H. K. Porter Company, Inc. v. Central Vermont Railway, Inc.

PETITIONER:H. K. Porter Company, Inc.
RESPONDENT:Central Vermont Railway, Inc.
LOCATION:Mapp’s Residence

DOCKET NO.: 257
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 366 US 272 (1961)
ARGUED: Apr 20, 1961
DECIDED: May 22, 1961

Facts of the case

Question

  • Oral Argument – April 20, 1961 (Part 1)
  • Audio Transcription for Oral Argument – April 20, 1961 (Part 1) in H. K. Porter Company, Inc. v. Central Vermont Railway, Inc.

    Audio Transcription for Oral Argument – April 20, 1961 (Part 2) in H. K. Porter Company, Inc. v. Central Vermont Railway, Inc.

    Richard A. Solomon:

    — Chief Justice, members of the Court.

    Before the recess, I had outlined the facts of this case.

    Now, these facts are not disputed and upon the basis of these facts, the Commission made a determination which is also not disputed and that is that there was in fact undue preference to the — people in official territory and in fact undue prejudice to the people in southern territory.

    This conclusion led to an order directing them to do away with the undue discrimination and this has been attacked solely on the grounds of jurisdiction, the jurisdictional issues of course being whether the Commission had any jurisdiction in this situation since both — both of the rates were international rates.

    Now, briefly, on the jurisdictional question with respect to why we don’t believe the unreasonableness part of this case is properly before the Court.

    The Commission’s decision discusses the unreasonableness of the rate and its report, starting on page 61 and ending on page 79, reaches the conclusion that the rate was unreasonable and also that it would form the basis of a reparations order.

    But if you look at the order of the Commission on page 81 of the record, you will see that this order is directed solely to the question of ordering the carriers to do away with the prejudicial rate structure.

    There is no order directing the establishment of any reasonable rate.

    There is no reparations order.

    This is not unusual.

    What the Commission did was, as far as the reasonableness and reparations point, it issued a preliminary determination here and said, “Filed necessary information pursuing to Rule 1.101 and subsequently, will get around to making reparations order.”

    Therefore, the only final action of the Commission which was before the District Court was the action of the Court on page 81 directing these carriers to end the prejudicial rate structure.

    The reasonableness was not before the Court and as a matter of fact, if a final reparations order had been issued, it still couldn’t have come before this Court because it’s established by United States against I.C.C. and other cases cited in our brief that final reparations orders do not go to a three-judge District Courts of the type that we had below here, they go to single-judge District Courts.

    In other words, to the extent that the District Court, the three-judge District Court here, purported to discuss to — and find improper the Commission’s reasonableness finding, they were without jurisdiction because there was no final order on the subject and because there — that Court would not have jurisdiction if there had been a final order.

    John M. Harlan II:

    (Inaudible)

    Richard A. Solomon:

    The order of the Commission, Your Honor, directs them to eliminate the prejudicial rate.

    This Court has held in the Texas and Pacific case as you’re aware that where a Commission order of that nature is issued, there must be an alternative available to the railroads.

    There is such an alternative here.

    This order doesn’t say which they should take, but they may eliminate this discrepancy in one of two manners.

    They can withdraw their concurrence to the joint rates now in existence to official territory which would mean they would file reasonable and non-discriminatory domestic rates from the border to official territory points and eliminate the discrepancy in that way or if they don’t choose to do that and this is their option, they can undo the discrimination by lowering their domestic rates now in effect from the border to southern territory.

    But they have under this Commission order and this is made perfectly clear in the supplemental opinion that the Commission issued later on, they have this option of eliminating this discrepancy in either way they wish.

    John M. Harlan II:

    (Inaudible) see that factual situation now to all states.

    Richard A. Solomon:

    Oh yes, that’s right.

    Now, if as we suggest you vacate the order on reasonableness, that order of the District Court would not exist.

    Presumably what would happen would be that the Commission, while on the proper filings, would issue a reparations order and if the carriers didn’t choose to comply with it under the ordinary procedures, the shippers would sue and then that issue would be before the Court in a proper manner.

    Now, let me get to the merits of my jurisdictional argument with respect to the undue prejudice business.

    The problem here, to the extent there’s a problem, comes from the fact that the Interstate Commerce Act, and I suggest primarily is a matter of constitutional requirements, provides that the I.C.C. does have authority over international railroad transportation but only has authority, “but only insofar if such transportation takes place within the Unites States.”

    In other words, it has authority over international railroad transportation insofar as it takes place within the United States.

    Now, there have been a series of decisions in this Court of which you will hear more of later.

    The News Syndicate case at volume 273, the Lewis-Simas-Jones case at volume 283, the Great Northern versus Sullivan case at volume 294 in which this Court has passed upon what is the authority of the Commission to determine and hold liable American carriers for the unreasonableness of an international rate.

    Richard A. Solomon:

    And I think it can be summed up that the present situation on reasonableness is that if the carriers enter into a joint through rate voluntarily, they are liable for the reasonableness of that rate, jointly and severally, with the Canadian carriers.

    If instead they enter into a combination rate, of the type here, or rather they file their tariff from the border and the Canadians file their tariff to the border, then the cases seem to indicate that the carriers usually are only liable for the reasonableness of the part of the order that they have filed from the border to the American destinations.

    As because of these findings in rate cases, presumably that the District Court thought the only issue in the case, and this appears on page 272 of the record, the only issue in the entire case was whether the Commission had jurisdiction over the portion of the transportation between the Canadian mines and Newport and East Alburgh, Vermont.

    Hugo L. Black:

    What page did you say?

    Richard A. Solomon:

    Page —

    Hugo L. Black:

    I thought you said 272.

    Richard A. Solomon:

    I — I’m sorry, I mean 242, sir, quite right.

    You see the — the District Court starts off its opinion saying, “A single question is presented, does the Commission have jurisdiction over the foreign factor because it involves transportation within the United States?”

    Now, we submit that that is an — an issue, maybe a decisive issue.

    Certainly, an important issue in deciding whether the Commission could find that the international rate itself here was reasonable or unreasonable.

    But we submit that that isn’t the problem and that is out of the case and the question is not whether a rate is reasonable or not but whether the relationship between two rates is such that they cause undue discrimination within the United States.

    Because the old case in this Court, United States against Illinois Central at volume 263, makes perfectly clear that even though both of two rates are reasonable and even though some of the carriers participating in these rates are beyond the Commission’s jurisdiction, that if one or more carriers that are part of both rates, have it within their power to alleviate the discrepancy that the Commission has it within its power to order that discrepancy be — be alleviated, then what is the jurisdictional question here, the real jurisdictional question?

    Well, I presume there are two possibilities.

    The first question would be, “Is the Commission estopped form looking into this situation at all merely because these two rates happen to be international rates?

    Does the fact that the joint through rate is an international rate and the combination through rate is an international rate estop the Commission from looking at the situation at all?”

    The other question presumably would be, “If — if they can look at it and find what’s obviously true that they do result in discrimination, can they do anything about it within the territorial jurisdiction of the United States?”

    As I understand the argument of the railroads, their argument is primarily the first.

    They say that we have the right to file a local U.S. tariff from the border to the various points of destination in the United States and if we do that, we’re only liable for the reasonableness of that rate.

    And therefore, you cannot look to the international rate for any purpose whatsoever because we’re not liable, they say, for the reasonableness of the international rate.

    John M. Harlan II:

    (Inaudible)

    Richard A. Solomon:

    There is none and as far as the undue prejudice is concerned — well, let me go back briefly.

    You said the U.S. portion, I don’t want to misstate it from the standpoint of my colleagues here, the argument maybe as to what is the U.S. portion, but there is no argument that the rates from Newport at East Alburgh to southern territory are unreasonable.

    Earl Warren:

    Well, is there any finding that it is discriminatory from our border to the south as compared with the — to the trip from our border to Pennsylvania?

    Richard A. Solomon:

    No Your Honor there isn’t and — and there couldn’t be such a finding because the discrimination isn’t because of any theoretical transportation from the border or these Vermont points to official territory of the south.

    The discrimination is on through routes paid for one time from the Quebec points either to official territory or the Quebec points to southern territory.

    The discrimination is caused by the fact that we have a joint though rate which Mr. McDonald admits they’re entirely liable for, a joint through rate to official territory, but a refusal to enter into joint through rates to southern territory.

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    What?

    Charles E. Whittaker:

    (Inaudible) joint through, it is not in contest as such?

    Richard A. Solomon:

    I think it’s very much in contest.

    Richard A. Solomon:

    Mr. McDonald would like to forget about it.

    Mr. McDonald says the only thing in contest is the rate to southern territory, but of course, that misses the whole point Your Honor.

    Undue prejudice cannot be caused by one thing.

    It’s a relationship of two rates.

    The undue prejudice here is caused by the fact that the joint through rates to official territory is prejudicial when contrasted with the absence of a joint through rate to southern territory.

    Charles E. Whittaker:

    That’s what produces the prejudice in the preference, but is the joint through rate — is there any finding that if as such was unreasonable?

    Richard A. Solomon:

    There’s no finding that either of these rates — well, now, excuse me, there is no finding that the joint through rate as such is unreasonable, but you may have prejudice, Your Honor even if you have two rates which in and of themselves are reasonable.

    Reasonableness is arranged.

    You may have two rates which considered alone are perfectly reasonable and still cause a prejudice which the Commission has authority to undo.

    So when you —

    Hugo L. Black:

    Could you explain to me, I don’t quite understand it yet.

    The language that I can get forgetting that their — just forget now that there’s anything named joint through rates.

    Richard A. Solomon:

    Yes, sir.

    Hugo L. Black:

    Just forget that, what is the prejudicial claim and what acts you have?

    Richard A. Solomon:

    The prejudice which has been found, Your Honor is that it costs less to ship this asbestos to places in Pennsylvania or Chicago or in the Northeast territory than it does to — to ship it to southern territory and not only less because of the distance and space, but less because of the preferential rate structure.

    Hugo L. Black:

    Who gets the money for the rate?

    Richard A. Solomon:

    The railroads get the money for the rate.

    Hugo L. Black:

    Do they divide it?

    Richard A. Solomon:

    They divide it but the railroads have agreed among themselves to a preferential rate to official territory.

    Hugo L. Black:

    You mean our railroads have agreed with the —

    Richard A. Solomon:

    Canadian railroad.

    Hugo L. Black:

    Canadian railroad.

