United States v. Interstate Commerce Commission

PETITIONER:United States
RESPONDENT:Interstate Commerce Commission
LOCATION:Kingsley Books, Inc.

DOCKET NO.: 12
DECIDED BY: Warren Court (1956-1957)
LOWER COURT:

CITATION: 352 US 158 (1956)
ARGUED: Oct 11, 1956
DECIDED: Dec 17, 1956

Facts of the case

Question

  • Oral Argument – October 11, 1956 (Part 1)
  • Audio Transcription for Oral Argument – October 11, 1956 (Part 1) in United States v. Interstate Commerce Commission

    Audio Transcription for Oral Argument – October 11, 1956 (Part 2) in United States v. Interstate Commerce Commission

    Ralph S. Spritzer:

    — have been serving them uninterruptedly for some 30 odd years.

    That the Army had leased them after they were completed to a succession of terminal operators.

    There’s no dispute.

    I might add that these facilities are suitable terminal facilities in every sense.

    They’re large.

    They’re well equipped.

    They have mechanical loading and unloading equipment and an abundance of warehouse space.

    Now, while the carriers have served these piers uninterruptedly, they have had from the first what may strike the Court as a rather unusual arrangement with respect to providing these port services to the shipper.

    The best way to describe it, I think, is to borrow from the language of antitrust and to refer to it as a tie-in arrangement.

    And it is this arrangement which is a kind of but-for cause of the controversy which ultimately arose in World War II and then repeated itself in the Korean period.

    One would normally expect, I think, that carriers would charge a line-haul rate for delivering freight cars to a terminal.

    And that thereafter, the shipper would pay a separate charge for the unloading and for the use of the pier to the terminal operator whoever he might be.

    That is common at most ports, but in a number of the North Atlantic ports this tie-in practice was initiated in the 1920s.

    And that practice is as follows.

    The shipper pays an export rate.

    The carrier agrees by appropriate tariff rule or provision that it will provide the wharfage and handling services itself or that it will absorb the wharfage and handling charges of designated commercial terminal operators.

    The wharfage and handling charges as the tariffs put it are included in the export rate to and from Norfolk, Virginia.

    The carriers however limit the places at which this performance can be obtained.

    Now, the purpose and effect of this, we think, are fairly evident.

    Harold Burton:

    I don’t understand what you mean by saying limited places.

    Ralph S. Spritzer:

    They will designate a particular terminal and say at this terminal, wharfage and handling —

    Harold Burton:

    They don’t — they don’t say at Norfolk.

    Ralph S. Spritzer:

    — charges of so much.

    Pardon?

    Harold Burton:

    They don’t say at Norfolk.

    Ralph S. Spritzer:

    No, they —

    Harold Burton:

    What —

    Ralph S. Spritzer:

    — designate the specific terminals.

    For example, the Army’s lessee until 1951 was a company named Stevenson & Young and they say in their tariffs, we included are the charges, wharfage and handling charges of Stevenson & Young and then those charges are specified, they’re $1 a ton as it happen.

    Harold Burton:

    Does those tariffs include these Army ports, these Army —

    Ralph S. Spritzer:

    Well, the tariffs have restrictions in them as they now appear, which exclude the Army now that it has repossessed the piers from getting the advantage of this absorption and that is what we claim is discriminatory in its operation.

    Harold Burton:

    The tariff — the railroads published the tariff.

    Ralph S. Spritzer:

    That is right.

    Harold Burton:

    And the tariff says it includes as a pier of embarkation, the Army piers, as I understand it.

    Ralph S. Spritzer:

    Yes.

    Harold Burton:

    Physically.

    Ralph S. Spritzer:

    Yes.

    There are certain conditions, which I’ll come to later, if I may postpone that for the moment.

    In other words, if I understand you, under the tariffs as written, assuming that they are valid —

    Ralph S. Spritzer:

    Yes.

    — the Army would not be entitled to this —

    Ralph S. Spritzer:

    That is correct.

    Commercial shippers getting their freight handled by the commercial terminal operator who still operates on a portion of the piers are getting the benefit of the absorption, but if — if I may postpone that just a moment to complete this background because I think it will help to define the issues of the case.

    The purpose and effect of this tie-in, as I say, are — are evident, we think, because if the shipper pays a certain export rate and by that act becomes entitled without paying anything further to wharfage and handling services to particular piers, he’s certainly going to be effectively deterred in ordinary circumstances at least from patronizing somebody else because patronizing somebody else will mean that you’ll have to pay a second time.

    You’ll have to pay whatever charges that non-designated operator might make for performing the services.

    Harold Burton:

    There is no — no separation of it.

    Ralph S. Spritzer:

    No, it’s an overall rate.

    It includes the wharfage and handling charges under certain conditions and whether the conditions, as they operate here, make for discrimination is really the issue that I’m going to get to define at the moment.

    Harold Burton:

    But what — what bothered me — but I understand the only condition is that it moves over pier X.

    Ralph S. Spritzer:

    No, there are further conditions which I have not yet stated to Your Honor.

    Felix Frankfurter:

    Is the Government the only shipper that has a private pier?

    Or they own or pier-owned (Inaudible)

    Ralph S. Spritzer:

    At this port?

    Felix Frankfurter:

    At this port, yes.

    I’m talking about —

    Ralph S. Spritzer:

    No, I think there’s a tobacco company that owns a pier down there and there maybe others.

    Felix Frankfurter:

    What is the tariff?

    What is the absorption or the situation as to that?

    Ralph S. Spritzer:

    The carriers do not undertake to absorb the charges at shipper’s piers.

