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31. In payment for use of cars. — United
States V. Delaware, etc., R. Co., 40 Fed.
101.

32. Sale of tickets through broker. —
Raleigh, etc.. R. Co. v. Swanson, 102 Ga.
754. 38 S. E. 601, 39 L. R. A. 275.

33. Shipment on through bills of lad-
ing. — Freight rates from London and
Liverpool to San Francisco are fixed by
the competition of the water and rail
route via the Isthmus of Panama and the
water route around Cape Horh. A car-
rier by rail from New Orleans to San
Francisco gave a much lower rate on
goods shipped from London and Liver-
pool to San Francisco on through bills
of lading than from New York, Chicago,
and other points to San Francisco (in
some cases less than half the latter rate).
The rate complained of was slightly re-
munerative to the carrier, and it would
lose the traffic unless it carried at such
low rate. Held, that under §§ 2 and 3
of the Interstate Commerce Act (24 Stat.
379, 380) the giving of such low rate is
an unjust discrimination, and a charging
of one person more than another for a
like service under su])Stantially similar
circumstances and conditions, and an or-
der of the commissioners prohibiting it
will be enforced. Tntcrsfate Commerce
Comm. 7'. Texas, etc., R. Co., 52 Fed. 187.

34. Because of competitiorL — Judgment,
141 Fed. 1003, affirmed in Interstate Com-
merce Comm. V. Chicago, etc., R. Co., 209
U. S. 108, 52 L. Ed. 705, 28 S. Ct. 493.

No undue prejudice to an intermediate
point, in violation of Interstate Com-
4 Car— 38



merce Act Feb. 4, 1887, c. 104, § 3, 24
Stat. 380 (U. S. Comp. St. 1901, p. 3155),
can be predicated merely on the fact that
a rail carrier charges a less rate to a
terminal point on the Pacific Coast, where
such rate is forced by competition. Atch-
ison, etc., R. Co. V. United States, 191
Fed. 856.

The discrimination in favor of compet-
itive points on account of competition
which compels a reduction of rates to
those points below the rate charged for
shorter distances is not an undue or un-
just discrimination prohibited by § 3 of
the act to regulate commerce. Decree,
99 Fed. 52, 39 C. C. A. 413, reversed in
East Tennessee, etc., R. Co. v. Interstate
Commerce Comm., 21 S. Ct. 516, 181 U.
S. 1, 45 L. Ed. 719.

35. Interstate Commerce Comm. v.
Texas, etc., R. Co., 52 Fed. 187.

Under Interstate Commerce Law (24
Stat. 379, 380) §§ 2, 3, the fact of the
existence of ocean competition will not
justify a railroad company's rates for
carrying merchandise from New Orleans
lo San Francisco which comes to New
Orleans from domestic points, which
rates are treble, and some cases four
times, the rates charged for carriage of
like kinds of mercliandise from New Or-
leans to San Francisco which reach New
Orleans from foreign ports, although such
lower rates constitute the only condition
on which the carrier can obtain any part
in such foreign traffic. Interstate Com-
merce Comm. V. Texas, etc., R. Co., 57
VoA. 948, C. C. A. 653, affirming 52 Fed.
187.



§§ 4086-4087 carriers. 3700

shipment, which provides that in consideration of reduced rates the vahiation of
the property shipped should not exceed a certain amount, and the carrier's ha-
bihty should not exceed that amount, since such contract violates the provision
forbidding special rates. ^^

§§ 4087-4090. Rebates— § 4087. In General. — The word "rate" means
the net amount the carrier receives from the shipper and retains, and any device
by which such amount is reduced below the rate given in the published schedule
is one for the giving of a rebate. ^^ The word "rebate," as used in the Interstate
Commerce Act and its amendments, refers only to such a discount, deduction,
or drawback as creates a discrimination in favor of a particular shipper and
against other shippers in like situation.^^ The purpose of Congress in the enact-
ment of Act of Feb. 19, 1903, known as the "Elkins Law," was to secure uniform
freight rates to all shippers, and its provisions are violated by the giving or receiv-
ing of any rebate or concession whereby any property shall be transported at a
less rate by any interstate carrier than that named in the tariffs published and tiled
by such carrier, whether by direct agreement between shipper and carrier or in-
directly by "any device whatever." ■^'* The meaning of the clause, "by any device
whatever" in the Act of Feb. 19, 1903, prohibiting rebates, is directly or indirectly
in anyway whatever.-*" Section 10 of the Interstate Commerce Act as amended
by the Act of June 18, 1910, making it unlawful to offer, grant, give, solicit, ac-
cept, or receive a rebate from a carrier for the transportation of goods in inter-
state commerce, was not impliedly repealed by Hepburn Act, June 29, 1906, mak-
ing it an offense to receive transportation for less than posted rates by false
billing, false classification, etc^^