    Richard A. Solomon:

    To a preferential rate to official territory —

    Hugo L. Black:

    The rate which —

    Richard A. Solomon:

    — which they are unwilling to agree to for as far as southern territory is concerned and the Commission has —

    Hugo L. Black:

    So that you have whatever you call it or — as I understand it, a rate from Canada to Pennsylvania which is less than the rate from Canada to North Carolina.

    Richard A. Solomon:

    Yes, and not only less because of distances but less because of the rate structure itself.

    Hugo L. Black:

    Yes, because they fixed it that way.

    Richard A. Solomon:

    Because they fixed it that way and the Commission has said “unfix it” and they say, either do away — you can take your choice as to how you undue it but undo it.

    Felix Frankfurter:

    You’re not dealing with the rates here but these relations of rates.

    Richard A. Solomon:

    Absolute.

    That’s right.

    William J. Brennan, Jr.:

    And what — what — do we know what joint through rate in North Carolina would be?

    Richard A. Solomon:

    Well —

    William J. Brennan, Jr.:

    It could be the same as that —

    Richard A. Solomon:

    No, you cannot know what a joint through rate to California —

    William J. Brennan, Jr.:

    That’s it.

    Richard A. Solomon:

    — would be because that’s a matter of agreement.

    William J. Brennan, Jr.:

    So (Inaudible)

    Richard A. Solomon:

    But — but let me —

    William J. Brennan, Jr.:

    Yes.

    Richard A. Solomon:

    I think I can answer that very quickly because the Commission has no authority to order these carriers to enter into a joint through rate with the Canadians and they haven’t ordered them to do so.

    Now, conceivably, they could — could do so, but the Commission can’t order them to do that because the Commission cannot go beyond its borders and require the Canadian companies to enter into an — a joint agreement with the American companies.

    Hugo L. Black:

    What did it order?

    Richard A. Solomon:

    It ordered the American companies to remove this discrimination and if they don’t do what Justice Brennan was suggesting but which we can’t order them to do, they can do it by two ways that we can order them to do.

    One, they can remove the joint through rate to official territory, put both rates on a par, both combination rates or two, within the existing rate structure, they can cut down on the part of the combination rate that they charge to southern territories, cut their rate form the border to the southern territories and equalize in that manner.

    Felix Frankfurter:

    But isn’t — isn’t — Mr. Solomon, isn’t the disharmony between the two rates, namely, the joint rate into official territory is a combination rate into southern territory?

    Isn’t that disparity or disharmony as you conceive it, due to the fact that they have entered into a joint rate which is lawfully been entered into?

    Is that right?

    Richard A. Solomon:

    I can’t — okay, I won’t say it’s lawfully been entered into.

    Felix Frankfurter:

    Well, then I’ll withdraw the lawfully, at least it’s been entered into under circumstances that the Commission can’t control as such?

    Richard A. Solomon:

    As such.

    Felix Frankfurter:

    Alright nor can the Commission bring about — I’m not — my — this is a question in the difference.

    Richard A. Solomon:

    Yes.

    Felix Frankfurter:

    — I’m not — it isn’t — it’s not an argument of this question, nor can it compel a joint rate to the southern territory because that involves control over the Canadian railroad which it hasn’t got, is that right?

    Richard A. Solomon:

    It cannot order the American railroads to enter into a joint rate with Canada.

    It can order the American railroads to remove themselves —

    Felix Frankfurter:

    I understand that.

    Richard A. Solomon:

    — from the joint.

    Felix Frankfurter:

    And — and here, was reaching —

    Richard A. Solomon:

    No.

    Felix Frankfurter:

    I want to go slow and see what difficulty is here whether — namely, whether the Commission isn’t trying to split the devil around the stump.

    If this were all in — within the territory of the United States, there’d be no problem, would there?

    Richard A. Solomon:

    That’s right, no question.

    Felix Frankfurter:

    Because it would control the situation through its power to compel to do or undo joint rates, is that right?

    Richard A. Solomon:

    That’s right.

    Felix Frankfurter:

    It has no such power because Canada intervened.

    Richard A. Solomon:

    I don’t agree with that sir because if —

    Felix Frankfurter:

    No, no, no.

    I’m not saying —

    Richard A. Solomon:

    I — I can’t agree with that premise.

    Felix Frankfurter:

    Antitrust — it cannot bring about that result by virtue of control over joint rates.

    Richard A. Solomon:

    I think it can but in part.

    Felix Frankfurter:

    Well, it — if it — alright.

    Richard A. Solomon:

    It can in part —

    Felix Frankfurter:

    But the consequences — it can, I understand that but not the fact.

    It can’t compel either the abolition or the entering into of joint rate in this situation, can it?

    Richard A. Solomon:

    I think it can compel the abolition.

    Felix Frankfurter:

    Alright (Voice Overlap) It can, the abolition in result but can it — can it tell the American railroads not to have joint rates with the Canadians?

    Richard A. Solomon:

    If it were not for the decision of this Court, a five to four decision of this Court in the Texas and Pacific case in 294 U.S., the answer to that question would be clearly, yes.

    Felix Frankfurter:

    And what good is it to say if it weren’t the law then if — if it — if it wasn’t the law, it would be the law but it isn’t the law.

    Richard A. Solomon:

    Well —

    Felix Frankfurter:

    That’s what you said.

    Richard A. Solomon:

    No, no, no this (Inaudible)

    Felix Frankfurter:

    You want us to reverse that case?

    Richard A. Solomon:

    No, you don’t have to.

    The Texas and Pacific case said that where you are directing an American carrier to alleviate an undue prejudice, you must give them an option as to how they alleviate it.

    You mustn’t just say cut down this rate or you mustn’t say just raise this rate, you must give them an option.

    Now, the Commission can and has given an option of that very nature in this case because they do have an option to cut down the higher rate by cutting down their domestic rates from the border and they do have an option of raising the lower rate by withdrawing from the joint rates.

    Felix Frankfurter:

    But this was all in Continental-United States (Inaudible), it wouldn’t have to give them an option.

    Felix Frankfurter:

    It could direct the — the —

    Richard A. Solomon:

    No, we’d still have to give them this option in —

    Felix Frankfurter:

    You mean it could direct entering into a joint rate.

    Richard A. Solomon:

    Oh yes, yes sir.

    If —

    Felix Frankfurter:

    If you’re — I’m not — do you think I’m attacking your conclusion.

    I’m not doing that at all.

    I’m trying to analyze it which is a different thing.

    All I’m saying is that if this weren’t all this — if this activity were performed in the United States, it could deal with it very easily, couldn’t it?

    Richard A. Solomon:

    You deal with it in many ways.

    Felix Frankfurter:

    In many ways, alright.

    Richard A. Solomon:

    Yes, sir.

    Felix Frankfurter:

    It is circumscribed it’s limited in dealing with it by virtue of the participation of a non-controllable Canadian carrier, is that right?

    Richard A. Solomon:

    That’s the issue, right.

    That’s the issue.

    Felix Frankfurter:

    But — well I’m — but it can’t deal with it by ordering joint rate.

    Richard A. Solomon:

    That’s correct, that’s correct.

    Felix Frankfurter:

    You don’t seem — you seem to shy away as though you think I’m — there’s some trap in my place.

    Richard A. Solomon:

    I’m sorry.

    It cannot deal with it in one particular manner.

    It could otherwise deal with it, yes sir.

    Felix Frankfurter:

    Now, therefore, the question arises whether — since it can, since this situation has arisen by virtue of the power of the carriers to enter into joint rates beyond the control as such, confronts some comfort as to my qualification as such, as such the I.C.C. cannot deal with the joint rate coming from Canada, can it?

    It can’t say — well if you should stop having a joint rate or it can’t — you reduce the joint rate.

    Richard A. Solomon:

    No, it can — it can certainly deal with joint rates coming from Canada.

    Felix Frankfurter:

    I didn’t say deal with, I said order a which is a different thing.

    Richard A. Solomon:

    No, it cannot order a joint rate, right.

    Felix Frankfurter:

    Alright.

    Hugo L. Black:

    Do you say that it can have all but it does not have power to do that, outlaw discrimination brought about to — by joint rate which is voluntarily in the district.

    Richard A. Solomon:

    Exactly and we say that there isn’t any jurisdictional problem because in doing so, it doesn’t have to go beyond the borders of the United States except to look at the rates which are filed within the United States, in that sense, it’s going beyond the borders but all of these various cases if you look at them go beyond the borders to look and see what the international joint rate is.

    Other than that, it is merely ordering American carriers to take action within America which is action unilateral in the sense that it is not action that the Canadian carriers have to have anything to do with to alleviate this rate.

    Richard A. Solomon:

    And we say that that does not cause any jurisdictional problem.

    That is the regulation of an international rate insofar as it takes place within the United States but I have to —

    Felix Frankfurter:

    But that — that isn’t the question, you’re not arguing the abstract question here.

    I don’t think the question put by — where was it, the District Court?

    Is — is that the question?

    I don’t think that’s the question.

    Richard A. Solomon:

    The question —

    Felix Frankfurter:

    That it can enter into a — into a — where is it, the open — the Government brief.

    The question I think is abstractly stated there, where is it, just a second.

    Well, I saw something.

    The question is in the abstract thing does the Commissioner of jurisdiction over the foreign factor or a combination of international rate.

    You agree with that, that that’s the issue?

    Richard A. Solomon:

    No, we don’t think that’s the issue.

    Felix Frankfurter:

    That’s a very abstract way of putting it, isn’t it?

    Richard A. Solomon:

    That’s what the District Court thought was the issue.

    We don’t think that has anything to do with this case.

    John M. Harlan II:

    (Inaudible)

    Richard A. Solomon:

    Well, either didn’t deal with it or dealt with it incorrectly.

    I think it really didn’t deal with it.

    Felix Frankfurter:

    If — if you’d be mobilized — if you’ll be mobilized I — I think I could get some help out of you which is what I’m looking for.

    Richard A. Solomon:

    Excuse me.

    [Laughs]

    Felix Frankfurter:

    Either — there’s no hostility that maybe — that’s not what you conceive to be the question, is it, whether has jurisdiction over the foreign factor?

    Richard A. Solomon:

    We don’t think that that has any relationship to our problem at all.

    Felix Frankfurter:

    Well, we’ll hear Mr. Ginnane.

    The question is assuming they can’t do anything about the arrangement entered into with the Canadian character because that’s a Canadian character, can it deal with the consequences of such an arrangement.

    Isn’t that the question?

    Richard A. Solomon:

    That’s the question —

    Felix Frankfurter:

    Alright.