    Felix Frankfurter:

    But — and — and doesn’t discriminate against the Government as shipper and in fact, there are other shippers in the situation (Inaudible) the government, is that correct?

    Felix Frankfurter:

    I’m asking —

    Ralph S. Spritzer:

    No —

    Felix Frankfurter:

    (Voice Overlap) —

    Ralph S. Spritzer:

    No.

    We — we think there are distinctions which between the position of the Government operating a port of embarkation and perhaps the position of a shipper who would like for some reason of commercial advantage to get delivery at one point rather than another because as the Commission’s findings in this case show, it was necessary.

    The Government had no choice in order to accomplish its mission, but to assume control of this port of embarkation during the war and emergency periods that it did.

    So, I think there are distinctions between the commercial.

    Felix Frankfurter:

    But the similar — in addition to that or in parts of that for similar services on a private pier owning shippers, I figured that the Government is (Inaudible)

    Ralph S. Spritzer:

    If they insist on getting delivery at their own piers rather than the designated piers.

    That is correct.

    Felix Frankfurter:

    And that on the Government piers, there are other — there are shippers other than the Government.

    Ralph S. Spritzer:

    Yes, that is right.

    Felix Frankfurter:

    Is — does most of the export stuff, export stuff, is that unloaded on the government pier?If you tell me (Voice Overlap) —

    Ralph S. Spritzer:

    At Norfolk, is that your question, Your Honor?

    Felix Frankfurter:

    One — one (Inaudible) to talk to only because it’s about Norfolk.

    Ralph S. Spritzer:

    Yes.

    Well, there are other piers in operation at Norfolk.

    They’re — the Army-based piers are not the only piers.

    There are other adequate facilities.

    Felix Frankfurter:

    But a good — a good deal of non-government stuff.

    Ralph S. Spritzer:

    It comes over the Government’s piers, that is correct and those commercial shippers get the absorption.

    Earl Warren:

    Does it come over the Government pier in the sense that — that the goods come in discriminately over the same area or was there a separation of area, one portion of — of the dock for commercial and one — one portion exclusively for the Army?

    Ralph S. Spritzer:

    The arrangement was a flexible or a fluid one as it worked out in practice.

    When the Government concluded in 1951 that because of the urgencies and complexities of a wartime operation with tremendous volumes and specialized equipment coming through the port and going to countless different overseas units, that it would have to take over and that it was necessary in the public interest to resume control.

    It also have decided that it was going to try to allow the commercial operator who had been there as lessee to continue in business and to handle commercial freight to the extent that that was consistent with the military needs there.

    And so, the Government permitted to use a — gave a permit to this commercial operator to continue and that permit covered a portion of the piers and of the warehouse facilities.

    However, the record tells us that in practice, it wasn’t the same portion everyday so that if there was space available at one end of the pier for some commercial traffic.

    One day it would be put there.

    If there was space at the other end of the pier, it might be put there.

    And the commercial operator worked in collaboration with the Government supervisors at the piers.

    Ralph S. Spritzer:

    Now, actually —

    Harold Burton:

    Is that the situation now?

    Ralph S. Spritzer:

    Yes, that has continued to be the case.

    Harold Burton:

    So, what — what happened if the Government leased its pier to commercial operator?

    Ralph S. Spritzer:

    Then terminated the lease and resumed control, but having resumed control, it gave a permit which permitted the former commercial operator to continue in business there on a limited portion of the piers.

    Harold Burton:

    And serve the railroads.

    Ralph S. Spritzer:

    And serve commercial shippers who shipped by —

    Harold Burton:

    (Voice Overlap) —

    Ralph S. Spritzer:

    — by the railroads, yes.

    The railroads —

    Harold Burton:

    The railroad —

    Ralph S. Spritzer:

    — hired the commercial operator.

    Harold Burton:

    The railroads made an arrangement to the commercial operator —

    Ralph S. Spritzer:

    That is right.

    Harold Burton:

    — to deliver their freight unto the pier and the commercial operator then loads it on shipside.

    Ralph S. Spritzer:

    That’s right and the railroads pay the commercial operator $1 a ton —

    Harold Burton:

    Out of the tariff.

    Ralph S. Spritzer:

    — out of the tariff.

    They pay the commercial operator $1 a ton as to every ton of commercial freight.

    That is continued to be the practice.

    I should add in giving some more of the background that the Government resumed control of the piers because it was necessary in order to do the planning of cargo and to sort out the great variety of freight and to deal with the weight problem of volume.

    The Government assumed control.

    There are also security considerations involved so far as war material is concerned.

    The Government assumed control and proceeded to give detailed on-the-scene instructions as to how the loading, the unloading, I should say, was to be accomplished.

    But it made a contract with Stevenson & Young, this commercial operator, whereby Stevenson & Young continued to do the physical work for the Government just as it does the physical work on the commercial freight.

    The Government took over its entire supervisory force, its entire labor force.

    It hired it by a contract and the general manager of Stevenson & Young got his instructions from the Army personnel at the piers and handled the freight accordingly.

    Now, as I have indicated in answer to questions earlier, the carriers had continued during this post 1951 period to pay $1 on each ton of commercial freight which is handled by the pier operator.

    The Government has hired Stevenson & Young to do similar work.

    Actually, the Government’s demands are far greater than those with the ordinary shipper.

    Ralph S. Spritzer:

    It has asked a great deal, more detailed work from the terminal operators, asked him to sort out cargo as it comes in to keep inventory, detailed inventory records so that the Army can lay it’s finger on any piece of equipment at any time to keep various records.

    The consequences then that the Government has been paying Stevenson & Young for its services, some $2.87 a ton.

