This suit, under § 16 of the Act to Regulate Commerce, February 4, 1887, c. 104, 24 Stat. 379, 384, was brought against the Louisville & Nashville Railroad in the federal district court for northern Alabama. By it the Sloss-Sheffield Company sought to recover $63,982.80 with interest, being the amount of a reparation order entered by the Interstate Commerce Commission for excessive freight charges exacted in violation of § 1 of the Act. 60 I.C.C. 595; 62 I.C.C. 646. The charges here in question were paid between April 17, 1910 and September 15, 1915, on shipments of pig iron from the company's furnaces in Alabama, over lines of the Louisville & Nashville as initial carrier, to purchasers at Ohio River crossings and points beyond in central freight association territory.
The District Court, which heard the case without a jury, entered judgment in accordance with the Commission's order, except that it disallowed damages for the period between April 16, 1912 and July 22, 1913. Writs of error from the Circuit Court of Appeals were sued out by both the plaintiff and the defendant. That court entered judgment for $103,367.47, being the full amount awarded by the Commission with interest; and thus affirmed as modified the judgment of the District Court. 295 Fed. 53. The carrier then sued out a writ of error from this Court. It also filed a petition for a writ of certiorari, consideration of which was postponed to the hearing on the writ of error. Compare Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531, 535. As the case is properly here on writ of error, the petition for certiorari is denied. Seventy-seven errors are formally assigned. Only seven distinct contentions require separate consideration. Some of these relate to matters of procedure, others to substantive rights. Some assert that complete defenses to the suit were erroneously overruled, others that the amount of the recovery should have been reduced. Those which deal with matters of procedure will be considered first.
First. It is claimed that the order of reparation dated July 12, 1921, on which the suit rests, is void, because entered without notice to the Louisville & Nashville or opportunity to be heard thereon in violation both of the rules of the Commission and of the due process clause of the Fifth Amendment. The essential facts are these: The order sued on differed from an earlier one entered March 8, 1921, accompanying the so-called Sixth Supplemental Report, only in this. It reduced the amount payable from
The Louisville & Nashville concedes that this claim of invalidity is unfounded if the order of July 12, 1921 did
The Commission, like a court, may, upon its own motion or upon request, correct any order still under its control without notice to a party who cannot possibly suffer by the modification made. Compare Pennsylvania R.R. Co. v. United States, 288 Fed. 88. This power of the Commission is, in adversary proceedings, narrowly circumscribed; and its exercise is not to be encouraged. Whether in this instance these narrow limits were transcended by the Commission, we have no occasion to enquire. The original order was sufficient to sustain the findings and the judgments of the District Court as modified and affirmed by the Circuit Court of Appeals. A copy of it was annexed to the petition in the District Court, and was introduced in evidence there. If lack of notice to the Louisville & Nashville rendered the later order void, the original order remained in full force. Compare Chicago, M. & St. P. Ry. Co. v. Hormel & Co., 240 Fed. 381, 383-384. The petition of the Sloss-Sheffield Company of June 30 for a modification may be treated as a remittitur by that company of a part of the amount originally awarded, Pacific Postal Telegraph Cable Co. v. O'Connor, 128 U.S. 394; the order of July 12 operates as the entry of the remittitur; and appropriate amendments
Second. It is claimed that the order of reparation sued on is void to the extent that it includes damages on account of shipments made between April 17, 1910 and April 16, 1912, because the cause of action for this period was barred by the special two-year statute of limitations contained in § 16 of the Interstate Commerce Act. In the original petition filed April 16, 1912, reparation for this period was specifically prayed for in these words:
"That the rates and charges herein complained of be found and declared to have been unjust, unreasonable and discriminatory for a period of at least two years preceding the filing of this complaint; and that the complainants . . . may have reparation to the extent of the difference between the rates and charges actually paid by them severally and the rates and charges that may herein be found and declared the just and reasonable maximum rates to be charged in the future."
