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BALTIMORE & OHIO SOUTHWESTERN RAILROAD COMPANY v. SETTLE ET AL.

decided: November 13, 1922.

BALTIMORE & OHIO SOUTHWESTERN RAILROAD COMPANY
v.
SETTLE ET AL., PARTNERS UNDER THE FIRM NAME OF W.H. SETTLE & CO.



ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.

Author: Brandeis

[ 260 U.S. Page 167]

 MR. JUSTICE BRANDEIS delivered the opinion of the Court.

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, interstate carload rates on lumber from southern points to Oakley and to Madisonville. It also duly published intrastate carload rates from Oakley to Madisonville. 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 cars, 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 according 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 continuously thereafter, it had been the intention of the shippers that the cars should go to Madisonville. They were billed to Oakley and physical possession was

[ 260 U.S. Page 168]

     taken by the shipper there, in order to get the benefit of the lower freight charges resulting from the combination of rates. The railroad insisted that, in view of this fact, the through rate to Madisonville applied; and it brought an action against the shippers, in the Federal District Court for Southern Ohio, Western Division, to recover the difference between the amounts actually received and the through rate to Madisonville. A demurrer to the petition, which set up the above facts, was overruled by the trial court; judgment entered thereon was reversed by the Circuit Court of Appeals for the Sixth Circuit; and the case was remanded to the District Court. 249 Fed. 913. The railroad then discontinued that suit and brought this one in the same court. The action was tried before a jury; the facts above stated were shown; the shippers got the verdict; and judgment entered for them was affirmed by the Circuit Court of Appeals. 272 Fed. 675. The case is here on writ of error.

It is admitted that if the reshipment from Oakley to Madisonville was part of a through interstate movement, the railroad was entitled to recover. The question is presented whether, in view of the undisputed facts, the original and continuing intention so to reship made the reshipment, as matter of law, part of a through interstate movement. The following instruction given and excepted to shows sufficiently how the question arose:

"As a matter of law, the existence of an original and continuing intention in the minds of the defendants Settle and Clephane to reship this lumber from Oakley to Madisonville, for the purpose of saving expense, is not, of itself, sufficient to convert the shipments into through shipments, if there was otherwise a good-faith delivery at Oakley. . . . If there was a good-faith delivery of this lumber at Oakley, to Settle and Clephane, the fact they always had an intention in their mind, and persevered in that intention, of reshipping it to Madisonville

[ 260 U.S. Page 169]

     for the purpose of saving money on freight, that would not necessarily constitute a through shipment in interstate commerce."

No material fact, evidential or ultimate, had been left in dispute. There was no room for any issue of good faith to be determined by the jury. Physical delivery of the cars to the shippers had been made at Oakley, after payment of the freight and other charges. The shippers had no place of business at Oakley. The delivery there was the completion of one stage in the contemplated movement to Madisonville. After a brief interval the second stage was begun under the local bill of lading. It was conceivable that the shippers might find a customer who would take the lumber at Oakley; and, in that event, the rail movement would have ended there. But that was not probable or expected; nor was it the reason for shipping to Oakley. The movement had been divided by the shippers into two stages -- instead of using through billing -- because they believed that by so doing they could secure transportation to Madisonville at less than the through interstate rate. Whether under the Act to Regulate Commerce lower intermediate rates can be so used in combination, is the precise question for decision.

The contention of the shippers is that the character of a movement, as intrastate or interstate, and, hence, what the applicable rate is, depends solely upon the contract of transportation entered into between shipper and carrier at the point of origin of the traffic; that when an interstate shipment reaches the destination named in this contract and, after payment of charges, delivery is taken there by the consignee, the contract for interstate transportation is ended; that any subsequent movement of the commodity is, of necessity, under a new contract with the carrier and at the published rate; and that, since this lumber came to rest at Oakley before that new movement, the reshipment from there to Madisonville (both

[ 260 U.S. Page 170]

     stations being within the State of Ohio), was an intrastate movement. This contention gives to the transportation contract an effect greater than is consistent with the purposes of the Act to Regulate Commerce. The rights of shipper against carrier are determined by law through the provisions of the tariff which are embodied in the applicable published rate. Atchison, Topeka & Santa Fe Ry. Co. v. Robinson, 233 U.S. 173; Western Union Telegraph Co. v. Esteve Brothers & Co., 256 U.S. 566. And whether the interstate or the intrastate tariff is applicable depends upon the essential character of the movement. That the contract between shipper and carrier does not necessarily determine the character was settled by a series of cases in which the subject received much consideration. Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498; Ohio Railroad Commission v. Worthington, 225 U.S. 101; Texas & New Orleans R.R. Co. v. Sabine Tram Co., 227 U.S. 111; Railroad Commission of Louisiana v. Texas & Pacific Ry. Co., 229 U.S. 336. And in Baer Brothers Mercantile Co. v. Denver & Rio Grande R.R. Co., 233 U.S. 479, 490, this ...


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