    We’re not claiming that.

    What we are claiming is simply that we are entitled to the same dollar or dollar’s worth of service as the commercial shipper receives when he pays the same overall rate that we pay.

    I think I can perhaps sharply illustrate what we think is the unjustified discrimination here by an illustration.

    The commercial shipper sends a ton of lead pipes from Columbus, Ohio to Norfolk.

    He pays, we’ll say, a $10 export rate.

    The Army does the same thing.

    It pays the $10 export rate.

    Thereafter, the commercial freight goes on, one freight car with the Army pipes on another freight car and back up the same engine.

    The engine gets to Norfolk, it switched to the base piers.

    At that point, Stevenson & Young takes over the commercial ton of pipes acting as agent for the carriers under a contract which they have with the carriers.

    They unload it from the cars and they put it on the pier floor.

    They do the same thing for the Army under its instructions.

    They unload the Army’s ton of pipe and they put it on the pier floor.

    They probably or very likely handle the two loads of pipe with the same crew of men.

    They put them down on the pier floor perhaps alongside of one another.

    They’re then both picked up by the same boat and carried overseas.

    Now, on the commercial ton of pipes, the carrier pays Stevenson & Young a dollar, $1 a ton for wharfage and handling.

    The military freight, the carriers had refused to pay $1 or any sum whatever.

    Thus from the standpoint of the carriers, the carriers received $9, $10 minus the one for wharfage and handling.

    They received $9 — they realized $9 that is for the line-haul carriage of a ton of commercial freight.

    Now, the Army’s freight, they retained a $10 undiminished by any sum, so they retained $10 for the line-haul carriage of a ton of military freight identical in character between identical points.

    Harold Burton:

    Is the bill of —

    But —

    Harold Burton:

    — ladings the same?

    Ralph S. Spritzer:

    Oh, yes.

    But assuming — assuming in your illustration that the commercial shipment went not to a public pier but that Stevenson & Young was operating as the agent for the shipper who owned that pier and that commercial shipment would receive exactly the same treatment that the Army received, wouldn’t it?

    Ralph S. Spritzer:

    That’s right.

    The commercial shipper would not get the dollar either — even if he insisted on a non-designated facility.

    The real discrimination here is whether or not there’s a justification for treating commercial piers, different — different private piers, isn’t that it?

    Ralph S. Spritzer:

    Yes.

    Now, I think to begin with —

    Felix Frankfurter:

    Before you (Inaudible) would you be good enough to explain the — enlighten us to — us to (Inaudible) on why the railroad has absorbed the commercial shippers.

    Isn’t that if they didn’t, then the ship — they will move (Inaudible) to some other road or some other port?

    Ralph S. Spritzer:

    Well —

    Felix Frankfurter:

    Or in other words, they complete this problem by abolishing, by not giving anyone, by not absorbing anything.

    Ralph S. Spritzer:

    Certainly, and in —

    Felix Frankfurter:

    Could you please tell me just (Inaudible) why —

    Ralph S. Spritzer:

    Right, and I’d like — I would like to refer at this moment to a case which tells that whole story.

    In the 1920s, the War Department, port authorities from various ports, commercial shippers and terminal operators went to the Commission and they said, “Why don’t you stop this practice in its inspection?

    It’s bad.”

    Because if the railroad had this tie-in arrangement, it means they can preempt the marine terminal business, which is not the railroading business at will.

    They can decide which pier operators will be favored by designation and which ones won’t.

    They can keep people out into the marine terminal business very effectively by not designating them.

    That’s going to make for discrimination and it’s going to demoralize competition.

    The Commission found that the evils which the parties were complaining about had not yet appeared.

    They appeared on the contrary that the — that everybody was getting adequate service and it refused the request made to it at that time that the carriers be required to state and assess separate charges for wharfage and handling.

    Commissioner Eastman and four other commissioners very vehemently dissented at that time and they predicted the discrimination a result that there would be no healthy competition in the marine terminal business and that it also would make for much more simplified freight regulation, freight regulation as they were required to state the charges separately.

    But that view did not prevail and so the tie-in arrangement continued.

    Now, the railroad interest in that tie-in arrangement is perfectly clear.

    They can restrict the entry of competition into the marine terminal business, a business in which they themselves are very frequently engaged.

    Also, they can limit the number of piers which they will have to serve and that is an operating convenience if that was mixed for savings.

    They don’t have to send their engines and their operating crews to a larger number of — of locations.

    So they have a clear interest in restricting the port practices as they described.

    Felix Frankfurter:

    It’s not against other railroads.

    Ralph S. Spritzer:

    No, not against other railroads but in order to aid them insofar as they are in its terminal business and as the standpoint of operating convenience.

    Now, the reason that they’re low, as I think, to make allowance or adjustment to the Army when they found it necessary in public interest to run its port of embarkation and work on, I think they’re apprehensive that they might be required to do the same for other private shippers.

    Now, whether as an initial matter, restricting the port practices by this tie-in arrangement is a good thing, is not a question which the Court has to decide, I think.

    There maybe justifications for such a restriction and the Commissioner said that there are, which don’t apply here.

    Ralph S. Spritzer:

    Now, the Commission has said in a number of decisions that it’s reasonable for the carriers to restrict the availability of this absorption to designated public terminals if those public terminals are adequate.

    And it is said this serves a salutary purpose because it would be wasteful and uneconomical that the carriers were required to disperse their traffic to any and all piers at a port.

    Here, they can keep the traffic concentrated.

    We don’t think that those reasons apply here.