Agreement of Parties Immaterial. — A claim against a carrier for rebates
may be resisted as against public policy or contrary to state or federal regula-
tions, notwithstanding any agreement of the parties. 4-

Carriers Subject to Act. — A private car company which delivers its cars to
railroad companies to be furnished indiscriminately for the use of shippers, re-
ceiving pay for such use from the railroad companies on a mileage basis, is within
the provision of the act forbidding rebates and the giving by such a car company
of any rebate or allowance to a shipper using its cars, whereby he secures the
transportation of his property at a less rate than that named in the published tariff
of the carrier for transportation of such property in its own cars, although from
its own funds and without the connivance or knowledge of the carrfer, is a viola-
tion of the statute. Such a car company is therefore subject to the jurisdiction
of the Interstate Commerce Commission, charged with the duty of enforcing the
statute and having power to inquire into the operations of any agency of trans-
portation which may so conduct its business as to destroy uniformity of rates. ^^

Who May Complain of Rebate. — A coal shipper, which, with others, was
given rebates by a railroad company in violation of law, can not maintain an ac-
tion against the company to recover damages for discrimination because others
were granted larger rebates.'*'*

36. Because of reduced valuation of ing Co. v. United States, 82 C. C. A,
goods.— Ward v. Missouri Pac. R. Co., 13.5. 153 Fed. 1, U L. R. A., N. S., 400.
158 Mo. 226, 58 S. W. 28. 41. Nichols, etc., Lumber Co. v. United

37. Rebates.— United States v. Chicago, States, 212 Fed. 588_ _

etc., R. Co., 148 Fed. 646. See post. "Re- 42. Agreement of parties immaterial.

ceiving Rebates," § 4240. T-^'^'^o^^^"'^' .h^'tt^/"..."'- ^o^thern In-

„„ . . c- T> £ /-> -nv 1 diana R. Co., 195 I'ed. 330.

38. American Sugar Refin Co. v. Dela- ^^ Carriers subject to act.— Interstate
ware, etc., R Co., 207 Fed. <33, reversing Commerce Comm. v. Reichmann, 145 Fed.
judgment, 200 Fed. 652. g^.

39. United States v. Standard Oil Co., 44. 'Who may complain of rebate. —
148 Fed. 719. Pennsylvania R. Co. v. International Coal

40. Direct or indirect.— Armour Pack- Min. Co., 97 C. C. A. 383, 173 Fed. 1.



3701 INTERSTATE COMMERCE ACT. ■ § 4088

§ 4088. What Amounts to Rebate. — Necessity for Refusing Rate
Paid. — The offense of giving rebates in violation of the Act of February 19, 1903,
is not complete nor the offense committed until the carrier, to whom, the shipper
has paid the full legal rate, has refunded to the shipper, upon a claim presented
by him, a part of the legal rate already paid.'*-'' It follows, therefore, that the act
applies and that a prosecution thereon may be sustained where the agreement for
the rebate was made and the property transported pursuant thereto before the
act went into effect, notwithstanding the actual refunding of a part of the legal
rate was not made until after the law went into effect.'*'^

In Absence of Discrimination. — If there is no unjust discrimination, an
agreement by a railroad company that it will carry goods at a certain rate, and
repay the shipper a part thereof as a rebate after the shipment, is not illegal,
and the rebate may be recovered by the shipper in a proper case."*'' So long as
there is no unjust discrimination, and no stipulation in the contract forbidding
the carrier extending similar rates to all other shippers similarly situated, there
is no express provision of law, and no sound reason arising out of public policy,
which prohibits a carrier entering into a fair and equitable milling in transit
arrangement with any of the numerous industries now operating under such
plans."*' But a lumber company, using a railroad owned by stockholders of a
rival lumber company that operated as a separate corporation, would be given
a rebate contrary to the Interstate Commerce Act if a nondiscriminatory agree-
ment between the two lumber companies were construed to entitle the former
company to the same proportion of the interstate freight rates on its shipments
which the railway company receives on the interstate shipments by the other
lumber company.^"'

Where Legal Rate Higher than Rebated Rate. — A shipper is not entitled
to recover damages from a railroad company for discrimination in rates because
of rebates paid to a shipper from another district ; the rate from such district with
the rebates deducted being higher than that paid by plaintiff. ^*^

