Chicago, M. & St. P. R. Co. v. United States, 366 U.S. 745 (1962)

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Author: Justice Douglas

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Chicago, M. & St. P. R. Co. v. United States, 366 U.S. 745 (1962)

MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK concurs, dissenting.

Four lines pass through the Spokane gateway to the West Coast: The Milwaukee, the Northern Pacific, and the Great Northern, that reach Puget Sound, and the S. P. & S., that reaches Portland, Oregon. The "triangle" referred to by the Commission has its apex in Spokane and its two base points in Portland and Seattle-Tacoma. The S. P. & S. is owned 50% by the Great Northern and 50% by the Northern Pacific.

The Milwaukee is at present under a disadvantage in shipments via the Spokane gateway. The disadvantage is not in service or facilities for service, but in the rate structure. When the Milwaukee -- a road that reaches to Chicago -- wants to ship goods to Portland over the shortest route -- the S. P. & S. -- it must quote combination rates. When the Great Northern and the Northern Pacific make those shipments, they get a preferred joint rate on a through route via Spokane. The result is to "close the Spokane gateway in a commercial sense" so far as the Milwaukee is concerned. 300 I.C.C. 453, 457. The advantage which the S. P. & S. affords the Great Northern and Northern Pacific was stated by the Commission in Portland Chamber of Commerce v. Oregon R.& N. Co., 19 I.C.C. 265, 283,

It is used by the Great Northern and Northern Pacific in the transportation of all business between coast and interior points which can be handled more cheaply over it than over the existing lines of the Great Northern or Northern Pacific.

That is a monopolistic advantage; it is control over traffic which the two lines are not entitled to exploit to the exclusion of the Milwaukee.

"Through routes" are the rule, § 1(4), and the maintenance of discriminatory "combination rates," the exception. Under the terms of § 15(3), the Commission is to establish the former whenever "necessary or desirable in the public interest." Only in § 15(4) do we have an exception to this policy. Since 1910, Congress has recognized a railroad’s limited right not to be "short hauled," that is, not to have to carry over its lines traffic originating on, or destined to, another line when the entire carriage could as well have taken place on its own line. Here, the Northern Lines claim that they, together with the jointly owned S. P. & S., make up a single system which the Milwaukee wants to short haul.

The question presented concerns the meaning of the words "common management or control" as they are used in § 15(4) of the Act.

First. If the Great Northern and Northern Pacific are to be granted the special monopolistic protection now extended, § 15(4) needs to be rewritten. It says that the Commission shall not

require any carrier . . . to embrace in such route substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith.

The section is framed in the singular. When the short haul protection was first given, the amended § 15 referred to "carrier or carriers" seven times (36 Stat. 551-553) and "line or lines" twice (36 Stat. 553). So it seems apparent that, when the plural was intended, the plural was used. Senator Elkins, in explaining the provision, spoke in the singular:

The road that initiates the freight and starts it on its movement in interstate commerce should not be required, where it is a line not unreasonably long, to transfer its business from its own road to that of a competitor, especially when the commerce initiated by it can be as promptly and safely transported from the point of shipment to the point of destination by its road as by the line of its competitor.

45 Cong.Rec. 3476. (Emphasis added.)

The Senate Report spoke of the short haul protection as extending to a railroad "having a line of its own between two designated termini." S.Rep. No. 355, 61st Cong., 2d Sess., p. 10. While the Transportation Act of 1940 greatly expanded the meaning of "control," the new definition was not made applicable to § 15(4), because it was thought "undesirable to make any change in the interpretation of present law" in that regard.{1} H.R.Rep. No. 2832, 76th Cong., 3d Sess., p. 63.

Second. Prior to the 1940 legislation, the Commission had held that joint ownership by two or more railroads was not sufficient to create "common management or control" within the meaning of § 15(4). Absorption of Switching Charges, 157 I.C.C. 129, 132; Manufacturers R. Co. v. Ahnapee & W. R. Co., 172 I.C.C. 554, 564. Those two cases involved a terminal railroad jointly owned by 15 connecting roads. On oral argument, counsel for the Commission conceded that those decisions are out of line with the present one. If control by 15 roads is not "common" control within the meaning of § 15(4), I fail to see how control by two railroads is.{2} The other cases relied upon by the Court did not involve § 15(4).