    In the first place, we don’t think that the service can be deemed adequate because while there are adequate facilities at the port other than the Army base piers which the Army could use.

    The exigencies are such that the Army must perform this kind of operation at a pier where its personnel are present and in control.

    Now, I’m not asking the Court to go into an evidentiary matter there because I think the Commission’s findings support fully what I’ve just said.

    At record 11, in the paragraph that appears in the middle of this page, Your Honors will find a statement that the Army, from actual experience, has determined that ports of embarkation must be operated by personnel of the military service and employees of the Government.

    And then, the Commission goes on to speak about the necessary training to do the planning which precedes the actual loading of the vessels.

    The Commission tells us that precise overseas requirements demand absolute control over all shipments.

    Security of materials must be assured and then it goes on to describe how the base has been organized.

    And further on page 20, I will pause to do more than mention that in passing, the Commission states again, at the middle of the page after the citing areas, facts about the Army operation.

    These indicate to some extent the vast problem of the Army in coordinating the supplies received in the various course for shipment to its widespread forces.

    And so, I think we have here a case in which on the Commission’s own findings, the Army have to operate in a way that it did and hence, realistically, there was no adequate service.

    Felix Frankfurter:

    Do I — am I right in inferring from what you’ve said and what you are talking right now that the decision in this case could not determine the duty to absorb or not other privately owned ships?

    Ralph S. Spritzer:

    I think that is correct, because I don’t think and in this, I’m paraphrasing what Judge Washington said to the Court of Appeals in the first case, and I don’t think that there’s any precise analogy by any means between the situation of a commercial shipper who says, “I don’t want delivery at Pier 39.

    It’d be more convenient for me to have it a few blocks further south at Pier 29.”

    I say there’s no analogy between that and the steps taken by the nation in the public interest to a — to assure a smooth flow of war material in time of an emergency.

    Now, a further prompt —

    Harold Burton:

    Mr. Spritzer.

    Ralph S. Spritzer:

    Yes, sir?

    Harold Burton:

    There’s one thing I don’t understand.

    Is there any reason why the Government couldn’t ship its goods exactly by the shipper to this under the same bill of lading to the same pier, to the base pier, to be handled exactly like the private shipowner, is that it?

    Ralph S. Spritzer:

    We —

    Harold Burton:

    I understand that (Voice Overlap) —

    Ralph S. Spritzer:

    — we find it necessary —

    Harold Burton:

    — they weren’t for service and they — they want in a different time and they want people to look at it in a different way, I understand that.

    Ralph S. Spritzer:

    Yes.

    Harold Burton:

    But so far as the tariff itself is concerned —

    Ralph S. Spritzer:

    Let me refer Your Honor to the tariff, if I may.

    Ralph S. Spritzer:

    It’s at record 458 is the provision that concerns us.

    And this is a — a provision out the Pennsylvania tariff which the Commission states to be typical.

    And then it starts out by stating certain exceptions which aren’t pertinent here, then it goes on to say that, “Wharfage and handling charges,” I’m reading from that at the third line, “Wharfage and handling charges published in a certain tariff will be included in the freight rate to or from Norfolk, subject,” and I’m not dropping to the end of that paragraph, “subject to the following conditions”.

    Now, under (b), one of the conditions is that the terminal operator is operating on war properties which are a public terminal facility of the rail carriers.

    And then, under (c), you will note that another condition is that the shipper does not get the benefit of the absorption unless the terminal operator is performing — it’s furnishing the wharfage facilities and performing the handling services for account of and as agent for the rail carriers.

    Then, the carriers say, “When Stevenson & Young is handling commercial freight under our contract that was Stevenson & Young, he’s acting for our account.

    And therefore, the commercial shipment meets the requirement of the tariff.”

    Now, they say further, “On the military traffic, when Stevenson & Young does the work by arrangement with the Army, it’s acting for the account of the Army.

    It’s not our agent.

    And hence, the Army does not come within these conditions and we retain this dollar.”

    Now, we are not quarrelling with the interpretation of the words that they put into tariffs.

    Our contention is that there is discrimination and it is no less discrimination because you close the door, dress it up in a provision of tariff.

    Harold Burton:

    But is — is there any reason why the Government can’t use this tariff exactly as it’s written if they felt that you gave them the things that they wanted?

    Ralph S. Spritzer:

    If we will prepare at the port of embarkation not to control our own piers and to make Stevenson & Young, the lessee, in full control, we couldn’t — we would get the service.

    Harold Burton:

    That will — that’d be — be no of difficulty in controlling any part of your piers if you wanted to.

    Ralph S. Spritzer:

    We don’t — we are not given by the railroads this absorption if we control the pier at which the freight was handled.

    They say —

    Harold Burton:

    Well, then — then the — the shipper could not get advance to this, a commercial shipper if you’re in control of that pier.

    Ralph S. Spritzer:

    They say — the Commission reasons that when Stevenson & Young is acting in respect to the commercial freight under its permit, that’s a different pier pro tanto.

    They treat Stevenson & Young acting in respect to the commercial freight as operating a different pier from the pier as a whole.

    Felix Frankfurter:

    After enough pier facility, with reference to which there is absorption to be (Inaudible) to enable the Government to ship, to dispose of its business and (Inaudible) on owned piers.

    Ralph S. Spritzer:

    Yes.

    The Commission found that there are other adequate facilities for Norfolk, so we could have handled them somewhere else.

    Felix Frankfurter:

    And — and have it absorbed.

    Ralph S. Spritzer:

    Yes.

    Felix Frankfurter:

    (Inaudible)

    Ralph S. Spritzer:

    If we were prepared to give up what the Commission also found to be necessary.

