# Opposition Brief — Texas & Pacific Railway Co. v. St. Louis Southwestern Railway Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_0949%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1947 - **Citation:** 330 U.S. 825 ## Text SUPREME COURT OF THE UNITED STATES. OCTOBER TERM, 1946, THE TEXAS AND PACIFIC RAILWAY > COMPANY, Petitioner, * No. 907. ST. LOUIS SOUTHWESTERN RAIL- WAY COMPANY, Debtor, Respondent. J RESPONDENT’S BRIEF IN OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI To the United States Circuit Court of Appeals for the Eighth Circuit. / \ A. H. KISKADDON, OLIVER J. MILLER, \. JACOB M. LASHLY, Attorneys for Respondent. LASHLY, LASHLY, MILLER & CLIFFORD, Of Counsel. February 7, 1947. Sr. Louis Law Printtne Co., 415 North Eighth Street. CE ntral 4477. INDEX Page CG - Ts asannscsescodpeiectecdiaceccckants 1 SS bs i445 wx'ds vedevudsdecevss cob eatecnst 2 SD NINE -ae.ve ceccwnakacdésabheetsnhanede 2 EES cu asaxaes cnevesens 6icu0ienasdedkesteainh 3 p PROTPTVET TTT ee TTT eer te 9 I.There is no conflict of decisions among the circuits and the decision below is fully sup- WONNNE Rat TOS ROGUE < faxiecacii esas Woeds 9 II. The decision below, which held the Arbitrators’ award to be valid and binding upon the parties, is in accord with the weight of the authorities and petitioner failed to show how said decision is untenable and probably in conflict with the State law as yet unannounced by the Supreme SD Ge FN i hi Ks bcs cas Raseeeckucd vedi 18 III. No important question of federal law is in issue. 25 Ce abcd i ven TRG ea Sete BAK 27 Cases Cited. Atlantic Coastline v. B. & O. R. R. (D. C. Md., 1935), Se Ge a FRED Re aS va Aab eee 4k ives nuked as 26 Campbell v. Campbell (1916), 44 App. D. C. 142, 242 ec Es Ps woo 0s we pan vation bas abreeiae 20 Columbia v. Canca Co. et al. (1903), 190 U. S. 524, ee Ot LUNG. wikia sah We one wanewandhanaeeas us 21 Dickens v. Luke (Mo. App.—1928), 2 S. W. (2) 161, i cht inan Gs echaeh kane edhsewanhs eonceiwee« euek ks 24 Grannopulos v. Pappas (1932), 80 Utah 442, 15 P. ERE SEA ELIE 29 ii Higgins-Wall-Dyer Co. v. City of St. Louis (1932), 331 Mo. 454, 53 S. W. (2d) 864, 866............++-- 24 Inglis v. Trickey et al. (1935), 172 Okla. 144, 45 | (DA) 185, 187.6... cei eee c ence necc cen cvececcees 22 Jacob v. Pacific Export Lumber Co. (1931), 136 Or. G22, 297 P. B48, B56... cece cen ee cc ecco eens 22 Mackay Radio & Telegraph Co. v. Radio Corp. (1939), oe. SS eeeeeererererrrrerrt rrr errr 9 McCullough et al. v. Clinch-Mitchell Construction Co. (C. C. A. 8, 1934), 71 F. (2d) 17, 22, cert. den. 293 oe 9 GFA SMe rrr rie 18, 20 Mutual Benefit Health & Acc. Assn. v. United Cas. Co. (1944), 142 F. (2d) 390, 393, cert. den. 323 Pope Const. Co. v. State Highway Commission (1935), 337 Mo. 30, 84 S. W. (2d) 920, 921................ 24 Richardson & Sons, Ltd., v. Hedger Transportation Corp. (C. C. A. 2, 1938), 98 F. (2d) 55, 57......... 18, 20 Ruhlin v. New York Life Ins. Co. (1938), 304 U.S. 202. 23 Wabash Railway Co. v. American Refrigerator Transit Co. (C. C. A. 8, 1925), 7 F. (2d) 335, 351, cert. den. ge ee Se TTT errr ee 18, 19 Williams v. Chicago, S. F. & L. Ry. Co. (1892), 112 ce € | | eS er reerrr Try re retry 24 Statutes Cited. Federal Arbitration Act of Feb. 12, 1925, c. 213, Sec. 11, Oe Wee, BU, © BG he Thin cn cic ccc cen esis cons 21, 22 Supreme Court Rule 38 (5) (b)............... 2c eee 26 IN THE SUPREME COURT OF THE UNITED STATES. OCTOBER TERM, 1946. THE TEXAS AND PACIFIC RAILWAY ) COMPANY, Petitioner, = > No. 907, ST. LOUIS SOUTHWESTERN RAIL- WAY COMPANY, Debtor, Respondent. 3 RESPONDENT’S BRIEF IN OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI To the United States Circuit Court of Appeals for the Eighth Circuit. OPINIONS BELOW. The Findings of Fact, Conclusions of Law and Order of the United States District Court for the Eastern Divi- sion of the Eastern Judicial District of Missouri dis- missing the claim of petitioner are unreported, and are found at page 575 of the Record herein. The opinion of the United States Circuit Court of Appeals for the Eighth Circuit affirming the decree below is also unreported as yet, and is found at page 589 of the Record. iia JURISDICTION. The judgment of the Court of Appeals was entered on November 27, 1946 (Record page 589). Petition for re- hearing was