    Richard A. Solomon:

    — and the answer is yes because they can do it within the United States.

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    The Canadian carrier is transporting asbestos from mines to the —

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    Right.

    Charles E. Whittaker:

    And that — suppose they (Inaudible)

    Richard A. Solomon:

    Actually, they don’t.

    They only have a proportional rate which is only for going further on but it — yes.

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    If it was to the border, it wouldn’t.

    Charles E. Whittaker:

    If it’s to the border, yes.

    Richard A. Solomon:

    Right.

    Yes.

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    That’s right.

    Charles E. Whittaker:

    (Inaudible)

    Richard A. Solomon:

    That is right.

    Felix Frankfurter:

    And the rate — the carriers say that situation derived from our ability or our power beyond your control of condemnation as such into entering into an arrangement with the Canadian carrier and that Canadian character is under no obligation so far as this — the United States authority is concerned, into entering into a similar arrangement going south.

    Isn’t that true as a fact?

    Richard A. Solomon:

    That is true as a fact.

    Felix Frankfurter:

    But you are gun shy —

    Richard A. Solomon:

    Let me give you an example, another case of this Court, the Saint Louis Brownsville railway against the Brownsville District case.

    There, the problem was whether a carrier should be required to provide cars from Brownsville across the Mexican border.

    And it was argued that it should do so because it was providing cars from a couple of other ports.

    Well, Justice Butler speaking for this Court said in that case, of course that we have no authority, nobody has any authority to require these carriers to provide cars across the Mexican border.

    But if they provide them for one shipper, then we have a discrimination problem.

    We have the same thing here.

    These people aren’t under any obligation to enter into a joint route to southern territory and they’re under no obligation to — not enter into a joint route to official territory.

    But if they voluntarily act and their voluntary actions within their control produce a discriminatory situation then the Commission has authority to do something about it.

    Felix Frankfurter:

    In other words, the advantage you take of being — of participating in an — in an international transaction doesn’t preclude the jurisdiction to deal with the national part of that transaction.

    Richard A. Solomon:

    Exactly.

    Richard A. Solomon:

    What these gentlemen are asking is the right to completely discriminate between sections of the country as long as its international trail.

    Felix Frankfurter:

    May I, instead of interrupting you Mr. Ginnane, ask you whether a mere reading of the Interstate Commerce Act is an answer to this question? Suppose I very conscientiously and zealously read and reread the Interstate Commerce Act as such would I get an answer to this question?

    Robert W. Ginnane:

    One qualification as interpreted by this Court’s decision in Texas & Pacific case requiring a carrier to cease undue preference and prejudice whether it’s within the United States entirely or whether a part of it involves international traffic, the carrier must be aloud the choice as to whether it’s going to eliminate the preference by moving one rate up or the other down.

    Charles E. Whittaker:

    (Inaudible)

    Robert W. Ginnane:

    Only on carriers operating within the United States.

    We agree entirely with the argument which the Department of Justice has made and the Section 31 point, preference and prejudice.

    First, I’d like to comment briefly upon the suggestion of the Department of Justice that the issue of the railroads’ liability of reparations under Section 1 of the Act was not properly before the District Court or before this Court.

    It is suggested that that issue is not just justiciable until the Commission issues a final dollars and cents reparation order.

    And — and on the theory that when such an order is finally issued and if the railroads do not voluntarily obey it and pay then at that point under Section 16 of the Act, the shippers may maintain a suit on that order.

    I don’t deny the logic of the suggestion.

    However, we are inclined to believe that this Court need not accept the suggestion, that for practical reasons, it could take a contrary view.

    To begin with, a determination of liability as distinguished from the computation of damages has been held to be —

    Felix Frankfurter:

    (Inaudible)

    Robert W. Ginnane:

    — something which the courts can determine separately from the computation of damages.

    Now moreover, since the question of the Commission’s jurisdiction with respect to preference and prejudice and is jurisdiction with respect to the reasonableness of the rates, arises out of the same transportation problem, it seems to us unfortunate that the two questions of jurisdiction arising out of the same transportation situation would have to be litigated separately by the parties by separate routes.

    If both questions are now resolved, there would remain for any court in which a suit was brought on a reparations order, the detail questions as to whether the reparation for — are accurately computed, whether the responsibility for particular shipments were assigned against the — the carriers that were truly participated in the shipments.

    If the Court should agree with the suggestion of the United States, then we have a further concern as they do.

    The opinion of the Court below while disclaiming authority to consider the validity of reparation orders is entirely devoted to discussion of the Commission’s jurisdiction to determine the reasonableness of the rates which is the very jurisdictional issue which would underlie in a subsequent reparations order.

    So we would urge that if this Court should agree with the suggestion of the Department of Justice then it should vacate the decision below insofar as it relates to the Commission’s jurisdiction to determine the reasonableness of rates.

    So that in any suit which may later be brought by these shippers on any future reparations order issued by the Commission, they will not then be cut off by a res judicata effect of the opinion of the three-judge court.

    Assuming that Your Honors will hold that the issue of the Commission’s jurisdiction as the reasonableness of the rates is properly before this Court, we contend the contrary to the court below that the Commission did have jurisdiction to determine that the through combination rates from the Canadian origins in this case to the southern destination points were unjust and unreasonable and that the shippers were therefore entitled to reparations.

    John M. Harlan II:

    Could I ask you one question? (Inaudible)

    Robert W. Ginnane:

    Not on this record.

    Reparations maybe had for discrimination, for undue preference and prejudice.

    That takes a different type of proof, a heavy burden of proof, a different burden of proof than is involved in getting reparations based upon the unreasonableness of the rates.

    And in — and on this record in this case, the — the Commission’s finding that the railroads were reliable for reparations was based entirely upon its conclusion that the rates were unreasonable.

    Charles E. Whittaker:

    (Inaudible) what about this proposition?

    Suppose that this — these Canadian railroads published a rate, filed it in Canada and was approved of a very high sum from the mines to the Canadian — United States border and now then in this attack, you consider the whole combination rate from the mines to southern territory and then require the American railroads to absorb what may be a very highly false rate in Canada, do you?

    Robert W. Ginnane:

    Well, and as I will get to later in my argument, we would require that Canadian carriers to absorb somewhat to the extent that they perform transportation service within the United States.

    Charles E. Whittaker:

    Well that’s just two or three miles.

    Robert W. Ginnane:

    But on the other hand, these carriers, Canadian and the Official Territory American carriers, they’re dealing together all the time, establishment of joint rates divisions and so on.

    If the — if the Canadian segment of rate is just outrageously high, the traffic isn’t going to move on particular routes, that’s all and there won’t be a thing we can do about it but of course the Canadian Commission has jurisdiction at that point.

    We have no reason to believe that they’re anymore indifferent to the interest of — of shippers than the Interstate Commerce Commission is.

    We can leave that to them I suggest.

    Now, the rates in question consist of two factors.

    This cut through combination rate consists of two factors, a so-called proportional rate applicable only on the through traffic, established by the Canadian lines from the Canadian mines, the origins, to East Alburgh and Newport in Vermont.

    And the second factor of this combination rate, are the various classes or joint commodity rates which the American carriers have established from East Alburgh and Newport to the southern destinations, mostly in North and South Carolina.

    East Alburgh is three miles south of the border.

    Newport is five miles south of the border.

    The Canadian lines here involved run into East — East Alburgh and Newport where they physically interchange traffic.

    Now the act for — Section 1 of the Interstate Commerce Act specifically provides that it applies to international rail traffic but only insofar as such transportation takes place within the United States.

    Now, in this case the shippers attacked the entire through combination rate as unreasonable.

    They did not attack the factor consisting of the rates from Alburgh and Newport to the south.

    Now, the appellee railroads raise only a question of jurisdiction.

    They contend that they publish rates from the boundary to the south, that’s the American railroads, and that these rates are not attacked.

    And they contend that the proportional rates of the Canadian lines, the other factor in the combination rate, are not subject to the American Commission’s jurisdiction.

    The Commission rejected the — the railroads’ contention that they had published rates to the boundary.

    Noting the Newport and Alburgh were three and five miles south of the boundary respectively, the Commission held or they had found that the proportional rates maintained by the Canadian lines to these points, that’s Alburgh and Newport, obligate those carriers to provide substantial transportation service within the United States.

    Now, it’s undisputed that Canadian railroad performing transportation service within the United States is just as much subject to the Interstate Commerce Act as — as an American railroad is or the same as an American railroad performing service in Canada is subject to Canadian law.

    However, the railroads contend that as a practical matter, East Alburgh and Newport should be considered as border points because they were right on the Canadian-American border.

    And the court below agreed with us.

    It said, “Surely the fact that interchange occurs a few miles on one side of the boundary instead of the few miles in the other side is a fortuitous event on which Congress could not have intended that the Commission’s jurisdiction should depend.”

    Now, we admit that Government regulation around an international boundary, in fact all sorts of business around an international boundary, is a technical business.

    It involves arbitrary lines.

    Now, the Interstate Commerce Commission has routinely treated as border points such places as Detroit, Port Huron, Nogales on the Mexican border which in fact are right adjacent to the border.

    We haven’t taken the position that that the border at Detroit is the middle of the Detroit River.

    We have assumed that Detroit right on the boundary river is a boundary point, but a line must be draw — applied somewhere.

    There comes a point at which the Interstate Commerce Act must be applied with Canadian carriers operating within the United States.

    For reasons of topography or operating convenience, those interchange points theoretically might be 10 or 15 miles south of the border and as an operating matter as a commercial matter that might be perfectly bona fide.

    No element of evasion involved.

    Charles E. Whittaker:

    (Inaudible)

    Robert W. Ginnane:

    Certainly and — and that’s why we treat Port Huron and Nogales, Detroit as being border points, but some, as I said at some point of distance, the Act should be applied.

    Now, we have — we have assumed — we assumed that that — that it is proper for the Commission to apply some flexibility and treat as border points those points that are on — right adjacent to it as on a boundary limit.

    But we submit that the Commission is not under on any obligation to treat as border points other interchange points, three to five miles inside United States and if those Canadian lines coming down to Alport — Alburgh and Newport, are not regarded as performing transportation within the United States so as to be subject to the act, then I suppose tomorrow they can take up the tracks they can sell it, they can scrap it.

    Well, that thought was too much for the court below.

    The court below said, “If for example the Canadian carriers sought to abandon interchange service between the interchange points of the border or if they sought to lease their trackage in the United States to another carrier, the Commission would clearly have jurisdiction.

    We agree.