    That is to say that the Government be on-the-scene to give detailed instructions and provide special safeguards for the handling of this commended amount of military traffic.

    Felix Frankfurter:

    That cannot — does not — exactly cannot be done on the piers, which typically speaks of — or available for Government export material, then — then (Inaudible) might use the word available, but it isn’t available.

    Ralph S. Spritzer:

    Well, I would — the — the facilities are adequate only in the sense that they would be physically adequate.

    Ralph S. Spritzer:

    The —

    Felix Frankfurter:

    And that you — and you say further that this — this (Inaudible) choice situation —

    Ralph S. Spritzer:

    Yes, sir.

    Felix Frankfurter:

    — it seems there is (Inaudible) choice, you say the findings of the Commission, you think, is out of controversy in — in the record (Inaudible) is that it?

    Ralph S. Spritzer:

    Yes, and I’d like to refer to the Commission’s brief in that same connection.

    At page 33 of its brief, the Commission tells us and I refer Your Honors to the last paragraph.

    The Commission says the Commission found that the special requirements of the Army’s operation made it necessary that the handling of its freight be done at its own pier facilities under its control to suit its own convenience.

    And that the Army did not wish to use the railroad’s pier facilities by which they mean incidentally, the Army base facilities leased to the commercial terminal operator, thus, effectively preventing the railroads from providing the services.

    In other words, they say the railroads don’t undertake to provide service at a shipper’s pier.

    They don’t have to work under supervision of a shipper if they don’t want.

    And when the Army, because of necessity or otherwise, chose to repossess its pier, it lost its right to get then to any absorption.

    Now —

    Felix Frankfurter:

    But the finding — the finding really gets down to the question whether — assuming that there were no — that there were no (Inaudible) had to use the Army piers, there were no commercial shippers, everybody had to use the Army piers than the commercial shippers, what would be the situation?

    Would it be absorption for the commercial shipper and not for the Government?

    Ralph S. Spritzer:

    That’s exactly what has been happening everyday with respect to those who do use the Army’s piers.

    Commercial shipments have continued to come over the Army base piers since 1951 and the commercial shippers had continued to get the absorption.

    Felix Frankfurter:

    Although they control — in case (Inaudible) control on another commercial pier.

    Ralph S. Spritzer:

    Yes, they — the Army pier —

    Felix Frankfurter:

    Would they get (Voice Overlap) —

    Ralph S. Spritzer:

    — insofar as commercial freight is handled at that pier because the railroad say as to that traffic, the terminal operator is acting as our agent and therefore these conditions of the tariff are met.

    Now, we —

    Felix Frankfurter:

    You’re not challenge whether the conditions of the tariff are met.

    You’re challenging —

    Ralph S. Spritzer:

    Their reasonableness.

    Felix Frankfurter:

    But this (Inaudible) of the tariff.

    Ralph S. Spritzer:

    As applied to the particular facts which are involved in running a port of embarkation in time of war or emergency.

    Now, the Commission goes on at its —

    Harold Burton:

    Is this the time for emergency?

    Ralph S. Spritzer:

    Yes, the piers were taken over in 1951 under emergency powers.

    As the time of emergency, that was immediate left or away.

    Harold Burton:

    (Inaudible)

    Ralph S. Spritzer:

    Pardon?

    Harold Burton:

    Still at the time or that time of emergency.

    Ralph S. Spritzer:

    Yes, they are still retained, it’s my understanding, though the record in this case leaves off at 1953.

    Now, the carriers go on to say after stating that Army operation was necessary and that the railroads did not have to perform at the Army’s pier, the Commission reasons, and I think this is the core of their case, and I’m still reading from the bottom of 33, “Under such circumstances, there is no obligation upon the railroads to make allowance for unloading and wharfage for.”

    And they quote this Court, and they — they quote from the Atchison, Topeka, and Sta. Fe case, “For whatever transportation service, the law requires the carriers to furnish — to supply,” excuse me, “they have the right to furnish”.

    Now, we think their — the whole fallacy of their case is in that sentence because this is not a transportation service that the carriers are obliged to supply.

    They have reached out and gone into a business which is not railroad, as the Commission at other points in its brief states.

    They have really preempted a related business, the marine terminal operation business, and they’ve done it by this device of having an overall charge.

    Now, they were upheld in that in 1929 by the Commission which said, “We don’t think anybody is being hurt by having this tie-in arrangement because everybody is getting adequate service.”

    Now, it’s carried a step further, as we view it, because now we’re being told in effect, even though you cannot use what service would be made available to you by the carrier, even though the railroads are unwilling and unprepared to give the particular kind of need which you have, you still must pay the overall charge and get benefit of no adjustment.

    Now, as we view the Atchison, Topeka and Sta. Fe case, it holds precisely the opposite.

    The first issue in that case, which this Court unanimously decided, involved the matter of providing refrigerated cars for shipper’s use.

    This Court held that the Hepburn Act imposed a specific duty on carriers to provide refrigerated cars for shippers.

    And it said that that being so, the carriers having made immense investments in order to be in a position to provide these refrigerated cars must have an exclusive right to furnish them.

    The carriers can’t be told by particular shippers that we won’t use your refrigerated cars.

    We’ll supply our own refrigeration.

    The Court said that that would be obviously unfair and as much as the carrier has to be standing by or ready to provide the services, it should not be made to depend upon haphazard calls for it.

    Then, this Court went on, however, and it considered the matter providing the so-called accessorial services which aren’t within the transportation obligation, services which are sometimes performed by shippers, which are sometimes performed by carriers, which are sometimes performed by third parties.

