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UNITED STATES v. INTERSTATE COMMERCE COMMISSION ET AL.

decided: December 17, 1956.

UNITED STATES
v.
INTERSTATE COMMERCE COMMISSION ET AL.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA.

Warren, Black, Reed, Frankfurter, Douglas, Burton, Clark, Minton, Harlan; Brennan took no part in the consideration or decision of this case.

Author: Reed

[ 352 U.S. Page 160]

 MR. JUSTICE REED delivered the opinion of the Court.

This appeal requires a determination of whether railroads serving the port of Norfolk, Virginia, must grant the United States an allowance for the Government's performance of certain wharfage and handling services on its own export freight. For shippers who conform to the requirements of the tariff, the railroads assume these charges as a part of the rate. The United States, however, found it impractical to conform to the tariff requirements.

The present litigation was instituted pursuant to 28 U. S. C. § 2325 in a three-judge District Court of the District of Columbia by the United States, through its Department of the Army, against the Interstate Commerce Commission and the United States, to set aside the Commission's order in United States v. Aberdeen & Rockfish R. Co., 289 I. C. C. 49. That order dismissed a complaint filed by the United States on November 20, 1951, against several named railroads charging them with violations of the Interstate Commerce Act. The District Court, one judge dissenting, dismissed the complaint. 132 F.Supp. 34. We noted probable jurisdiction. 350 U.S. 930.

Since May 1, 1951, the railroads have refused to pay an allowance to the Army for the wharfage and handling*fn1 services the Army performs on military export traffic passing through Army base piers in Norfolk, Virginia. The railroads have assumed in their tariffs the obligation to

[ 352 U.S. Page 161]

     furnish these accessorial services for all shippers that comply with their tariffs. And, in accordance with these tariffs, the railroads have furnished the services for commercial shippers at public sections of the same piers without additional charge. These services were performed for the Army and the railroads by the same private company -- for the Army under contract to carry out its orders for terminal and storage services; for the railroads by contract to act as the carriers' agent in accordance with their tariffs.

The Army sought a determination that the railroads' refusal to make an allowance to it to the same extent that the railroads paid the private company, Stevenson & Young, for handling of private shipments subjected the Government to unjust discrimination and constituted an unreasonable practice in violation of §§ 1, 2, 3, and 6 of the Interstate Commerce Act.*fn2 The Army also requested

[ 352 U.S. Page 162]

     an order that the railroads cease and desist from such refusal in the future.*fn3

The transfer of export freight from rail carriers to outbound water carriers is made on piers or wharves that allow the unloading of freight from railroad cars to within reach of ships' tackle. Railroads are under no statutory obligation to furnish such piers or to unload carlot freight, Pennsylvania R. Co. v. Kittanning Co., 253 U.S. 319, 323.*fn4 In general the railroads have taken on the duty of wharfage and handling for freight consigned for overseas shipment.*fn5 In some instances railroads have charged for the use of the piers ("wharfage") and the necessary "handling" separately from their charge for

[ 352 U.S. Page 163]

     line-haul transportation. In other cases there has been only a single factor export rate (one inclusive charge) providing for limited shipside delivery with the railroad furnishing these accessorial services pursuant to their tariffs at no extra charge to the shipper. The latter practice has been generally followed by railroads serving North Atlantic ports. Where railroads do not have their own piers, they have provided these services by contracting with commercial terminal operators.

I.

The Norfolk piers, involved in this matter, were managed by such operators. They were built by the United States after World War I and have been leased in part or in whole to a series of commercial operators since then. The leases were cancelled during World War II but they were leased to Stevenson & Young, a private terminal operator, at the end of that war. The railroads here involved, using the single factor shipside rate described above, contracted with Stevenson & Young, as their agent, to perform the wharfage and handling for 25cent per ton for wharfage and 75cent per ton for handling, on both commercial and military freight. But with the advent of the Korean hostilities, the Government again cancelled the leases and the Army took entire control of the piers. Apparently the military shipments require special handling and storage. To assure its complete satisfaction, the Army hired Stevenson & Young to perform those services under a general pier-operating contract for the Army.*fn6

[ 352 U.S. Page 164]

     The unused portions of the piers were later released by the Government, by a contract dated December 28, 1951, for the commercial operations of Stevenson & Young. By that contract Stevenson & Young leased the unused parts for 1952 from the United States, for a public commercial maritime terminal. It was over these leased portions of the piers that the lessee carried on its public warehousing activities in accordance with the railroad tariffs.

A typical tariff arrangement appears in the note below. It is the basic exhibit in this case.*fn7 It was bottomed on

[ 352 U.S. Page 165]

     a contract of April 5, 1947, between the Pennsylvania Railroad and Stevenson & Young. By that contract Stevenson & Young, as a public wharfinger, agreed to act "as directed by the Railroad" and as its agent for wharfage and handling of "export, import, coastwise and intercoastal freight" in accordance with the tariff upon the facilities it acquired on the Army base. The agent assumed responsibility for freight charges and care of freight in its charge. It agreed, paragraph 4, that:

"The Terminal [Stevenson & Young] shall provide adequate facilities for the handling and storage of the freight subject to this agreement, shall provide access to the Railroad or its agent, the Norfolk and Portsmouth Belt Line Railroad, for the delivery of cars to and from shipside without interference or

[ 352 U.S. Page 166]

     interruption, and shall load and unload cars promptly without delay of freight or railroad equipment."

Paragraph 13 said:

"This agreement shall terminate absolutely and immediately whenever the Terminal ceases to operate the said facilities as a public wharfinger for the handling of freight, and in any event shall be terminable by either party on thirty days notice in writing."

A large amount of private commercial traffic continued over the released portions of the piers, and the railroads continued to absorb the cost of that wharfage and handling by paying Stevenson & Young $1.00 per ton of freight.

The result of the Army's insistence on operating its own pier facilities is that the Army pays the same export rates without receiving wharfage and handling services as commercial shippers do for whom the railroads provide those services at no additional charge. Because the Army provides these services itself, it claims a right to ...


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