Allowance for Services of Shipper. — The published tariff schedules of an
interstate carrier by rail gave its rate on packing house products from a certain
point, including the rate charged by a belt line company for carriage between
such point and a connection with the carrier's road. The carrier charged and
received such rate from a packing company, paid the charge of the belt line
company, and afterward paid back to the packing company the sum of one dollar
upon each car so shipped. Such repayment constitutes the granting of a rebate,
and can not be justified as lawful on the ground that it was an allowance to
the packing company for the use of its own private track in moving the cars
from its sliipping Ijuilding to a connection with the belt line tracks.^'*

Refunding for Use of Private Track. — Private tracks built by the owner of
a packing ])lant on its own property, extending from a connection with the tracks
of a belt line railroad company to and around its buildings, and used in loading
cars for shipment, are not a part of the railroad system, but plant facilities, and
the refunding by a railroad com])any, which made and published a schedule of
througli rates, including the belt line charge, of one dollar per car to such packing

45. Necessity for refunding rate paid. 48. Laurel Cotton Mills f. Gulf, etc.,
—New York, etc., R. Co. v. United States, R. Co., H4 Miss. 3:59, .37 So. 134, 66 L.
212 U. S. 481, .53 L. Ed. 613, 29 S. Ct. R. A. 4.'53.

304, affirming 146 Fed. 298; S. C, 212 U. 49. I-'ourche River Lumber Co. v. Bry-

S. 500, 53 L. Ed. 624, 29 S. Ct. 309. ant Lumber Co., 33 S. Ct. 887, 230 U. S.

46. New York, etc., R. Co. v. United 31(), 57 L. Ed. 1498, reversing judgment.
States, 212 U. S. 500, 53 L. Ed. 624, 29 135 S. W. 796, 97 Ark. 623.

S. Ct. 309. 50. Where legal rate higher than re-

47. In absence of discrimination, — El- bated rate. Mitclull Coal, etc., Co. 7'.
liot on Railroads, § 1505; Rorer on Rail- I'ennsyK ania R. Co., 181 1'\m1. -103.
roads, § 1375. Laurel Cotton Mills v. 51. Allowance for services of shipper.
Gulf, etc., R. Co., 84 Miss. 339, 37 So. —United States v. Chicago, etc., R. Co.,
J 34, 66 L. R. A. 453. I IS l'\.d. 646.



§ 4088 CARRIERS. 3702

company on shipments made by it and paid for at the schedule rate, on the
ground that it was a payment for the use of such private tracks, thus making
the rate charged one dollar per car less than that published and charged to
shippers generally from the same point, constituted the giving of a rebate, in
violation of § 1 of the Act February 19, 1903.^-

Refunding Cartage Charges. — Where a railroad company, in order to ob-
tain shipments from one so located as to require no cartage when he ships by
another road, makes him a rebate to cover the cost of cartage, but makes no
such rebate to other shippers who require cartage by whichever road they may
ship, it is guilty of unjust discrimination."^

Refunding Elevator Charges. — Where an interstate carrier returned to a
shipper of grain after payment of the freight an amount equal to elevator charges
at the point of shipment, and the carrier had not published or filed any schedule
showing that it had absorbed such elevator charge as a part of its rate between
the points in question, the carrier was guilty of granting rebates prohibited by the
act.^^ A railroad company whose published schedule rate for the carriage of
oats in interstate shipment from Minneapolis to Duluth or Superior was five cents
per one hundred pounds, and which received payment from a shipper at such rate,
but, on shipments intended for through transportation over the lakes, later re-
funded to the shipper the elevator charges for transferring the grain from its
cars to vessels after the termination of its own carriage amounting to one-half
cent per bushel, was guilty of granting a rebate or concession from the published
schedule rate, in violation of the Act of Feb. 19, 1903, and it was no defense to
a prosecution therefor that competing roads granted a like concession, and that it
was compelled to do the same in order to secure its fair share of the business,
or that it treated all shippers alike, or that the concession was made by its officers
in good faith and in the honest belief that it was lawful. "'"

Agreed Valuation for Injury to Goods. — When an interstate shipment was
made under a contract, providing that if the stock shipped was injured the ship-
per should obtain no compensation beyond an agreed valuation, a decision that
the agreement as to valuation was invalid does not give the shipper rebate, but
only compensation for loss sufi:'ered, which is not a lower rate than he is enti-
tled to."^''

Rebate from Joint Rate. — The Act of Feb. 19, 1903, makes it unlawful for
a carrier to grant a rebate from a joint tariff which it has filed with the
interstate commerce commission or published, or in which it participates when
filed or published by another carrier. W^hen a carrier unites with one or more