    And the Court said, “Now, in that situation, it must be determined on the fact of each particular case who may better perform the job and the public interest should be considered.”

    And then, the Court went on to state what the consequence of that determination would be, and we’ve quoted a paragraph which has crucial bearing, I think, on this case, the paragraph from the Atchison opinion at page 14 of our reply brief.

    I’ll read those two sentences, if I may.

    “Neither party has a right to insist upon a wasteful or expensive service for which the consumer must ultimately pay.

    The interest of the public is to be considered as well as that of shippers and carriers.”

    Then, I would ask Your Honors to mark these words particularly.

    “Their rights,” that is the right to shippers and carriers, “in turn having been adjusted by a reduction in the rate, if the loading is done in whole or in part by the shipper and by an increase in the rate where the loading is done in whole or in part by the carrier, but — by whom so ever done, the loading must be such as to fit the freight for shipment.”

    Now, the only way we can fit this freight for shipment at the Army base piers is to have the personnel on the piers to give the on-the-scene directions.

    The only way we can fit the freight for shipment is by being in control of those piers.

    The carriers say they are unwilling to work for the Army when it is in control of the pier.

    When these piers were repossessed, they were asked if they would undertake not to provide handling under our direction with — with the Government giving detailed specifications as to what it wanted done and they refused.

    Ralph S. Spritzer:

    They said, “No, we don’t work at shippers’ piers.”

    So, the Army then went ahead and actually proceeded to use for its labor the very same people whom the carriers used.

    And we’ve been told contrary, we think, to the teaching in the Atchison case that there is to be no adjustment.

    We are of the view that since it was necessary for the Government to operate the piers under the Commission’s own findings that the carriers in that circumstance at least are obliged to untie the package which they’ve tied together, that they’re obliged to make the same $1 adjustment in the case of the military freight as they do in the case of the commercial freight.

    Felix Frankfurter:

    Would it take much time as — to indicate what it is with something (Inaudible) or figure in mind what it is that makes the handling, etcetera, necessary or unavailable at the — at the (Inaudible) piers?

    What kind of (Inaudible)

    Ralph S. Spritzer:

    Yes.

    Well, there — there are a good many things.

    Let me —

    Felix Frankfurter:

    (Inaudible)

    Ralph S. Spritzer:

    — perhaps give one or two illustrations, if — if I may and perhaps the — a bit of the testimony would be best for that purpose.

    At 177, we have the testimony of the general manager of the Stevenson & Young Company in 177 and 178.

    And he points out there’s a vast — on 177, that there’s a vast amount of clerical works superintendent’s administration to keep his — this complexity of savings into some reasonable form.

    The Army indicates that 1200 to 1500 cars of freight coming here a month maybe more going to a lot of different destinations all over the world under various force marks.

    It’s complicated.

    We have to handle it in a complicated manner.

    We have to keep it straight.

    We have to keep an inventory for the Army so they will know just what they have.

    And then over on 178, he says, “Having been in the Army myself, I have some idea of their problem.

    It is a vast problem of coordination of supplies to forces all over the world.”

    A little later on 78, he asked — he’s asked why it can’t move to a port terminal just like any commercial freight and he answers, “Theoretically, it can, but I think it is too complicated a job to funnel that freight through one spot without the Army being there with their hands on the funnel.”

    Felix Frankfurter:

    The question (Inaudible)

    Ralph S. Spritzer:

    I think basically that, yes.

    In other words, what you’re really saying, I take it is, that the discrimination between private and public piers in these tariffs is just only when the shipper has a reasonable choice of using the public pier as distinguished from these private piers.

    Ralph S. Spritzer:

    Yes, and where the service is not adequate to the shipper’s needs, we certainly think then that there can be no continued justification for this tie-in arrangement.

    Now, I should emphasize that it’s no greater burden to the railroads since it doesn’t physically perform the work itself.

    In respect to the commercial freight, any more than it does on the military freight, it’s no burden to pay this $1 to the Army or the military freight if they don’t have in respect to the commercial freight.

    It’s no greater burden to pay a dollar to X than pay a dollar to Y.

    Now, that’s —

    Harold Burton:

    Does the Government — does the Government — excuse me, are you going to say something?

    Ralph S. Spritzer:

    No, I — I was going off on a different point, Your Honor.

    Harold Burton:

    Does the Government take the position that the Army is entitled to something that a private shipper couldn’t get?

    Suppose —

    Ralph S. Spritzer:

    No, we don’t.

    Harold Burton:

    Let’s assume this is a manufacturer of some electrical appliances and had some — particularly to handle very carefully (Inaudible)

    Would they have an opportunity to get this reduction?

    Ralph S. Spritzer:

    Well, I think the — I think this is our answer to that.

    We think if the carriers are going to preempt this terminal business, which is a dubious practice —

    Harold Burton:

    Well, I’m assuming (Voice Overlap) —

    Ralph S. Spritzer:

    — at best.

    Harold Burton:

    — in this situation.

    Ralph S. Spritzer:

    Yes.

    Harold Burton:

    You have preempted it in a sense that they were furnished (Inaudible)

    Ralph S. Spritzer:

    Well, on the sense that they have a tie-in.

    Harold Burton:

    And then the only way you can get it delivered of at this terminal is to pay this charge for the commercial shipment.

    Ralph S. Spritzer:

    Yes.

    Now, our — our answer to the situation of the private shipper is this.