    Felix Frankfurter:

    How — how would you get a hold of the Canadian carrier?

    Would — would you make an order and then the — the Court sustains the order as — as a practical thing the order — I suppose the Canadian carrier is located in Canada.

    Practically —

    Robert W. Ginnane:

    Well, take —

    Felix Frankfurter:

    — they obey.

    I — I assume practically, the obedience is given by —

    Robert W. Ginnane:

    But the tariffs here involved for example, are on the file of the Interstate Commerce Commission, they have an agent within the United States.

    Suppose they try to abandon and scrap the lines out there.

    We can go to a court —

    Felix Frankfurter:

    But the — we can ask them and say —

    Robert W. Ginnane:

    — we can ask a federal court.

    Felix Frankfurter:

    Must they have an agent in the United States?

    Robert W. Ginnane:

    Well, for all tariff purposes, yes.

    Felix Frankfurter:

    Pardon me?

    Robert W. Ginnane:

    For all tariff purposes, yes, but suppose they — they seek to abandon and scrap that three or five-mile segment o f line, we can —

    Felix Frankfurter:

    You could have an injunction against scrapping them, on whom would the injunction be served, to its agent?

    It is — as a matter of fact, where is he?

    Who is he?

    What is it?

    Robert W. Ginnane:

    It could be — it could be directed to the Quebec Central Railroad and — and in any — in any agents who are trying to tariff the tracks.

    I don’t think we’d have any trouble preventing the removal of the tracks.

    Felix Frankfurter:

    I wasn’t suggesting trouble.

    I just want to know how this action would be.

    Felix Frankfurter:

    I mean the prejudice, the — the individuals who would be actively in charge of their cars and their equipment.

    Robert W. Ginnane:

    I don’t think it would be a practical problem and here as the court below conceded their subject — their jurisdiction of the act for the purpose of regulation of abandonments and leasing, seems to us the same jurisdiction as applicable for rate purposes.

    John M. Harlan II:

    (Inaudible)

    Robert W. Ginnane:

    Because the jurisdictional provision in — in Section 1, paragraph 1 is the same.

    Foreign transportation — International Rail Transportation insofar as it takes place within the United States.

    The abandonment — the abandonment and leasing limitations are applicable only to carriers and transportation subject to our jurisdiction.

    And the court below didn’t dispute that.

    It really said as to the — as to the rate jurisdiction well in terms of the distance of these interchange points in the border, it’s de minimus and we submit that the problems of national jurisdiction should — can be treated de minimus only very carefully.

    They say the shippers’ complaint — well, I’m ahead of myself, that the Court agrees with us contrary to the court below and the situation for rate purposes is this.

    The United States Lines have established rates not to the border but to points in the United States south of the border.

    And the other element of the challenged combination rate is the proportional rate established by the Canadian lines from origin points in Canada to points in the United States.

    We argue that thus, both the United States and the Canadian lines have performed transportation subject to the Interstate Commerce Act.

    It’s is another way of saying that both elements of that through combination rate had been applied to transportation taking place within the United States.

    John M. Harlan II:

    (Inaudible)

    Richard A. Solomon:

    Yes.

    John M. Harlan II:

    (Inaudible)

    Robert W. Ginnane:

    As I say the, shipper’s complaint, leading right into your question Mr. Justice Harlan, challenged the entire combination rate.

    That was required as we see it by this Court’s decision in the Sullivan case and the Sullivan case involved international traffic between Canada and the United States.

    There were two rate factors.

    One was a proportional rate established by the Canadian carriers to the border.

    The other was another proportional rate established by the American carriers up to the border.

    When an American shipper tried to attack just the American proportion that — the proportional rate established by the American railroads, this Court said no, that a shipper seeking reparations must show that the entire through charge is unlawful, unreasonable.

    This Court analogized that the proportional rates in that case, even though they were separately established by the participating carriers as local rates, this Court analogized those proportionals to joint rates but it seems to us that the logic of the Sullivan decision clearly goes further.

    That there is no difference between separately established proportional rates which make up a through rate as in that case or separately established local rates which are used to do — make a through combination rate.

    It’s a combination rate whether it’s separately established proportional rates or separately established local rates.

    Felix Frankfurter:

    Does that mean because part of it intrudes into the United States, you can pass a judgment — you must pass judgment on the entirety.

    Robert W. Ginnane:

    That we must, yes.

    (Inaudible)

    Robert W. Ginnane:

    Great Northern Railroad Company v. Sullivan, 294 U.S. 458.

    Felix Frankfurter:

    And — and that is not, Mr. Ginnane because in any sense it has validity, the Commission assumed jurisdiction over the Canadian part of the traffic but in order to exercise jurisdiction of that which is it’s duty to exercise, namely the American part, it must take into account the whole of which the American is at part.

    Felix Frankfurter:

    Is that it?

    Robert W. Ginnane:

    Yes.

    Now, if the rates break right on the border in true sense, under the Sullivan case, before awarding reparations, we would have to look at the entire through rate, but the — but the liability would be limited to the Canadian — to the American carriers for their portion of the transportation up to the border.

    We’d have to look at the entire rate but our jurisdiction to impose liability would be limited to the American carriers that had established a rate right up to the border.

    Felix Frankfurter:

    Which means that you may find that there is either the proportional or the combination of the joint was unreasonable but you can’t assess the — the unreasonableness against the Canadian.

    You have to break up the share that belongs to the American, is that it?

    Robert W. Ginnane:

    As — as in the Sullivan case.

    There the — there the rates either broke on border points or as the tariff in that case showed at the international border near such and such town.

    Both the shippers’ complaint and the Commission’s finding that the shippers are entitled reparation ran against the United States and the Canadian lines who had participated in this transaction, this transportation from the Canadian origins to southern destinations.

    The appellants contend, and the decision below seems to suggest that the United States Lines which established rates up to Alburgh and Newport cannot be held responsible for an unlawful through combination rate which includes as one of its factors, the proportional rate applied by the Canadian lines in Alburgh and Newport North.

    In other words, they’re suggesting that the joint and — they admitted joint and severed liability of the participants in a joint rate, cannot be applied to the participants in a combination rate.

    We think this Court held to the contrary in the Sullivan case.

    In addition, both the Commission and the lower federal courts have applied joint and severed responsibility for the railroads participating in the combination rate composed of factors which were separately established by the participating carriers.

    That principle is very well summarized, we believe, in the Atlantic & Yadkin Railroad Company case in opinion by Judge Parker which is set — quoted from — in our brief at pages 42 and 44.

    John M. Harlan II:

    The Sullivan case is (Inaudible)

    Robert W. Ginnane:

    It was a combination, it’s a strange thing.

    It was a combination rate consisting of two proportions, separately established proportions.

    All or — all the phrase “proportional” there means they were just — they were used with each other on through traffic.

    They weren’t available to local traffic in Canada or to local traffic in this country.

    John M. Harlan II:

    (Inaudible)

    Robert W. Ginnane:

    Well, it sounds like a joint rate — rate but it wasn’t the — it wasn’t the result of express agreement with a later division.

    Each established its own proportional and in that sense, it was separately established as the local rates going into a combination rate.

    Felix Frankfurter:

    What — what was it proportioned to?

    I don’t —

    Robert W. Ginnane:

    In the Sullivan case?

    Felix Frankfurter:

    Pardon me?

    Robert W. Ginnane:

    In the Sullivan case, Your Honor?

    Felix Frankfurter:

    No in what you’ve just said, I mean if you got a — a proportional rate that is really in effect to joint rate, I don’t — I’m confused.

    Usually a proportional rate is proportionate.

    That isn’t the — that isn’t the normal usage, is it?

    Robert W. Ginnane:

    Well, it’s normal only in this instance.

    Proportional rates typically are available only through traffic.

    Felix Frankfurter:

    Yes.

    Robert W. Ginnane:

    Traffic moving goes through the interchange point.

    It would not be available on traffic, say, in the East Alburgh, destined for the East Alburgh or starting from East Alburgh and in the Sullivan case for example, there were two proportionals, each separately established by the participating carriers for their —

    Felix Frankfurter:

    In order to bring about a combination.

    Robert W. Ginnane:

    Of the combination rate just as much a combination rate as — as though that — that there were two local rates used to comprise the combination rate.

    Felix Frankfurter:

    Why — what’s — what’s the point of — what’s the technical of transportation reason for using that lingo?

    Robert W. Ginnane:

    It governs the applicability of the rate, whether it’s applicable to local traffic or to through traffic (Inaudible)

    Felix Frankfurter:

    Well, all it means is that filed with the Commission is the rate which — if there’s a combination used as against using merely the local purposes of what which is used in the combination.

    Is that all that is?

    I mean —

    Robert W. Ginnane:

    If I understand you correctly, sir, it’s as much a combination rate whether it’s made up of two — proportions — proportional rates.

    Felix Frankfurter:

    But the proportions —

    Robert W. Ginnane:

    (Inaudible)

    Felix Frankfurter:

    — are — is not available for the traffic of the second, is that right?

    Robert W. Ginnane:

    That’s right, only for through traffic, going through both segments.

    Felix Frankfurter:

    And that’s — so I ask again why it cause proportions — their proportions in relation to the second.

    Is that it?

    I’m — I’m confused.

    Robert W. Ginnane:

    No, it’s — it’s used to — to distinguish a rate applicable on through traffic as distinguished of any local rates which might be — which might be in the — in the published tariffs.

    Thank you.

    Earl Warren:

    Mr. McDonald.

    J. Edgar Mcdonald:

    Mr. Chief Justice, Associate Members of this Honorable Court.

    I hope I can do something to clarify what I think is the very simple issues before this Court and if I may say so at the outset without the slightest disrespect to either of my distinguished opponents, I’m amazed that neither the Department of Justice nor the Commission has seen fit to face up to what we say is the very, very simple issue that requires determination one way or the other by this Court, which we think was determined by the three-judge District Court.

    And that is this question of jurisdiction and whether it must be said to be determined on the basis of whether or not a rate applies to the actual international boundary line or whether the boundary line for practical purposes of rate making maybe regarded as some distance away from the exact international boundary line.

    And because of our thinking on that point, we say that the issue here is a simple one.

    The Interstate Commerce Commission either had jurisdiction over these complaints and the right to determine among the basis of recognized principles which it’s — usually applies in the conventional cases before it or it did not, in which event the complaints were defective on their respective faces and should have been dismissed forthwith.

    Now, that’s the simple position that we have taken since the first complaint was filed a number of years ago.

    It’s the position we adhered to when four additional complaints were filed.