52. Refunding for use of private track. pany presented to defendant the receipted

—Judgment, United States v. Chicago, ireight bills paid by the consignees with

etc., R. Co., 148 Fed. 646, affirmed in other papers, on \yhich defendant, ac-

156 Fed. 558, 84 C. C. A. 324, 26 L. R. A., cording to a pre-existing agreement, re-

jyj g gg-l^ funded elevator charges to the grain com-

■ „ '' T^ r' J. ^ u Tir I ^ pany. Held, that defendant at the time

53 Refunding cartage charges.-Wight \^ j^ ^^^^,^ ^^^^^^ j^^^ ^^^^^j knowledge

^ United ^State^s, ICu^ U. S. 512, 42 L. ^^^^ ^^^ hcx^ht had been paid by the

bd. 258, 17 b. Lt. 8.v^. consignees acting for the grain company,

54. Refunding elevator charges.— EI- and that such facts therefore sustained an

kins Act, § 1 (Act Cong. Feb. 19, 1903, indictment charging the railroad com-

c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. pany with paying a rebate to the grain

1907, p. 880]); Wisconsin Cent. R. Co. conipany from freight charges before

V. United States, 169 Fed. 76, 94 C. C. A. xhcn "received from the grain company."

444. Wisconsin Cent. R. Co. v. United States,

A grain company made certain ship- 169 Fed. 76, 94 C. C. A. 444.

ments of grain over defendant's mad 55. Judgment, United States v. Chicago,

from Minneapolis to Milwaukee to the etc., R. Co., 151 Fed. 84, affirmed in 162

grain company's brokers, who received Fed. 835.

the consignments, paid the freight, and 56. Agreed valuation for injury to

afterwards sold the grain for the ship- goods. — Cramer v. Chicago, etc., R. Co.,

per's account. Thereafter the grain com- 153 Iowa 103, 133 N. W. 387.



3703 INTERSTATE COMMERCE ACT. § 4088

Others in making a rate for interstate or foreign shipments, and a through bill
is issued therefor, it is subject to the Interstate Commerce Act. An express
agreement for the through rate is not required, but the successive receipt and
forwarding in the ordinary course of business by two or more carriers under
through bills, or any arrangement for a continuous carriage, constitutes assent
to such common arrangement, and makes the carrier a party to the contract,
within the meaning of the act.^'" Where the defendant railroad was a party
to a joint rate for the shipment of coal for a certain price to the point of junction
with a connecting carrier, and an increased amount for shipment to other points
on the defendant's line, of which sum the defendant received a part, the defend-
ant is not subject to prosecution for receiving a rebate, where coal was shipped
for the defendant's own use to its yards, although within the city limits of the con-
necting point, where the joint agreement also provided that, where the point of
destination of shipment is between any two points named in the schedule, the
rate should be the same as to the next more distant point named. •'''^

Trackage Charges Paid by Railroad to Stockyard Company. — The cer-
tificate of incorporation of a union stockyards company authorized it to hold
shares of stock in a transit company, which owned stockyards, and a belt line
which connected all the railroads entering the city. The transit company, most
of whose stock was owned by the stockyards company, depended on the perma-
nent market for cattle created by the presence of slaughtering and packing estab-
lishments. Some of the packers, known as "nonassociate," contemplated a re-
moval from the vicinity of the stockyards. Other of the packers, known as "as-
sociate," purchased a large tract of land at a distance from the city, and made
preparations to remove their plants and establish stockyards of their own.
The stockyards company entered into a contract with the associate packers, by
which it was to give them a large amount of interest bearing income
bonds in consideration of a conveyance of the land purchased, and an
agreement not to remove their plants, etc. On a bill to restrain the exe-
cution of the contract, it was held that trackage charges paid by the railroad
companies to the stockyards company for the use of the latter's tracks were not
repaid by the packers to the railroads, and that the agreement was not intended
as a device to pay a rebate to the associate packers, in violation of the interstate
commerce law, prohibiting discrimination in railroad rates. ^'^

Shipment to Points Beyond Carrier's Line. — Where a railroad company
has published and filed a schedule of rates on interstate shipments to points be-
yond its own line said section applies to such rates equally with those between
points on its own road.^*^

57. Rebate from joint rate. — United hauled over its own line to a chute be-
States V. Wood, 145 Fed. 405. tween that and the next station, although