    We think it may be reasonable for the condition to permit the port practices to be restricted, maybe reasonable to permit this kind of arrangement where the service which the railroad is offering at its designated piers is fully added —

    Harold Burton:

    Well, I —

    Ralph S. Spritzer:

    — maybe then it’s reasonable to say, “Well, we’ll —

    Harold Burton:

    (Voice Overlap) illustration where it wouldn’t be bad?

    Ralph S. Spritzer:

    If the carrier — if the shipper absolutely needs to process this freight up to the port.

    Harold Burton:

    To — to have a lift as the ordinary pier operator handles it will damage the delicate machinery with the private commercial manufacturer shipment.

    Ralph S. Spritzer:

    Well, he could pick a pay for a special service.

    Harold Burton:

    Can the — can the Government do the same thing?

    Ralph S. Spritzer:

    We are.

    We’re paying $2.87 a ton for the handling of our freight.

    Harold Burton:

    But you’re not —

    Ralph S. Spritzer:

    We’re not claiming that.

    Harold Burton:

    (Voice Overlap) —

    Ralph S. Spritzer:

    We say we just want a dollar.

    Harold Burton:

    You’re not saying that or anything that’s available unto the others.

    Ralph S. Spritzer:

    It’s not available under the terms of the tariff, but similar service is being provided to all commercial shipments at the Army based piers.

    Harold Burton:

    And this goes back to what I asked you at the first time (Inaudible)

    Ralph S. Spritzer:

    Yes.

    Harold Burton:

    (Inaudible) the Government could get exactly the service that a private shipper could get if they want.

    Felix Frankfurter:

    And you say no to that.

    You (Inaudible)

    Ralph S. Spritzer:

    Well —

    Felix Frankfurter:

    You accept that (Inaudible) point.

    Ralph S. Spritzer:

    If — if it were satisfactory to our needs, we could get service by —

    Harold Burton:

    (Voice Overlap) shippers —

    Ralph S. Spritzer:

    — by getting off to the piers and turning them over to the lessees.

    Harold Burton:

    Or — or they’re staying right there that they could get exactly the same service that the private shipper (Inaudible)

    Ralph S. Spritzer:

    We’re trying to and we haven’t succeeded since World War II to get what the private shipper gets.

    We’ve stayed there and we were told as soon as we resumed control of the piers on which the traffic moved, we lost our right to this $1 a ton absorption.

    Now, let’s say, Your Honors, that it appears from the record that if a commercial shipper wants to get extra special — extra or additional service from Stevenson & Young, he can get it and pay for it separately without losing the benefit of this $1 a ton.

    But because we do not meet the tariff’s condition that Stevenson & Young must be acting as agent in — on account of the Railroad, we are told we can get no absorption.

    Now, our position basically is this.

    We’ve been paying a rate which is concededly compensatory.

    The tariffs of the carriers say that wharfage charge and handling charges are included.

    We’ve not been getting that service as a result of a condition which operates here unreasonably and discriminatorily.

    Felix Frankfurter:

    May I ask — I must ask you one question —

    Ralph S. Spritzer:

    Yes, sir.

    Felix Frankfurter:

    — before you sit down.

    Assume that the American Oil Company exports business is as — is conceivable, enormously expanded, enormously expanded so that they’re new to the expanded export of oil in all the same time, exactly the same time in consideration, coordination and funneling and all the other words that you use and therefore that — and they can’t — and they can’t carry that out on one of the available public piers and wants to do it, do do it on the Government’s piers, would they or would they not be entitled to the claim you made for the (Inaudible) in this case?

    Ralph S. Spritzer:

    The — yes, I certainly think so.

    I think the Commission’s decisions saying you have to take the service as specified in the tariff at particular localities, at particular places can be justified on the Commission’s own reasoning in the past only on the assumption that that service is fully adequate to the needs of the shipper.

    Felix Frankfurter:

    Although in my hypothetical case, all these oil companies or the consortium of the American Oil Company may have appealed owned by them adequate to the — to a much small outpoured oil than to (Inaudible)

    Ralph S. Spritzer:

    Well, I think in each case where you get into this shadow area whether the shipper should perform or whether the carrier should perform, as the Atchison case teaches, it must be decided who can better perform in the public interest.

    Ralph S. Spritzer:

    Now, if the carriers cannot, at a designated facility, serve the legitimate needs of the shipper, then I can see no basis whatever for the carriers to continue charging an overall rate.

    We think they’re required under the reasoning of the Atchison case to make the adjustment to the shipper.

    What comes down to in this case is that since the Army had to run its own port of embarkation, the carrier realized that the $1 a ton more per line for carriage of the same freight.

    Felix Frankfurter:

    (Inaudible) happens in this case and (Inaudible) because I don’t know nothing about it yet.

    Ralph S. Spritzer:

    Yes.

    Felix Frankfurter:

    But it happens that in this case, the Army is the only shipper (Inaudible)

    Is that right?

    Ralph S. Spritzer:

    Yes.

    There are only two types of shipments that come over at the Army base piers, one is the military and the other, the shippers of commercial freight.

    Now, the shippers of commercial freight whose traffic is handled side-by-side, they’re not paying anything additional to Stevenson & Young.

    The carriers are paying $1 to Stevenson & Young and they’re getting their service, we’re not.

    Earl Warren:

    Mr. Ginnane.

    Robert W. Ginnane:

    May it please the Court.

    I am sharing my time with Mr. Cousins, who will argue on behalf of the railroad carriers who are (Inaudible) in this case.

    Before going into the facts which has — my Brother says are essentially undisputed, so I shall not have occasion to repeat them at any length.

    I’d like to review briefly some of the principles which are involved in this field.

    As you’ve been told, it’s the general rule in the United States that shippers are required to load and consignees are required to unload carload freight.