    J. Edgar Mcdonald:

    It’s the position we adhered to in our efforts to have the case reconsidered by the Interstate Commerce Commission and at the position that we, I’m glad to say, adhered to successfully before the three-judge court.

    Now, I think it helps considerably to or should help considerably to this Court’s consideration of this matter, if I undertook to talk a minute about the nature of the rates involved and what I understand to be the Court’s prior dealing with jurisdictional matters affecting international traffic.

    Now, first of all, as you’ve already heard, there are such things as joint rates.

    A rate that applies as a single entity from a point of origin regardless of whether it’s in a foreign country or this country to a destination regardless of where it is.

    In any event, it’s a single entity, one rate, one factor which applies and is made in the first instance by the voluntary agreement of the various railroads participating therein.

    William O. Douglas:

    That’s — that’s the order of (Inaudible)

    J. Edgar Mcdonald:

    It might be, Mr. Justice Douglas except that I’d like to say this as long as you ask me about it that in case this is of any enlightenment to the Court.

    Proportional rates are what I would call a qualified rate whether they’d be a single line rate, made without anybody else’s agreement as the Canadian rates were in this instance or whether they are joint rates made up of the agreement of two or more lines.

    But the significance to me of an — of a proportional rate is the fact that it’s something special, it’s a limited rate, it doesn’t have general application.

    In this instance, as I think is clear from the record in the various briefs, if a shipment of this particular commodity were made from one of the origin mines to either East Alburgh or Newport, Vermont, the — the Canadian factor which is involved in these proceedings would have had no application because there’s a specific tariff provision that restricts its application in the case like that and — or good, bad or in different reasons throughout the — for more than 50 to 75 years at least.

    I have no hesitation in saying, it has been — those — that type of rate has been referred to in the commerce world as a proportional rate.

    It’s — they maybe made for a number of reasons, largely, I would say competitive reasons perhaps where one railroad or group of railroads may think it necessary to take something less than they would normally do for purposes of transportation competition or purposes of industrial competition, for purposes if you choose a foreign competition, the production in foreign lands that the railroad industry as such may feel some necessity of attempting to assist the industry, the manufacture on the one hand and itself on the other as transportation agency.

    Now, the other type of rate of course is a local rate which maybe — which usually would be a rate published by one railroad for so called local application and that it would be general.

    That rate would have — if that — if these Canadian rates had been published as so called local rates there would have been no restriction on their use whether the traffic, being shipped under them, were to come to rest finally at East Alburgh or Newport or whether it was to continue which journey down to Charlotte, North Carolina.

    Now, it seems to me that most of the disagreement in the — involved in this litigation stems from the failure of the Commission and our friends who argue for them to distinguish what this Court has previously said and done with respect to the Commission’s jurisdiction over international traffic in the sense that you have heretofore been dealing with reparation cases, cases where rates for the future were not involved and reparation cases in which joint rates were involved.

    And it seems to me, from the beginning and — and still does, that the law in that respect is crystal clear.

    As a matter of fact, I think it originated with the Commission itself who first enunciated the general doctrine in a case that’s referred to, I’m sure through all our briefs, the so called Black Horse Tobacco case reported in 17 I.C.C. 588, as long ago as 1910.

    And the gist of the generally recognized rule is that American and I — I emphasize the word American, American railroads have a clear alternative with respect to their participation in international traffic.

    They may publish rates to and from the border, in which event they are liable only for the lawfulness of those rates.

    And when I say lawfulness, I mean lawfulness whether measured under Section 1, reasonableness or unreasonableness or Section 3 preference or prejudice.

    Or they can enter into joint rates voluntarily in which event they become jointly and severally liable for the lawfulness of those rates.

    And again, it doesn’t make too much difference, I don’t suppose whether you talk Section 1 or 3 or both.

    So that I hearsay if I may repeat that the simple question here is the — is whether the Commission had jurisdiction.

    It either did or did not and I say this Court, no more than the three-judge court, doesn’t have to journey too far into the woods and fail to see the trees if I may use a common expression.

    In this instance, you’ve been told a little bit about already and we have discussed at length in our brief three cases that seems to me are all that need to be examined in order for this Court to make its determination of the issue before it.

    The first is the so called News Syndicate case reported at 275 U.S. 179.

    The second is the Lewis-Simas case reported at 283 U.S. 654 and the third is the Great Northern versus Sullivan case to which, Mr. Ginnane has already referred.

    Now, each of those cases was a reparation case.

    I — I was inclined to say that reparation here is an incidental aspect of it.

    That’s the tail on the horse.

    J. Edgar Mcdonald:

    I’m sure my good friend, Mr. Ussery wouldn’t agree with me on that point but I do say that before you start to worry about whether the rates have been unreasonable or otherwise unlawful in the past, the big thing to be determined here is the question of whether or not the Commission had jurisdiction to take these complaints and deal with them at the outset.

    And you can forget all about the reparation insofar as that particular aspect is concerned because if they didn’t have jurisdiction, that’s the end of the line.

    If they did, I — I guess we’re at the end of the line and are wasting our time and that of the Court’s in arguing to —

    Felix Frankfurter:

    Would you —

    J. Edgar Mcdonald:

    — the contrary.

    Felix Frankfurter:

    — would you mind stating jurisdiction of what?

    J. Edgar Mcdonald:

    Jurisdiction over the rates applicable on this traffic and if I may say that, there has been —

    Felix Frankfurter:

    And — and that’s because — and what — that’s because this originated in Canada?

    J. Edgar Mcdonald:

    Is — did you say is that because?

    Felix Frankfurter:

    And — and is that because the rates originated on traffic?

    J. Edgar Mcdonald:

    I wouldn’t say it was because of that, Mr. Justice Frankfurter.

    I would say it wouldn’t make any difference whether the traffic were moving into Canada, rather than others.

    Felix Frankfurter:

    Well, I didn’t but with (Voice Overlap) that was involved.

    J. Edgar Mcdonald:

    Either way — that’s right, because international traffic is involved.

    Hugo L. Black:

    May I ask you one question —

    J. Edgar Mcdonald:

    Yes.

    Hugo L. Black:

    — before your argument goes to find to myself? Assuming that the Court — Commission has no jurisdiction to relieve against rates that are discriminatory, large numbers of sections in the country, is there any relief that a shipper could get?

    J. Edgar Mcdonald:

    I — I don’t have any doubt at all about it and we’ve said so in our brief specifically and I say this to you, Mr. Justice Black.

    The only thing wrong, I keep telling myself and I certainly in hope I’m right at this late stage of this litigation, the only thing wrong with this — with these complaints was the fact that they fail to assail the American factor of the rate.

    If they had done that and the Commission had made substantially the same determination that it did — well, they’d be —

    Hugo L. Black:

    Suppose — suppose it’s perfectly reasonable and that a lower rate is reasonable, that — that is on the brief.

    J. Edgar Mcdonald:

    Yes, sir.

    Hugo L. Black:

    Suppose that a discrimination —

    J. Edgar Mcdonald:

    Yes, sir.

    Hugo L. Black:

    — favored one section of some shippers of against another.

    The part of it isn’t — is a — it’s a segment of a through rate from Canada.

    What’s the relief there if it’s discriminatory?

    J. Edgar Mcdonald:

    My answer to you, sir it is no different except in this respect.

    Again, I say the rate to be assailed as causing the preference or prejudice under Section 3 must be the rate from the border, the American factor and not the through rate regardless of — I won’t say regardless.

    John M. Harlan II:

    But can we do that under the Sullivan case?

    J. Edgar Mcdonald:

    I — I see no reason why not, Mr. Justice Harlan.

    The — I — I wouldn’t be frank with you if I didn’t concede that the Sullivan case has given us lots of reason to ponder and think.

    But we think we have the answer to the Sullivan case and unlike Mr. Ginnane here, his client does too.

    We say the answer to the Sullivan case is clear, the — the Court, this Court said that the issue there was whether the uncontroverted facts, it — it appears on the very first page of the decision, page 459, whether the uncontroverted facts and those found by the Commission are sufficient to warrant the conclusion that he, the plaintiff there, sustained — sustained damage in consequence of the — of a violation of the act by the defendant.

    And the conclusion of the Court set forth at the — the end of its opinion on page 43 — 463 rather, is that it follows that retention by the defendant of an undue proportion of just and reasonable charges, did not damage the plaintiff.

    If I can without getting too involved in that, the Court there refused to look at the question of whether or not they had a right to deal with the overall thing jurisdictionally I don’t — I think.

    I don’t think jurisdiction as such was raised and simply —

    Hugo L. Black:

    Suppose these through rates —

    J. Edgar Mcdonald:

    — passed it on — excuse me sir.

    Hugo L. Black:

    I thought you’ve been —

    J. Edgar Mcdonald:

    Simply dealt with it as a question of whether or not there was proper proof of damage independent of any jurisdictional question.

    Yes Mr. Justice?

    Hugo L. Black:

    Suppose the through rates had been made from inside the border to southern and official territory and with the same discrimination?

    J. Edgar Mcdonald:

    Yes, sir.

    Hugo L. Black:

    Would the Commission — could the Commission have forbidden the discrimination?

    J. Edgar Mcdonald:

    Yes sir.

    If these — if these had been —

    Hugo L. Black:

    And get it (Voice Overlap) if — if — then you have to say that even though they could if they — they combined with the railroad in Canada, the result of which is precisely the same discrimination.

    J. Edgar Mcdonald:

    I don’t think it is.

    Hugo L. Black:

    There’s no jurisdiction.

    J. Edgar Mcdonald:

    I don’t think it is precisely the same discrimination because in the one case you’d have a joint rate, the assailed rate from Quebec origin to Charlotte, assailed that is creating either undue and unreasonable rates and charges or unduly preferential and prejudicial rates and charges versus other joint rates maintained to official territory, Ambler, Pennsylvania specifically.

    But if there had been rates published and we say they were from the boundary — from the border to Ambler — to Charlotte, then we say the question of their lawfulness must be measured by them alone.

    You don’t go beyond the border to look at them for any reason and there’s nothing I can find in this or any of the court preceding that says anything different in that.

    Hugo L. Black:

    Even though in North Carolina would be having to pay considerably more than the official territory on a line on a trip and most of it was in this country?

    J. Edgar Mcdonald:

    Well, Mr. Justice Black, the answer to — my answer to that if I were counsel to the other side would be to tell them to file a complaint with the Interstate Congress Commission and assail the legality of the American factor.