filed on December 9, 1946 (Record pages 601- 607), and denied on December 16, 1946 (Record page 609). The petition for writ of certiorari was filed on January 17, 1947, and the jurisdiction of this Court is invoked under Section 240 (a) of the Judicial Code as amended by the Act of February 13, 1925, 28 U.S. C. A. 347. QUESTIONS PRESENTED. The only question presented here is whether respondent, an intermediate carrier, is liable to petitioner, the initial carrier, for certain proportions of a joint freight charge claimed by petitioner for the transportation of crude petro- leum over a through route from Wickett, Texas, to Whiting, Indiana. Petitioner’s claim, which is grounded on the alleged violation by respondent of certain Manda- tory Freight Accounting Rules, formulated by the Railroad Accounting Officers Association, was denied by the Inter- line Freight Accounting Arbitration Committee and by the Interline Freight Accounting Arbitration Appeal Com- mittee. Petitioner challenges the award of the arbitrators, which both the district and the appellate courts hold to be conclusive of the issues and binding upon the parties. All other questions formulated at pages 2 and 3 of the petition are either merely academic and speculative, or are otherwise wholly irrelevant to the case and to the issues decided by the courts below. _— STATEMENT. In the latter part of November, 1927, an oil field was developed near Wickett, Ward County, Texas, a station served by the Texas and Pacific Railway Company, herein- after also referred to as petitioner. The crude oil was to be refined in Whiting, Indiana, and petitioner was, therefore, anxious to establish a through rate from Wickett to Whiting, with the concurrence of all the connecting railway lines (Record page 46 and Debtor’s Exhibit 3, Record pages 416-417). Petitioner is the initial carrier and operates a line of railroad from Wickett to Big Sandy, Texas. The connecting carriers are: respondent and its Texas subsidiary, which operate lines of railroad from Big Sandy to St. Louis, Missouri, and East St. Louis, Illinois; and the Alton Railroad Company, the Chicago & Eastern Illinois Railroad Company, the Ilinois Central Railroad Company, the Wabash Railroad Company, here- inafter called ‘‘the Illinois trunk lines’’, which operate lines of railroad from East St. Louis to Chicago junctions. The terminating carrier is the Elgin, Joliet & Eastern Railroad Company, which delivers the oil to the consignee, the Standard Oil Company, at Whiting, Indiana, and collects from it the freight charges (Stipulation of Facts, Record pages 31-32; 173). The through rate was established at 37¢ per 100 pounds of crude oil, and was published in the Southwestern Lines’ Tariff 125-C, Suppl. No. 3, issued on November 17, 1927, and effective on November 24, 1927 (Claimant’s Exhibit 1, Record page 49). Respondent’s Joint Division Sheet No. 9828, also effective on November 24, 1927, allowed 6.5¢ of the through rate of 37¢ to the lines north of East St, Louis, and the balance to the lines south of East St. Louis (Claimant’s Exhibit 15, Record page 87). The division of — the balance of 30.5¢ was established at 21.35¢, or 70%, to petitioner, and 9.15¢, or 30%, to respondent and its Texas subsidiary, in spite of the disproportion of this division to the mileage haul (for a discussion of this disproportion, see Record page 277). No question arises concerning the aforesaid divisions under the 37¢ rate. In March, 1928, petitioner began negotiations with re- spondent for the reduction of the rate to 32.5¢ (Claimant’s Exhibit 18, Record page 96). Respondent consented to the publication of a through rate of 32.5¢ on condition that it would continue to receive for itself and its sub- sidiary the same division as before, namely, 9.1¢ (Claim- ant’s Exhibit 19, Record page 96; Claimant’s Exhibit 20, Record page 97; Stipulation of Facts, Record page 35— bottom), thus leaving 16.9¢ for petitioner. The reduction of the rate was not submitted for concurrence to the IIli- nois lines, whose 6.5¢ division was not affected thereby (Debtor’s Exhibit 12-A, Record page 419; Debtor’s Ex- hibit 12-B, Record page 420). The new through rate of 32.5¢ from Wickett, Texas, to Whiting, Indiana, was published in respondent’s Tariff No. 125-C, Suppl. No. 25, issued on August 9, 