This claim rests primarily upon the assertion that the prayer is so general as to be, under §§ 13 and 16 of the Act and the rules of the Commission, insufficient to invoke its jurisdiction to award reparation.
Third. It is claimed that the order sued on is void to the extent that it includes damages on account of shipments made between April 16, 1912 and July 22, 1913. The contention is that the prayers of the original complaint, filed April 16, 1912, asked for reparation only on account of shipments made within two years theretofore; that a prayer for reparation on account of shipments to be made thereafter was first introduced by the supplemental petition filed July 22, 1915; and that, therefore, the special two-year statute of limitations barred recovery on account of shipments made during this fifteen months' period. We think the Court of Appeals was right in refusing to limit the prayer in the original petition. The language used does not require a construction which would so narrow its scope. A reading of the prayer as seeking damages for losses suffered in the past through the exaction of existing rates, but not for losses which will result while the proceeding to reduce them is pending, would deny to the words used their natural meaning and impute to the complainant a strange eccentricity of desire. The action of the Commission was in harmony with its own long settled practice and with the practice of courts in analogous cases.
Fifth. It is claimed that the order of reparation is void to the extent that it includes damages payable by the Louisville & Nashville in excess of 23 cents a ton on shipments transported, under joint through rates, over lines of connecting carriers to points beyond the Ohio River crossings. The contention is that the liability of the connecting carriers is not joint and several; that each is liable individually only for the part which it received of the excess unlawfully exacted; and that the Louisville & Nashville must be deemed to have received only 23 cents of the excess, because the Commission, when requested by the carriers to decide under § 15 in what proportions the future reduction of 35 cents in the joint through rates already ordered should be borne, decided that the Louisville & Nashville should bear a shrinkage of 23 cents in the existing division and the lines north of the River a shrinkage of the remaining 12 cents. The argument is that the joint through rate, although in fact established by the voluntary act of the carriers, should be deemed to have been compelled by law, since § 1 (4) made it the duty of carriers to establish through routes and § 15(3) empowered the Commission to enforce that duty; that the joint through rates should be treated as if they were merely a combination of the full individual rates of the several carriers, because the rates in question were in fact constructed by combining as factors the existing published proportional rates of the several carriers; that carriers necessarily exercise a fallible judgment as to reasonableness when initiating and in agreeing upon a joint rate; that a later decision by the Commission that the joint rate is excessive does not involve a finding that the carriers acted either arbitrarily or from bad motives in establishing
The cause of action sued on is of statutory origin. It rests primarily upon § 8 which declares that if "any common carrier . .. shall do, cause to be done, or permit to be done any act, matter or thing in this act prohibited or declared to be unlawful. . . such common carrier shall be liable . . . for the full amount of damages sustained in consequence of any such violation of the provisions of this act. . . ." The Commission held early, and has consistently held since, that carriers who by means of a joint through rate make excessive charges are liable jointly and severally for all the damage sustained.
The fact that the joint rate had been constructed out of existing proportional rates is not of legal significance. The rates complained of were not merely the aggregate of individual local or proportional rates customarily charged by the respective lines for the transportation included in the through routes. The rates in question were strictly joint through rates. Each through rate was complained of as a unit. Compare Parsons v. Chicago & Northwestern Ry. Co., 167 U.S. 447, 455-6. A single charge was made for the transportation from point of origin to point of destination.
Nor does the fact that the connecting carriers may have been induced to enter into these agreements for joint through rates because the Interstate Commerce Act had declared this to be the general duty of all carriers, prevent the agreement actually entered into from being the joint
The division of the joint rate among the participating carriers is a matter which in no way concerns the shipper. The shipper's only interest is that the joint rate be reasonable as a whole. It may be unreasonable although each of the factors of which it is constructed was reasonable. It may be reasonable although some of the factors, or of the divisions of the participants, were unreasonable. Moreover, there is no finding that the excess received by the Louisville & Nashville was only 23 cents a ton. The Commission did not fix or determine the rights of the several carriers as against each other in respect to the reparation awarded; nor had it, so far as appears, fixed the divisions of the joint rate theretofore existing. Awarding reparation for excessive charges in the past and regulating rates for the future involve the determination of matters essentially different. Baer Bros. Mercantile Co. v. Denver & Rio Grande R.R. Co., 233 U.S. 479.