    And if they could show that that rate and charge produced unlawfulness, they’d be entitled to relief.

    Now, on that very point let me make this observation that one of the things wrong with all of these is that our Canadian friends, good neighbors as they are, the Canadian railroads in particular here, would be free where Canadian factors are involved to do as they please with respect to the level of them and neither the Commission nor the courts of the United States could do anything about that.

    They could raise or lower them as they saw fit.

    And I don’t deny the — the validity of an argument that they might in so doing make it economically impossible to transport the merchandise, but that’s quite a different thing, that’s not the point.

    The point here is whether or not we in fact publish rates to or from the border.

    J. Edgar Mcdonald:

    Now, it seems to me the answer to that question is one that the Commission itself gave a long time ago.

    In — Carey Manufacturing Co. v. G.T.W. Ry. Co, reported at 36 I.C.C. 203 which coincidentally happened to be a complaint involving asbestos.

    The Commission said that their jurisdiction attaches at ports of entry and without going into any considerable detail let me point out that we have listed in appendices (c) — in appendix (c) of our brief a large number of cases where the Commission itself has in effect followed that statement of principle that they would not deal with the measure of the rate that applied from a so-called border point within the United States to a destination in Canada or vise versa.

    They have gone further than that and where joint rates were involved, they have by and large disclaimed any right to deal with the fact of beyond — with — not with the measure of the rates, not the factor, the measure of the — single entity rates beyond the port of entry or the interchange point.

    But for the first time that I can discover in our particular case, they say that that sort of a situation is not sufficient to — to deprive them of jurisdiction that on the contrary, it gives them jurisdiction because the Canadian factor, says the Commission, obligates the Canadian carriers to perform substantial transportation service within the United States.

    Felix Frankfurter:

    Mr. McDonald.

    J. Edgar Mcdonald:

    Yes, sir.

    Felix Frankfurter:

    May I revert to an answer you gave to Justice Black a little while ago when he asked you whether that means there’s no relief for inequities that the situation may disclose.

    J. Edgar Mcdonald:

    Yes, sir.

    Felix Frankfurter:

    And you quite eagerly said, of course there is if they had changed their complaint so as to direct itself to allege the unreasonableness or improper relations, the remedy would be different, was it not?

    Does your answer imply that merely by change of formulation of lawyer’s statement of the case, the same result could be reached here?

    J. Edgar Mcdonald:

    By results, you mean the — the —

    Felix Frankfurter:

    The actual —

    J. Edgar Mcdonald:

    The general nature of the type of thing that the Commission has given us in its report and order.

    Felix Frankfurter:

    That’s right, yes.

    Yes.

    J. Edgar Mcdonald:

    I would say exactly the same thing with them.

    I’ll go this far Mr. —

    Felix Frankfurter:

    You mean —

    J. Edgar Mcdonald:

    — Justice Frankfurter and I —

    Felix Frankfurter:

    Well, you said that before.

    J. Edgar Mcdonald:

    I may only prove that I’m not as smart as I should be.

    I would be–

    Felix Frankfurter:

    Well, I’m referring about you.

    J. Edgar Mcdonald:

    [Attempt to Laughter]

    I’m not smart enough to do that either, sir.

    I have said to our own colleagues in discussing this case that if the — if these complaints had assailed the American factor from East Alburgh or Newport to Charlotte, made the same allegations and offered evidence with respect to those on a merit basis the Commission would probably have reached a decision entirely favorable to them.

    Felix Frankfurter:

    Well, substantially this order, you say —

    J. Edgar Mcdonald:

    Substantially this order I think.

    Yes, sir.

    Felix Frankfurter:

    Then — then this is a very like a lawsuit under the common law pleading.

    This is isn’t — hasn’t got much substance to it then.

    J. Edgar Mcdonald:

    Well, if that —

    Felix Frankfurter:

    I don’t mean to say — I don’t mean say an erroneous enunciation of a principle may not be mischievous in consequences but all I’m saying is that — you — you said it before in great candor enough.

    What I get from you is that a redrafting of the complaint would bring about the same result.

    That’s what you’ve said, haven’t you?

    J. Edgar Mcdonald:

    I say that in my honest judgment as somebody with a lot of traffic as well as legal experience, that’s my considered judgment, yes sir.

    And a proper complaint on a proper record, I think the outcome would have been relevantly just as successful to the other side as this.

    William J. Brennan, Jr.:

    Yes, but is there —

    J. Edgar Mcdonald:

    But —

    William J. Brennan, Jr.:

    — a proper record here.

    J. Edgar Mcdonald:

    No, sir.

    No, sir because there is no —

    William J. Brennan, Jr.:

    Much away then?

    J. Edgar Mcdonald:

    Sir?

    William J. Brennan, Jr.:

    (Inaudible)

    Felix Frankfurter:

    No, no, no.

    J. Edgar Mcdonald:

    I’m not giving a thing away I don’t think [Laughter] because we say you see that if we’re correct on the jurisdictional contention we make, then the complaints were defective on their face and fall.

    There is certainly nothing in this record for example that deals with the measure, the lawfulness of the American factor as such.

    There’s no conclusion or finding by the Commission that the American factor as such and there’s no order directed to the American factor as such.

    And we say incidentally that all the Commission actually did was to throw in the statutory language insofar as transportation takes place within the United States in an attempt by giving that kind of lip service to the statute to get the overall jurisdiction to deal with the entire rate situation.

    John M. Harlan II:

    But on your theory as to how it is pledged that have been drawn, wouldn’t that necessarily involve the shipper to prove that you might be — American factor is (Inaudible)

    J. Edgar Mcdonald:

    I guess the answer to the —

    John M. Harlan II:

    And maybe the unreasonable part of it in here is entirely in the rest of the provision, the statute itself.

    J. Edgar Mcdonald:

    Well, if it in — if it in here is entirely in the rest of the rate, of course, his forum and his (Voice Overlap) complaint and everything —

    John M. Harlan II:

    (Inaudible), isn’t it?

    J. Edgar Mcdonald:

    Sorry?

    John M. Harlan II:

    That’s why the Sullivan case makes pretty good sense?

    J. Edgar Mcdonald:

    I don’t like to disagree with you, sir but the Sullivan case doesn’t make too much sense to me at all.

    John M. Harlan II:

    (Inaudible)

    J. Edgar Mcdonald:

    Except in — and except if I am correct in my analysis of what the only issue there was and what the Court — the only finding that the Court made and I get substantial comfort from the fact that the District Court in effect, seems to me to have said substantially the same thing.

    Charles E. Whittaker:

    Mr. McDonald.

    J. Edgar Mcdonald:

    Yes.

    Charles E. Whittaker:

    Could I ask you please?

    If the pleading has been filed on the (Inaudible)

    J. Edgar Mcdonald:

    Well, they’d be different in this respect and this respect only — only.

    Theoretically — well, I guess it’s been, say at the record.

    They would have been different in the sense that the rate from Newport or East Alburgh to Charlotte would be the assailed rate, the rate that allegedly caused the unlawfulness in those rates and the undue preference or prejudice by comparison with the other rates.

    Charles E. Whittaker:

    (Inaudible) that is wrong?

    J. Edgar Mcdonald:

    Assuming the same general type of record, the same general type of evidence and so on, I have no doubt in the world with this further qualification that the — the Commission there, because there’d be no limitation on their powers of proscription in fixing rates, would have been able to do — would have been able to say that the rate for the future, such and such a rate for the future would be a maximum reasonable rate for the railroads to apply from East Alburgh or Newport to Charlotte, number one.

    Number two, they could say, giving us an alternative that they are preferential or prejudicial and incidentally as this Court undoubtedly knows, they could still be reasonable but nevertheless preferential or prejudicial in violation of Section 3.

    But they could then give us an alternative order which left to us the choice of raising the one or lowering the other.

    Or third, because of good and sufficient reasons, they could exercise the authority granted them under Section 157 if I recall correctly affixing the exact measure of the rates to thereafter be maintained from both competitive origins in order to make the rates for the future, non-preferential and non-prejudicial.

    Charles E. Whittaker:

    On pleading of ambiguity that — so there may be an objection between a (Inaudible) just as the parties actually tried (Inaudible) and the judgment is not different and it could otherwise be, there’s no (Inaudible)

    J. Edgar Mcdonald:

    Well, that —

    Charles E. Whittaker:

    Is that right?

    J. Edgar Mcdonald:

    My answer to that of course is going to be a rather guarded one.

    I’m perfectly willing to give you my personal opinion as to what the Commission’s — Commission’s decision would have been on a complaint that put an issue in a — in a proper proceeding, the issues which I think should have been raised, but I don’t think it follows that — that an — in anyway we waive any right that we may have had or that we are now going to be in effect arguing out the Court by an expression of a personal opinion by myself as a — an expert or an ignoramus as to what the administrative agency like the Interstate Commerce Commission would or would not do on a given set of facts.

    I don’t think that follows the point.

    William J. Brennan, Jr.:

    (Voice Overlap) lawsuit if they would — if they — you want to — you’re right and they should’ve found in due course.

    You say they can’t have this question for that and file a new lawsuit and prove it all over.

    J. Edgar Mcdonald:

    That’s correct.

    We say that there’s no jurisdiction here in this thing — all thing falls and that’s in effect what that three-judge court has found.

    And I say —

    Felix Frankfurter:

    You may take care — you may — you may — by — on your theory, your — you don’t mind my saying so, skillful admission —

    J. Edgar Mcdonald:

    Thank you, sir.

    Felix Frankfurter:

    — your might so far as this cases is concerned be the best rates might change but I should suppose you and every other railroads dealing with — every other border carriers, if you were has a deep interest on the generality of the — of legal issue.

    J. Edgar Mcdonald:

    Oh absolutely yes sir.

    Felix Frankfurter:

    That’s the real —

    J. Edgar Mcdonald:

    That’s right and I — I don’t know what I did because I — I abstracted.

    J. Edgar Mcdonald:

    One of the answers to — to some of these questions I’ve been given and the reason I said Mr. Ginnane’s own client doesn’t agree with him appears in a decision by the Commission itself, in Yellow Jacket Boat Company Inc. versus H.S.N.T. and S.F. Ry. Co. reported at 305 I.C.C. 117, where the defendants in that case relied on Sullivan and said, “You can assail as an American factor alone, you got to assail the whole thing” and Interstate Commerce Commission doesn’t seem to agree with Mr. Ginnane there.

    They seem to agree with me.

    And I just pointed that out in the brief too because they say here that this doctrine that you have to assail the total rate applies only to domestic traffic.