1928, and effective September 18, 1928 (Stipulation, Record page 36; Claimant’s Exhibit 5, Record page 57). Prior to September 18, 1928, on which date the 32.5¢ rate was to come into effect, the railway lines operating north of East St. Louis decided to raise their division from 6.5¢ to 10¢, effective August 15, 1928. Notice of this change was given by the Illinois trunk lines on August 8, 1928 (Claimant’s Exhibit 26, Record page 120), and they refused to recede from their position ‘‘despite the vigorous protests of interested connecting carriers, including ap- pellant [petitioner] and appellee [respondent]’’ (Opinion Court of Appeals, Record pages 591-592; Record pages a en 393-396; Debtor’s Exhibit 21, Record page 426), which protests were also made to the Interstate Commerce Com- mission (Claimant’s Exhibit 26-B, Record page 126; Claimant’s Exhibit 26-A, Record page 125). Since the Elgin, Joliet & Eastern, as terminating carrier, collected the freight charges on all of the petroleum, the Illinois trunk lines were able to enforce their demand for 10¢ by withholding that amount in settlements with prior carriers. Neither respondent nor petitioner ever received the division of the reduced rate which they in- sisted lawfully accrued to them. The first oil movement from Wickett to Whiting in- volved in this suit, as to which the Illinois lines retained a division of 10¢, took place on October 19, 1928. Respond- ent had then the alternative either to charge the loss of revenue entirely upon petitioner or to apportion said loss between itself and petitioner. Respondent’s agreement with petitioner allowed it an arbitrary of 9.1¢ and not a percentage. Standing on the literal terms of said agreement, respondent could have retained its 9.1¢ and remitted the balance, namely 13.4¢ to petitioner (Record page 485, top). This is admitted by petitioner’s accountant and witness Oliver (Record page 344, top). Instead of taking this position and in order to help petitioner, respondent converted the divi- sion of 9.1¢ to respondent and of 16.9¢ to petitioner, into percentages, resulting in 35% or 7.875¢ to respondent, and 65%, or 14.625¢, to petitioner (Stipulation, Record page 38). The difference between 14.625 per ewt. which petitioner received for the period in question and what it would have received had it been paid 16.9¢, amounts to $64,424.46, and is the amount which petitioner seeks to recover from respondent (Stipulation, Record page 38, bottom). — It should be noted that the shipments in question moved on what is known as ‘‘junction settlement’’, which is a procedure for the collection of freight, and is authorized as an alternative method to ‘‘through billing’ by the Mandatory Freight Accounting Rules adopted and agreed to by the major railroads of the United States, including petitioner and respondent (Stipulation, Record page 32, No. 3 and page 37, bottom; Opinion Court of Appeals, Record page 593, bottom; page 594). In through billing, a through interline waybill, issued by the original carrier accompanies each shipment from origin to destination. This through waybill shows, among other things, the origin and destination of the shipment, consignor and consignee, route of movement, the applicable rate and and the information necessary to the apportionment of revenue between connecting carriers. As it is provided for by Mandatory Rule 118 (Record page 570), on ship- ments moving on through billing, freight charges collect, the destination carrier collects the charges from the con- signee and accounts to prior earriers for their established divisions of the applicable rate (Stipulation, No. 3, Record pages 32-33; Opinion Court of Appeals, Record page 593). On the junction settlement plan, which is the procedure involved in the present suit,* when the shipments of petitioner arrived at East St. Louis, respondent changed the headings of their waybills, which read ‘‘to Whiting, Indiana,”’ to read ‘‘to East St. Louis, Illinois’’, and the headings reading ‘‘Consignee: Standard Oil Company of Indiana’’ to read ‘‘Consignee: Standard Oil Company of Indiana, Whiting, Indiana’”’ (Stipulation, No. 5, Record pages 37-38). Thereafter, the Illinois trunk lines issued new waybills for the transportation from East St. Louis to Whiting. * This suit concerns merely oil shipments moving