Sixth. It is claimed that the Sloss-Sheffield Company cannot recover, because it was not damaged by the excessive
The objection urged is not that the company failed to make specific proof of pecuniary loss — the failure held in Pennsylvania R.R. Co. v. International Coal Mining Company, 230 U.S. 184, 206, to be fatal in a suit under § 2 for unjust discrimination, and in Davis v. Portland Seed Co., 264 U.S. 403, to be fatal in a suit under § 4 for violation of the long-and-short-haul clause. The carrier concedes, as it must under Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531, that a recovery for excessive freight charges can be had under § 1 without specific proof of pecuniary loss, and that the measure of damages is the amount of the excess exacted. It was likewise settled by Southern Pacific v. Darnell-Taenzer Lumber Co. (see 190 Fed. 659; 221 Fed. 890), that where goods are sold f.o.b. destination, it is ordinarily the seller who bears the freight, who suffers from the excessive charge, and who consequently is entitled to sue.
The additional facts relied upon to support this objection to recovery are these: All the shipments were made under a standard form of contract which was applicable to sales for future delivery in installments and which contained a provision substantially as follows:
"Price. Fourteen dollars and eighty five cents ($14.85) per ton of 2240 lbs. delivered at Chicago, Illinois.
"This price is based on present tariff freight rate of $4.35 per ton. In case the tariff rate declines, the buyer is to have the benefit of such decline. In case the tariff freight rate advances, the buyer is to pay the advance.
"Freight, cash; balance, cash 30 days from average date of monthly deliveries (Invoice date). . . . The seller not will be liable for any overcharge in freight when correct rate is expressed in bill of lading."
The provision in question is a common one in contracts of sale. Its effect upon the consignor's right to recover
The Louisville & Nashville argues now that a sale at the delivered price of $14.85 is, by reason of this provision, the legal equivalent of a sale at $10.50 plus freight; that under a contract of sale at a fixed price plus freight the purchaser would be entitled "in case the tariff rate declines" to the benefit of "the decline"; that a decision that a published rate exacted was excessive is the legal equivalent of a decline in rates; that under the provision quoted the purchaser would be entitled, as against the seller, to any damages payable by the carrier for having established and collected the higher tariff rate thereafter found to be unlawful because excessive; and that, since the refund to be made by the carrier would ultimately enure to the purchaser's benefit, no damage was suffered by the seller by reason of the excessive freight charge.
The construction urged ignores the commercial significance of selling at a delivered price. When a seller
Seventh. It is claimed that the order of reparation is void to the extent that it included as damages interest amounting to $25,979.49 accrued prior to the entry of the final order on July 12, 1921; and that the judgment is erroneous for the further reason that it included interest upon interest to the extent of $1,363.93, as it allowed interest generally from the date of the award. The main contention is that no interest is allowable prior to the date of the final award because until then there was no obligation to pay the claim in suit. The argument is that until entry of the award, it was uncertain whether any amount was payable by way of reparation, since the Commission might reduce rates for the future without awarding any damages for the past; that, moreover, the claim was unliquidated; that the claim was, in its nature, one which the parties could never voluntarily have liquidated, since a shipper must, in any event, pay freight rates in accordance with the tariff as published and the carrier must retain the amount received; that failure by the carriers to observe this rule would have been a criminal
It has been the uniform practice of the Commission to recognize as an element of the damages loss of interest on charges unlawfully exacted; and, in ordering reparation, it has usually included as a part of the damages such interest from the date of the payment.