58. Sharing joint rate of shipper of within the limits of the city, the fact that
carrier's own goods. — Defendant operated it had the coal billed at the $3.80 rate
a line of railroad from Montpelier to and took its divisional share thereof did
Wells River, in Vermont, a distance of not render it subject to prosecution for
39 miles. By a joint tariff, to which it receiving a rebate, in violation of Inter-
was a party, the rate on coal from a state Commerce Act Feb. 4, 1887, c. 104,
point in Pennsylvania to Montpelier was 24 Stat. 382 (U. S. Comp. St. 1901, p.
fixed at $3.55 per ton, and to all other 3160), as amended by Act Feb. 19, 1902,
points on its line at $3.80, of which it c. 708, 32 Stat. 847 (U. S. Comp. St.
received 75 cents as its share. The pub- Supp. 1909, p. 1138). Montpelier, etc.,
lished rules also provided that, where the Railroad v. United States, 187 Fed. 271,
point of destination of a shipment was 109 C. C. A. 532.

between any two points named in the 59. Trackage charges paid by railroad

schedules, the rate should be the same as to stockyard company. — Willoughby v.

to the next more distant point named. Chicag(j Junction R., etc., Co., 50 N. J.

Held, that the tariff rate to Montpelier lu|. n.-ifl, 25 Atl. 277.

should be construed as applying to the 60. Shipment to points beyond carri-

station in that city, and that where de- er's line. — United States v. Standard Oil

fendant received coal for its own use, Co., 148 Fed. 719.
which it received at such station and



§ 4088 CARRIERS. 3704

Milling' in Transit Agreement. — A "milling in transit" agreement, by which
the railroad contracts to credit on the freight charges on manufactured goods any
freight on raw material shipped to the factory, is not violative of this section.^ ^
It is no longer open to question that milling in transit arrangements by which
a railroad contracts to credit on the freight charges on manufactured goods any
freight on raw material shipped to the factory are recognized as valid agreements,
which may be lawfully entered into between shippers and carriers."^- It is well
understood that at the present time this principle is applied to the movement of
many commodities. Generally, in its application, the raw material pays the local
rate into the point of manufacture. When afterwards the manufactured product
goes forward, it is transported upon a rate which would be applicable to the prod-
uct, had it originated in its manufactured state at the point where the raw material
was received for transportation, whatever has been paid into the mill being ac-
counted for in this final adjustment. Under this or some equivalent arrangement
at the present time, grain of all kind is milled and otherwise treated in transit;
flour is blended ; cotton is compressed ; lumber is dressed, and perhaps otherwise
manufactured; live stock is stopped oft' to test the market.^^ It may be urged
with much force that the act to regulate commerce does not sanction arrange-
ments of this kind, and the commission, early in its history, intimated that such
might finally be its conclusion. "^^ Such practice were, however, in use to a con-
siderable extent at the time of the passage of the act, and since then they have
become universal. To abrogate these privileges would be to confiscate thousands
and probably millions of dollars in value, by rendering worthless industrial plants
which have been constructed upon the faith of their continuation. Nor is it a
forced construction of the statute to hold that, when the product goes forward to
the point of consumption, it but completes the journey upon which it entered
when the raw material was taken up. There can be no doubt that the application
of this principle has cheapened the cost of transportation, and probably of manu-
facture. ^^^

Manner of Calculating Rate. — Whether the raw material pays the local rate
into the point of manufacture, and afterwards the manufactured product pays
a lower rate, calculated from point of original shipment, or whether the raw ma-
terial pays the local rates, and this is credited in whole or in part upon the trans-
portation of the manufactured products subsequently shipped, result is the same
in principle; the one being, in the language of the interstate commerce commis-
sion, "an equivalent arrangement" of the other, and neither contravening the
mandate of the law devised to protect shippers from unjust discrimination,
whether the same arises from extortion or from unlawful rebates granted to a
favored few.''^^

Validity Dependent upon Circumstances of Particular Case. — The le-
gality of the principle of milling in transit arrangements being recognized,
whether each special agreement will be upheld depends upon the varying circum-
stances attendant upon its making; but it can not be affirmed that such an agree-
ment as is here under consideration can be declared to be, by its very terms, vio-
lative of the laws prohibiting unlawful rebates.'^"

61. MUling in transit agreement.-Lau- ^ 65. Central Yellow Pine Ass'n v. V. S.
rel Cotton Mills v. Gulf, etc., R. Co., 84 & P- R- Co., 1 Inters Commerce Com
Miss. 339, 37 So. 134, 66 L. R. A. 453. R^p. 703; Laurel Cotton Mills ^'- Gulf

^« T , ^ . ,,.,, r- If V etc., R. Co., 84 Miss. 339, 37 So. 134, 66

62. Laurel Cotton Mills v. Gulf, etc., l r A 453

R. Co., 84 Miss. 339, 37 So. 134, 66 L. gg " -^^^^^^ of calculating rate.— Laurel



Online LibraryThomas Johnson MichieA treatise on the law of carriers (Volume 4) → online text (page 113 of 214)