on “junction settle- ment,” and covers the period October 19, 1928, until December 27, 1929, when “through billing” was established (Stipulation, Record page 38; Record page 482). — = re This method permitted cash settlements to be made with the Illinois lines at the close of each week’s business and enabled respondent and petitioner to receive their proportion of the revenue thirty days sooner than under through billing. Respondent had been operating under the “junction settlement” plan since March 1, 1920, when it came out of federal control after the first World War, without capital or government guarantee (Record page 482). Petitioner, which was perfectly aware of this practice when it nego- tiated for and routed these shipments over respondent’s line and accepted this procedure at the time upon re- spondent’s avowed intention to maintain same (Debtor’s Exhibit 34, Record page 494; Debtor’s Exhibit 35-A, Record page 495; Debtor’s Exhibit 36-A, Record page 497), is not justified now in charging that respondent “failed to follow the shipping instructions” of petitioner (Peti- tion, page 5), as if by so doing respondent were commit- ting wrong or failing to live up to contractual obligations. Cash settlements between respondent and the Illinois trunk lines at East St. Louis were accomplished in the following manner as provided by the Mandatory Rules, 135 ff. (Record pages 570-572). Respondent on delivering a shipment to an Illinois trunk line presented that carrie- with a bill for that part of the joint rate chargeable to the transportation from Wickett to East St. Louis. The Illinois line receiving the shipment advanced to respond- ent the charges accruing on the transportation from Wickett to East St. Louis, and respondent remitted to petitioner its division of the revenue (Record, page 405). Elgin, Joliet & Eastern collected from consignee at des- tination the full freight charge for the movement on the. through rate from Wickett to Whiting (Record, page 173). a wen When the Illinois trunk lines started deducting 10 cents on junction settlements, this created a disputed division (Record page 486), and Freight Accounting Rule 143 (Record page 571) became applicable. This rule provides as follows: “The outbound carrier [Illinois lines] shall prepare junction Settlement Sheets * * * In case of dis- puted divisions, the settlements made by the outbound carrier [Illinois lines] must be accepted by the in- bound carrier [respondent] pending agreement by traffic departments of interested carriers” (Record pages 485-6). This left no alternative to respondent, and shows the in- accuracy of petitioner’s statement that respondent “acqui- esced in the cut” (Petition, page 6). Following the Procedure in Disagreements set forth in the Mandatory Rules 272 ff. (Record pages 572-574), peti- tioner instituted arbitration proceedings against respond- ent, alleging that respondent was liable to petitioner for violation of the Mandatory Rules. Both the Interline Freight Arbitration Committee and the Interline Freight Arbitration Appeal Committee found the issues in favor of respondent, held that it had not violated any of the Mandatory Interline Freight Accounting Rules and that petitioner had no cause of action against respondent (Rec- ord pages 265, 269, 273; on appeal, Record pages 226, 230, 233). The tndings of the arbitration committees were upheld both by the District (Record page 577) and by the Ap- pellate Courts, which held that the award was final and binding upon the parties (Record pages 597-600). eR ARGUMENT. I. There Is no Conflict of Decisions Among the Circuits and the Decision Below Is Fully Supported by the Record. 1. This case involves no complicated issue. Petitioner charges that respondent is liable to it for the alleged vio- lation of certain Mandatory Rules. This issue has been submitted by petitioner to two Freight Interline Arbitra- tion Committees, which held that no mandatory rule had been violated by respondent, and that petitioner had no cause of action against respondent under the Rules. The award has been upheld by two federal courts, and peti- tioner now seeks certiorari to review their decisions, alleging the great importance of the questions involved here. Petitioner claims that ‘‘these questions are novel’’ (Petition page 12) and therefore