The further contention is that by allowing interest from September 12, 1921, the effective date of the Commission's order, on the whole amount then payable, compound interest to the extent of $1,363.93 was allowed. It is true that the judgment entered involves such payment; but it does not follow that this was error. Payment of some compound interest often results when a judgment of affirmance is entered by an appellate court. It results, likewise, whenever a trial court enters judgment in an action upon a judgment or upon an award. An order of reparation may be likened to an award in this respect.
Affirmed on writ of error.
Writ of certiorari denied.
The separate opinion of MR. JUSTICE McREYNOLDS.
When this matter was before the Interstate Commerce Commission, July, 1916, Commissioner McChord, member since 1910, wrote a well-considered dissenting opinion pointing out that defendant in error had suffered no proximate damage and therefore ought not to recover. 40 I.C.C. 738. I think he was right.
At Birmingham, Ala., defendant in error accepted a written proposition made by the Chicago Foundry & Machine Company to purchase fifty tons of pig iron at "fourteen dollars and eighty-five cents per ton of 2240 lbs., delivered at Chicago, Illinois," which recited:
"This price is based on present tariff freight rate of $4.35 per ton. In case the tariff rate declines, the buyer is to have the benefit of such decline. In case the tariff freight rate advances, the buyer is to pay the advance. Freight, cash; balance, cash 30 days from average date of monthly deliveries. .. . The seller will not be liable for any overcharge in freight when correct rate is expressed in bill of lading."
From time to time the iron was consigned to the purchaser at Chicago under straight bills of lading issued by plaintiff in error; the weight and rate were stated on each bill. The carrier had no knowledge of the sale agreement; upon receipt of the goods the consignee paid the freight charges. The consignor rendered uniform bills which contained charge items for weights shipped at $14.85 per ton less freight at $4.35 per ton, always with a balance equivalent to $10.50 per ton. Entries on the consignee's books are not disclosed. In substance, as shown by the writing and practice, the consignor agreed to receive
The provision that, "The seller will not be liable for any overcharge in freight when correct rate is expressed in bill of lading," indicates that the parties did not regard the consignee as mere agent of the seller when paying transportation charges. By disavowing its interest in an overcharge the seller at least recognized the consignee's right to seek redress from the carrier.
Under settled doctrine the right to reparation for violations of the Interstate Commerce Act depends upon proximate damage. This was distinctly affirmed in Pennsylvania R.R. v. International Coal Co., 230 U.S. 184; Southern Pacific Co. v. Darnell-Taenzer Co., 245 U.S. 531; Davis v. Portland Seed Co., 264 U.S. 403. In the case last cited respondent sought, without success, "to secure something for itself without proof of pecuniary loss consequent upon the unlawful act." Here, no better result should follow like effort. In the same case we said: "Southern Pacific Co. v. Darnell-Taenzer Co., 245 U.S. 531, presents no conflict with Pennsylvania R.R. v. International Coal Co. There the shipper paid a published rate which the Commission afterwards found to be unreasonable. This court held he could recover, as the proximate damage of the unlawful demand, the excess above the rate which the Commission had declared to be reasonable. The opinion went no further."
It affirmatively appears that defendant in error suffered no appreciable damage. The consignee upon its own account, as agreed and obligated by law, paid freight charges upon receipt of the goods. These were too high; it was unlawfully required to pay too much and suffered proximate loss.
MR. JUSTICE STONE dissenting.
I dissent from the opinion of the majority of the Court on the ground that the consignees who paid the freight to procure goods, the title to which was in them when shipped, were within the protection of the statute prohibiting unreasonable freight rates, and upon payment of the illegally exacted freight from their own funds they were the persons suffering proximate damage and were therefore entitled to recover the excess freight within the meaning of the statute and the reasoning of the opinion in Southern Pacific Co. v. Darnell-Taenzer Co., 245 U.S. 531.
Compare Lehigh Valley R.R. Co. v. American Hay Co., 219 Fed. 539; Lehigh Valley R.R. Co. v. Markle Co., 279 Fed. 261.