Cases such as Blackshear Mfg. Co. v. Atlantic Coast Line R. Co., 87 I.C.C. 654, are irrelevant. There, the Commission was concerned with what rates to fix that were "single line" and what rates that were "joint line." It defined "single line rates" as those applicable over "single lines of railway or over two or more lines under the same general management and control," and it defined "joint line rates" as those applicable "only when the lines embraced in the route are not under common ownership or control." Id., 664. It defined the term "carriers under the same management and control" as carriers

generally controlled through ownership, lease, or otherwise to the extent of controlling traffic policy, even though separate corporate entity may be maintained.

Id., 664. "Common ownership an control" for ratemaking purposes was an innovation of the Commission, not a statutory term. The same is true of the other line of ratemaking cases to which the Court refers -- the ones represented by Chicago, M. & St. P. R. Co. v. Minneapolis Civic & Commerce Ass’n, 247 U.S. 490. There, two railroads owning a third which, in turn, owned terminal tracks made no charge for use of the terminal against traffic moving over its lines, but did not charge for its use by a competitor. This line of cases -- like those involving "single line" rates -- is concerned with just rates and rates that are nondiscriminatory. Economies of operation will not disappear merely because a carrier has competition. Of course, a monopoly position may make an affiliated short line more profitable, but I do not think that that is the sole reason for denying such short lines "arbitraries."

Section 15(4) deals with the highly specialized problem of the short haul. The "short haul" protection needs to be narrowly construed, lest it too end up as a device to discriminate against competitors and foreclose them from a market. That is why, I think, it was closely confined by Congress and put in the singular, not the plural, and not extended to group activities of railroads such as are involved here and in the terminal cases.

I would reverse the judgment below, and remand the case to the Commission for further proceedings.

1. The Court admits that Congress refused to broaden the protection of § 15(4) in 1940. Yet it seems to think this refusal of no relevance. If Congress has refused "short haul" protection to indirectly controlled lines, is it to be lightly assumed that that protection extends to both owners who jointly control a third line?

2. In Helix Milling Co. v. Great Northern R. Co., 287 I.C.C. 77, shippers wanted through routes and joint rates on the Great Northern, the Northern Pacific, and the S. P. & S. via the Spokane gateway. The Great Northern objected on the basis of the short haul protection afforded by § 15(4) of the Act. The Commission recognized that the short haul issue was involved, and made the findings as to the need for through routes on the assumption that the through routes would short haul the objecting road. But no analysis or discussion of the present problem was made. Cf. West Coast Lumbermen’s Assn. v. Chicago, M. & St. P. R. Co., 129 I.C.C. 363, 364. It should be noted that Alabama, T. & N. R. Co. v. Southern R. Co., 148 I.C.C. 708, 711, cited by the Court, does not involve joint control under § 15(4).

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Chicago: Douglas, "Douglas, J., Dissenting," Chicago, M. & St. P. R. Co. v. United States, 366 U.S. 745 (1962) in 366 U.S. 745 366 U.S. 757–366 U.S. 760. Original Sources, accessed September 21, 2018, http://www.originalsources.com/Document.aspx?DocID=CNE473HQEMGFLT3.

MLA: Douglas. "Douglas, J., Dissenting." Chicago, M. & St. P. R. Co. v. United States, 366 U.S. 745 (1962), in 366 U.S. 745, pp. 366 U.S. 757–366 U.S. 760. Original Sources. 21 Sep. 2018. www.originalsources.com/Document.aspx?DocID=CNE473HQEMGFLT3.

Harvard: Douglas, 'Douglas, J., Dissenting' in Chicago, M. & St. P. R. Co. v. United States, 366 U.S. 745 (1962). cited in 1962, 366 U.S. 745, pp.366 U.S. 757–366 U.S. 760. Original Sources, retrieved 21 September 2018, from http://www.originalsources.com/Document.aspx?DocID=CNE473HQEMGFLT3.