is not alleging any con- flict of decisions among circuit courts, but relies on the importance of the case as the ground for the granting of certiorari by this Court. Petitioner cites the case of Mackay Radio and Telegraph Co. v. Radio Corp. (1939), 306 U. S. 86, 1. c. 89, as a case in which this Court granted certiorari solely ‘‘because of the nature and importance of the case’’ (Petition, page 13). Petitioner’s quotation is not complete. This Court actually stated: ‘‘We granted certiorari, 305 U. S. 582, ante, 367, 59 S. Ct. 73, because of the nature and importance of the case, on a petition which urged as grounds for its allowance that validity and infringement of the Carter patent were in doubt and that, as petitioner is the only competitor of respondent in the business of world wide public radio communication, further litigation, resulting in conflict of decision among circuits, was improbable.’’ (Our emphasis.) oe a In the present case no contention is made or could be made by petitioner that conflict of decisions among cir- cuits may not arise in the future. The Mandatory Rules | are accepted and followed by the major railroads of the United States, and cases concerning the Rules may arise in any circuit of the United States. 9. Petitioner alleges that ‘‘the Court of Appeals has wholly misconceived the effect of the decisions of these Arbitration Committees’? (Petition, page 13). The con- trary is true. Petitioner argues that Rule 118 (Record page 570) requires the destination carrier to account for the proper revenue, and that by using the ‘‘junction settlement’? respondent ‘‘made itself the collecting car- rier of that portion of the joint rate accruing up to East St. Louis [and] therefore under the express terms of the Rule * * * it is ‘responsible for the collection of the proper revenue, and for the proper reporting to all roads in- terested,’ ’’ irrespective of whether or not respondent col- lected such revenue (Petition, pages 29, 7, 12 and 19). Petitioner made, unsuccessfully, the same contention before the Arbitrators as it is shown by the following passage of its brief before the Arbitration Committee: ‘‘R. A. O. A. Mandatory Rules 79 and 73 provide that statements of differences ‘if correct shall be promptly embodied in a correction account by settling carrier’. The St. Louis and Southwestern Railway by its action in suppressing through billing became the ‘settling carrier’ and as such responsible under the rules for the adjustment of Texas and Pacific Rail- way statements of differences’ (Record page 324, § 20). Petitioner’s present position is that the arbitrators did not absolve respondent from liability under the Mandatory Rules and that ‘‘they did not decide, as inadvertently — a stated in the opinion below, that ‘neither Rule 118 or 79 had any application on the question before them * * * and this without regard to ultimate decision of that dispute by the courts and by the Commission’ (Record page 599)’’ (Petition, page 9). The record shows beyond any shadow of a doubt that } the contrary is true. With specific reference to Rule 79, Arbitrator B. F. Russell said: **It is my opinion that there has been no violation of Mandatory Rule 79, 1928 Procedure, and Mandatory Rule 73, 1929 and subsequent Procedures’’ (Record pages 263-264). Similarly, Appeal Arbitrator K. W. Price stated: ‘*Question (2) * * * is its [respondent’s] refusal to issue correction account covering the statements of differences attached a violation of Mandatory Rule 79 (1928-1929) ? ‘‘Answer. No’’ (Record page 232). Petitioner contends that the arbitrator’s award: ‘left open the further question of whether or not it was respondent’s duty under established accounting rules and practices to collect this illegal exaction from the Illinois lines, and account to prior lines in ac- cordance with their agreed divisions’’ (Petition, pages 13-14). The record shows that such issue was discussed and de- cided by the arbitrators in the very language in which petitioner submitted it to them, as issue (e), namely: ‘In a case where a carrier makes delivery to a con- nection at a junction point in junction settlement and renders an incorrect interline settlement, because of the fact that the connection has arbitrarily retained excessive revenue, is the carrier making such incorrect a