    It doesn’t apply to international traffic.

    And least, I — I won’t take the Court’s time or perhaps my own to read at all but the discussion is rather protracted, appearing in pages 116 and 17 of the report.

    And they say there what I have said in effect that a local rate is complete in and of itself and it’s not dependent for its application upon a movement to or from beyond the border and in that respect differs from a proportional rate which is in the nature of a division of joint rate where shipments originating at Canadian points beyond the border move on local rates from the border to destinations in this country, the complaint maybe directed to the local rate or rates from the international boundary.

    No necessity according to the Commission in spite of Sullivan to assail the through rate.

    Charles E. Whittaker:

    Mr. McDonald, (Inaudible) just arguing based on the fact that you could claim (Inaudible) as too much.

    In other words, they involved the whole of the combination rates (Inaudible)

    J. Edgar Mcdonald:

    I think that the simple answer to that question, Mr. Justice Whittaker is yes.

    I would like to elaborate just a little bit on it if I may and —

    Hugo L. Black:

    Can I ask you one question before you — suppose you — suppose they had amended it?

    J. Edgar Mcdonald:

    If they had amended it, it would be the equivalent of a new complaint (Inaudible)

    Hugo L. Black:

    Could they had — could they have amended it and proceeded?

    J. Edgar Mcdonald:

    It’s common place to the amend complaints.

    Hugo L. Black:

    But it’s amended — amended to say what you say it should’ve said?

    J. Edgar Mcdonald:

    Yes, but if they have done that, Mr. Justice —

    Hugo L. Black:

    But why would that be jurisdictional?

    J. Edgar Mcdonald:

    Sir?

    Hugo L. Black:

    Why would your argument be of jurisdiction?

    J. Edgar Mcdonald:

    Well, if they had done that, it wouldn’t have been a jurisdiction or argument there because the whole record would thereupon be restricted to evidence related — relating to the American factor, the second factor of this combination rate situation.

    And important to one of my friends here, the amendment of the complaint would probably have wiped out considerable of limit — limit — considerable reparation by virtue of the operation of the statute of limitations which would have excluded anything that moved prior to the date of the amendment.

    That’s an important consideration from their standpoint.

    Charles E. Whittaker:

    If you agree that’s going to be amended, otherwise (Inaudible)

    J. Edgar Mcdonald:

    Well, the issue was actually tried in this — in this proceeding, in this litigation, Mr. Justice Whittaker, from beginning to end related to the entire transportation never to the transportation within the United States.

    Felix Frankfurter:

    Concretely, if — if the complaint had been as you conceded, in the alternative, I take it you would say there could be no reference, no — certainly no economic use made of anything that took place across the border?

    J. Edgar Mcdonald:

    That’s correct yes sir except in — maybe I answered you a little too fast there, Mr. Justice Frankfurter.

    I don’t — I guess my answer wouldn’t be necessarily so far as determining the lawfulness of the American factor for the future.

    The Commission — the complainants and the Commission could only properly have looked at the measure of rates applicable within the United States but they could have adverted to the fact as they undoubtedly would that the American factor rates were unlawful because we were maintaining joint rates to Ambler, Pennsylvania.

    And as to that, the Commission to some extent in agreement with Mr. Ginnane, the Commission would have the — have had to right to do two things.

    J. Edgar Mcdonald:

    They would have had the right to give us a cease and desist order.

    That’s clear, this Court has said so.

    They would also have had the right to award reparation for — so far as the American factor was concerned and they’d have had the right to proscribe a reasonable rate for the future from East Alburgh or Newport.

    They could go no further not — if I can — if I can —

    Felix Frankfurter:

    And may — may I —

    J. Edgar Mcdonald:

    Yes sir.

    Felix Frankfurter:

    — ask – add one more word.

    My difficulty — my real difficulty is that economically, from the point of view of — transposition economy, you cannot severe the American part from the Canadian part.

    What they charged, what a matter of — of railroad charges, what — what they (Inaudible) from their point of view as the railroad fixed by the — by the what do you call from colors of (Inaudible) rate.

    How can you disregard the Canadian part of it, the fact that they paid so much or not more or not less?

    J. Edgar Mcdonald:

    Well, I can simply say this to you in respect to that.

    That maybe an economic problem but it isn’t one that is — is something for this Court to deal with in deciding the legal question here, number one.

    Number two —

    Felix Frankfurter:

    Well, I mean in the context of the lawsuit.

    J. Edgar Mcdonald:

    Yes sir.

    Felix Frankfurter:

    I don’t see how you could shut out, how you could say, “This is merely a — an American?”

    J. Edgar Mcdonald:

    Well I would say this.

    Felix Frankfurter:

    (Inaudible) of transportation because it’s different.

    J. Edgar Mcdonald:

    Well, I would simply say this to you.

    So far as the measure, the level of the Canadian factor is concerned in a situation tried, as I would say this could’ve been tried, the level of rates within Canada afford no proper yardstick for determining the lawfulness of the American factors.

    Your entire transportation situation is different.

    Your — the standards of the — standards, the transportation factors of lawfulness within Canada are probably different than those that operate within the United States.

    Hugo L. Black:

    Does the record show whether — whether the Canadian railroad charged more for goods that were ultimately to be shipped to North Carolina than it did for carrying goods that were ultimately to be shipped to Pennsylvania?

    J. Edgar Mcdonald:

    I don’t honestly remember, Mr. Justice Black.

    The record certainly shows that with respect of the Carolina traffic, we charge rate X for the Canadian railroads, (Voice Overlap) we charge rate X for whatever that maybe (Voice Overlap)

    Hugo L. Black:

    What I’m trying to find out is that the record indicates that it cost, the Canadian railroad and the a motor transport goods that was going to — going to North Carolina, than to transport goods if they’re going to Pennsylvania.

    J. Edgar Mcdonald:

    There certainly is no cost evidence as such in the entire record that’s for sure.

    I can’t think of hand of any evidence that would cause me to give you an affirmative answer and rather than to answer you negatively and perhaps be wrong, I say frankly I don’t remember.

    Hugo L. Black:

    Was there anything that indicated whether they actually got less for that part of the leg of the journey because it was shipped to one place in this country rather than another?

    J. Edgar Mcdonald:

    I don’t remember that either and I take it, Mr. Ussery, my distinguished opponent in behalf of the complainants here is nodding his head no.

    J. Edgar Mcdonald:

    Well, I’m pretty sure the — and feel safer now in saying the answer to your question is no.

    Getting back to the question of interest —

    Earl Warren:

    Before you get off there, if there — if there is no difference in — the Canadian rates to our border, what are we — what are we fighting about?

    What is the difference between you and — and them?

    Isn’t the whole thing determined, the whole differential determined by what the — the railroads in this country do with those shipments?

    J. Edgar Mcdonald:

    No, I don’t think it is, Mr. Chief Justice.

    Earl Warren:

    Well my point, is this, I — I should understand it, I’m sure by now but I don’t.

    Suppose on — on shipment — one shipment to Pennsylvania and one to North Carolina cost X dollars to — to transport it from the — from the mine in Canada to the American border.

    Now, on the — on the one to the shipment to North Carolina, it cost X dollars to shipment to — to ship to the border.

    Now, what are we fighting about?

    Aren’t we fighting about what you say is — is the proper thing to fight about what the American railroads have done in connection with these rates?

    J. Edgar Mcdonald:

    I think, sir, I would try to answer you this way if I may.

    It might simplify the thinking of the Court and perhaps mine in answering your question if we forget all about Ambler and official territory for a moment because the situation by and large wouldn’t be any — any different except — the basic question wouldn’t be from my standpoint.

    If all that was involved here was a complaint, assail the lawfulness of a given rate from a Canadian origin to a — to a Charlotte destination where the rate charged on it was not a single entity rate but one made over Newport or East Alburgh, Vermont, my position still would be that the Commission has no jurisdiction to deal with the entire transportation rate in charge and to tell us what to do or what not to do about it except perhaps that — well, let me change — I’ll put it this way — except to say one of two things either take the position as we did here.

    They had jurisdiction in which event, they would undertake the fine that it was unreasonable for the past, although they could not as the prior discussion brought out proscribe or to require the establishment of a single factor through rate.

    They could give you instead a cease and desist order that would make you correct it insofar as the transportation takes place within the United States.

    And I think perhaps it’s a lot easier if we think of the single rate regardless of the Section 3 aspect of it because it’s an issue that is jurisdictional under the statute.

    Now, the statute is clear.

    I don’t argue at all that the Commission doesn’t have jurisdiction insofar as transportation takes place within the United States.

    I do argue as to what that means and I say the answer to it is to be found in the Commission’s decisions.

    For 40 years, they haven’t held as to the exact boundary line of the border.

    They have departed from it to the extent of 20 miles in the —

    Earl Warren:

    Well, we can — we’ll assume that but I still — I — I still don’t understand the situation.

    Let’s — let’s assume — well, I’ll start this.

    We’re fighting over dollars here aren’t we? Dollars to — to the railroad that and — and to the shippers?

    J. Edgar Mcdonald:

    Well —

    Earl Warren:

    Just — just a question of economics?

    J. Edgar Mcdonald:

    There’s — there’s certainly dollars involved.

    Earl Warren:

    Right.

    J. Edgar Mcdonald:

    But I’m not so sure that we’re here only because of the dollars involved in this litigation.

    Earl Warren:

    Well —

    J. Edgar Mcdonald:

    We’re here because of the principle involved.

    Earl Warren:

    Yes.

    J. Edgar Mcdonald:

    And the fact — that we’ve never been told that the Commission — by Commission or the Courts.

    Earl Warren:

    Let’s take —

    J. Edgar Mcdonald:

    It had jurisdiction where anything other than joint rate was involved.

    Earl Warren:

    Let’s take dollar wise.

    If — if this mine was right at the border, right at these towns where — where the exchange point in — in Vermont and you were transporting in one shipment to Pennsylvania and another one to Charlotte, North Carolina, would you be in any different financial position than you — than you are now granting that it cost X dollars to get from the present mine in — in Canada for either shipment?

    J. Edgar Mcdonald:

    Well, Mr. Chief Justice —

    Earl Warren:

    But — but —

    J. Edgar Mcdonald:

    — if I may, let me answer your question in this — in this fashion.

    I’d be willing to concede arguendo that that was the case, but to insist still that that’s no part of the issue which the Court is here required to determine, seems to me it’s — it’s very simple.

    Earl Warren:

    Well, did I under — and did I understand you to correct me at the beginning of your argument to say, “If — if the Court does have — if it does not have jurisdiction, of course the Government loses?”

    J. Edgar Mcdonald:

    Yes, sir.

    Earl Warren:

    If it does have jurisdiction, you lose?

    J. Edgar Mcdonald:

    That’s correct.

    Earl Warren:

    So it’s purely and simply a question of jurisdiction?

    J. Edgar Mcdonald:

    Yes, sir.

    Absolutely and I said that as clearly as I knew how in the three court — in the three-judge court action.

    I said that in the — in our briefs as well.

    And I say that the thing that has to be determined is whether or not behind the language of the statute the contentions of the Commission which in effect would say, “That unless you publish your rate to the exact boundary line, you haven’t complied with your statutory duty.”

    Is that that the law or is the law that you can publish a rate to a so-called border point, point which the Commission itself has characterized as points which for all practical purposes are international border points.

    In this instance, the District Court said, “Border points within the United States.”

    Now, in another proceeding, right in that same area, here we’re being hung for three or five miles of entry into the United States by Canadian carriers for the sole purpose of interchanging their traffic and they — they say that gives them jurisdiction.

    In another case where the — the port of entry and the interchange point was Highgate Springs and the distance was close to four miles right in between these two.

    Commission said that’s — that’s transportation within Canada and ignored that completely.

    Well, I’m old fashioned enough I guess to think that you just don’t say one thing means X today and Y tomorrow especially when you’re dealing with an administrative agency.

    Felix Frankfurter:

    Surely that’s the Highgate case?

    J. Edgar Mcdonald:

    That’s (Inaudible) and that’s cited in the appendix (d) of our brief Mr. —

    Felix Frankfurter:

    The green one, the green brief, Mr. McDonald?

    J. Edgar Mcdonald:

    Green.

    Yes, sir.

    Felix Frankfurter:

    Appendix (d), I gather?

    J. Edgar Mcdonald:

    It’s the last page of the document, 204 I.C.C. 284.

    Now —

    Felix Frankfurter:

    Does Mr. Ginnane deal with that case (Inaudible)?

    J. Edgar Mcdonald:

    No, sir.

    No.

    And may I say this in that connection.

    You’ll notice that the Commission’s report here has said that the publication of these Canadian rates to points just three or five miles inside the border obligated the Canadian carriers to perform substantial transportation service within the United States.

    It fails to say what that substantial transportation service was.

    It doesn’t — it hasn’t benefited from the admonishment that it has gotten a number of times by this Court, and particularly by Mr. Justice Frankfurter to make reports clear so that we know what they say, so the Court knows what they say and make it easier to rule upon the legality of the report and so on.

    Felix Frankfurter:

    I’ve been wondering in my mind, but I’m meaning to ask you or from Ginnane.

    Is there any kind of — a kind of fraternal or informal relation is there between the analog of the I.C.C. in Canada and the I.C.C.(Inaudible)

    J. Edgar Mcdonald:

    In all candor I know of none Mr. Justice Frankfurter.

    I do know that 30 years ago and we’ve cited in our briefs I think, generally speaking, the — the apparent informal agreement of the respective agencies was to let the Canadian agency deal with southbound rates coming into the United States.

    In other words, the — the originating rate making line and Commission would deal with it and similarly, northbound.

    That was an instance in which it seems to me the Commission without any notice at least has departed from its practice.

    Now, let me say this if I may because I’m sure my time is fast running.

    I say to you that that the — the fact of the Commission had given the railroads this rule or principle that they could publish rates to points like Highgate Springs or Newport and the like and that that would be recognized for all practical purposes as a border point is a rule that’s been in effect for 40 years.

    We say that when an agency like the Commission charged with the administration of the statute construes it in that fashion for 40 years.

    We have a right to rely on it.

    We say we did rely on it and therefore, that we are being done wrong by when the Commission now departs from it without any notification.

    Now, the Administrative Procedure Act, we say, provides a means whereby if the Commission for good and sufficient reasons decides that they should no longer do anything other than stick to the boundary line proper, they could’ve undertaken a formal proceeding that would’ve acquainted everybody in the country with the possibility of a change.

    Put them all on notice and if they thereafter required something different or adhered to some different principle, we would have had no cause for complaint.

    But they didn’t —

    Felix Frankfurter:

    Where in your — where in your brief you deal with the 40-year practice, namely administrative practice?

    J. Edgar Mcdonald:

    The — the 40-year practice?

    Felix Frankfurter:

    Yes.

    Hugo L. Black:

    Appendix (c)

    J. Edgar Mcdonald:

    Appendix (c) for one, it’s referred to through out the body of it but – – Appendix (c) in particular where we deal briefly with a lot of the cases that were dealt with.

    Felix Frankfurter:

    Does the Commission — does the Commission meet your contention on that one?

    J. Edgar Mcdonald:

    I don’t think so, no sir.

    Felix Frankfurter:

    I don’t mean satisfactorily meet it, as (Inaudible)

    J. Edgar Mcdonald:

    No, sir, I don’t think they’ve met it, more important I say they haven’t met yet.

    What I say is the crux of the whole thing is the publication of — or the maintenance of a rate to a point like East Alburgh, foes that satisfy the insofar as — the transportation takes place within the United States clause of the statute?

    Does transportation across the border on a Canadian rate to a point three or five miles inside of the border for the incidental purpose of letting go of the traffic for American transportation, is that the kind of transportation that the statute was intended to apply to?

    And I don’t think it is, we don think it is and that’s the reason we’re here.

    Felix Frankfurter:

    Well, you’re here because they brought you here, you won your case.[Attempt to Laughter]

    J. Edgar Mcdonald:

    Well, that’s true but it took a long time to get that far.

    Imagine we were the part of six or eight years in trying to get to the point where we got a three-judge court to agree with us.

    I’d like —

    Felix Frankfurter:

    If your theory was adopted and they started a new lawsuit, would take another six years?

    J. Edgar Mcdonald:

    It shouldn’t.

    Now, there’d be no more possibility for the kind of contentions that have been made here and I’m sure the — one of the moving reasons for instigating it.

    That would be gone.

    The possibility of getting reparation on traffic that moved 1950, 1951 or 1952 would’ve been wiped out by the operation of the statute of limitations.

    I — the part that’s almost entirely if not entirely from my prepared arguments, so I’m a little bit lost but I think I’d be infringing on the Court and probably overstepping my time.

    I will thank the Court and sit down.

    Richard A. Solomon:

    Mr. Chief Justice, do we have any time left?

    Earl Warren:

    Well, I — I think your time has — has expired.

    Did you have a question to ask, Mr. Ginnane —

    Felix Frankfurter:

    No, no, no.

    Earl Warren:

    — did you say?

    Felix Frankfurter:

    Well, I — I wouldn’t — I’d like to have his comment on the administrative —

    Earl Warren:

    Yes.

    Felix Frankfurter:

    What do you — what do you suggest —

    Earl Warren:

    This time, yes, you may.

    Would you answer the question please, Mr. Ginnane.

    Robert W. Ginnane:

    Into our relationship with the Canadian Commission?

    Felix Frankfurter:

    No.

    Well, no.

    That has — but the — the argument of administrative practice for 40 years.

    It’s just as — anything in there in the appendix (c)?

    Robert W. Ginnane:

    One cannot reconcile all the Commission’s decisions through the 40-year period.

    The great bulk on this —

    Felix Frankfurter:

    How many of them or rather what kind — was there a period when they shifted with a — shifted use?

    Robert W. Ginnane:

    I could pinpoint it that way.

    May I answer you in — at least in part this way?

    The great bulk of the cases on which the railroads rely are cases involving Detroit, Port Huron, Nogales, Buffalo and other towns or cities right on the border — right on the border’s grid which the Commission as routinely treated as being border points.

    Most of the cases fall in that category.

    Potter Stewart:

    But — but do you point to one with three and half a miles inside.

    Robert W. Ginnane:

    Three miles.

    Potter Stewart:

    (Inaudible)

    Robert W. Ginnane:

    Three or three and a half miles.

    Potter Stewart:

    And there are others like that?

    Robert W. Ginnane:

    That’s the one — the one in which you rely is most heavily.

    Not all of the decisions through 40 years can be entirely reconciled.

    Felix Frankfurter:

    What do you say to his suggestion that if the complaints were reshaped you would get the same result but — but he would avoid the — but he wouldn’t get the principle as he is now thriving to encompass?

    Robert W. Ginnane:

    He is mistaken.

    He is citing that if the complaint were rewritten that the — the shippers could make a comparison of a local rate from the boundary — from the boundary down to the Southern territories by comparing that with the rate to the official territory.

    It would be impossible to make such a comparison.

    The rate to the points on official territories is a joint through — joint rate from the Canadian origins to the destination points and official territory.

    We don’t know how it would be broken down at the American boundary.

    He would have you compare, he would say if the shippers to try to show discrimination between a rate from the boundary to the South with of a — with a joint rate from the Canadian origins all the way through to the official territory of origin.

    It can’t be done.

    Felix Frankfurter:

    The American segment of it, you say couldn’t be apportioned?

    Robert W. Ginnane:

    You can’t compare one segment of one through rate with an entire joint rate to the official territory and he knows it.

    Potter Stewart:

    What about —

    Robert W. Ginnane:

    Such a comparison can be effectively made in terms of the problems of proof and evidence only by comparing the whole group.

    Felix Frankfurter:

    I thought — I thought Mr. McDonald agreed with you would have to take into account the fact that the — that the joint — that the shipment originated on a joint rate in Canada?

    Robert W. Ginnane:

    But they have no breakdown as to how much of that was attributable to the transportation in the United States to the points on official territory.

    We might not even know what the division was as between the carriers even though — even if that were relevant.

    Felix Frankfurter:

    If that was on the face it discrimination and the burden would be on him to show it, wouldn’t it?

    Robert W. Ginnane:

    I’m afraid we’ll be comparing such unlike that it would be almost meaningless either for or against the carrier.

    William O. Douglas:

    What do you say about the Yellow Jacket case?

    Robert W. Ginnane:

    The Yellow jacket case says that where the — that where American carrier’s rate, the local rate, is fixed to the boundary, to the border, not just at some point in them — in — in the country.

    In that case, it involved Detroit and I think Port Huron.

    American carriers local rate goes to the — right up to the boundary, then the shipper may attack just the American segment of the rate.

    He may do so and perhaps the — perhaps the Commission was straining too hard there to — to help the shipper.

    Thank you.

    Earl Warren:

    Very well.