    However, it has also been held by the Commission and by this Court that without any change in their line-haul rates, railroads may assume an obligation to provide loading services under their tariffs.

    Of course, if they do so, all the shippers in the same circumstances must be treated alike.

    Export freight as distinguished from domestic freight requires the use of ports or piers upon which freight can be moved and up — and to which the freight can be unloaded within reach of ships tackle.

    Railroads have no legal duty to — to provide such wharfage and unloading services for export freight.

    But for many years, they have customarily provided such services.

    These services may, as they are in — in some parts of the United States, they may be stated separately as — as separate charges apart from the line-haul rate, or they may be furnished without any additional stated charge in addition to the line-haul rate.

    In getting to this case, the railroads which serve the North Atlantic ports, that’s from Hampton Roads including Norfolk North, have, for some years, preceding 1929, I couldn’t give an exact date, followed the practice of providing such wharfage and handling services on export freight without establishing or collecting a separate charge in addition to the line-haul rates.

    This practice grew out an extensive background or I should almost say a delicate background of competition not only between carriers and between ports.

    That history is and much of the justification is set forth at some length in a report to the Commission entitled “Wharfage Charges at Atlantic and Gulf Ports” in 1929.

    Now, railroads provide such — often provide such wharfage and handling services on their own piers with their own personnel, or where they do not own such piers, they will contract with commercial terminal operators or with municipally owned pier operators and to provide such services as agents for the railroad.

    The railroads have served the North Atlantic ports, including Norfolk, which is involved here, have never undertaken to provide such services on all of the export freight as the tariffs in the record on this case show.

    They have for reasons almost of this on their face, not provided such services for specified types of cargo for grain, bulk liquids and tankers, whether they don’t provide it unless the inbound freight rate is equal to a certain amount, in the case of the tariffs in this case, unless it’s at least 19 cents a hundred pounds.

    And moreover, the North Atlantic — the carrier serving the North Atlantic ports do not provide such services on export freight delivered to the private pier of the shipper or consignee, unless, as Mr. Spritzer has pointed out, the tariff involved in this case specifically provides that the railroads will furnish wharfage and handling services only on export freight which is delivered to the vessel by rail or for both properties owned or leased by Stevenson & Young and operated by that company as a public terminal facilities of railroads and only when Stevenson & Young performs such services as agent for the railroads.

    How many years did you say this type of differentiation between private and public piers is (Inaudible)

    Robert W. Ginnane:

    At least since 1929, sir.

    1929.

    Robert W. Ginnane:

    I — I can’t — it was going on before that.

    I can’t pinpoint the date prior to 1929.

    Now, the Army freight shipments involved in this case, after prior rail transportation, moved over Army piers 1 and 2 at the Army Base at Norfolk.

    Prior to May 1, 1951, these piers are leased by the Government to the firm of Stevenson & Young.

    And Stevenson & Young, during the same period, had turned around and entered into this contract for the railroads to operate these pier facilities, wharf and unloading facilities as a public terminal of the railroads, and they contract it for $1 a ton to provide wharfage and handling facilities on export freight as agent of the railroads.

    I should emphasize that this dollar a ton was the actual complete payment to Stevenson & Young for these services.

    It was not just an allowance toward the cost of the services.

    It was the complete payment for the services and the shipper was not billed for anything additional or separately for those services.

    And during this period, prior to May 1, 1951, the railroads paid this $1 a ton for wharfage and handling to the Stevenson & Young on both commercial export freight and upon the Army’s military export freight.

    On May 1, 1951, the Government took possession of its piers, except that what the Commission described and it’s not challenged, at least I don’t think it is, a very limited portion of the facilities was made available, left available to Stevenson & Young where it continued to handle commercial freight.

    And on this portion of the facilities which was thus left available to Stevenson & Young for handling commercial freight, Stevenson & Young continued to act as agents for the carriers and performed — continued to perform this wharfage and handling service on commercial export shipments for a $1 a ton.

    Felix Frankfurter:

    Mr. Ginnane, if Stevenson & Young didn’t have this portion with piers 1 and 2, would they have handled the freight on some other private piers, from other piers?

    Robert W. Ginnane:

    Only if — only if they were under such a contract with the — with the railroads at those piers.

    Felix Frankfurter:

    (Inaudible) point of your physical facilities.

    Suppose the Government said, “We need all of this.

    (Inaudible) any private shipments on piers 1 and 2.

    Robert W. Ginnane:

    It’s admitted at — in Norfolk.

    There are ample other pier facilities.

    Felix Frankfurter:

    For all private shipments.

    Robert W. Ginnane:

    To handle all private shipments and —

    Felix Frankfurter:

    (Voice Overlap) —

    Robert W. Ginnane:

    — and all of the Government freight here involved.

    In other words, during this period, Norfolk had a surplus of pier wharfage and handling facility.

    I might say that that is in contrast with the situation which existed during World War II, a period covered by the — by the first Norfolk case.

    In that case, the Court of Appeals of the District of Columbia was significantly impressed by the fact that during World War II, the volume of traffic, military traffic going to Norfolk was so great that there did not exist other pier facilities available to the railroads which could have handled the traffic.

    The situation is different here.

    The Commission has found and has not challenged that the base — that the pier facilities leaving aside Army piers 1 and 2 were more than adequate to handle all the traffic, commercial and military, going through the base during the period following — going to the port during the period following May 1, 1951.

    Robert W. Ginnane:

    The Commission’s detailed report contains the following.

    We believe are critical findings of fact, which are not challenged.

    First, that on the night of May 1, 1951 and up to the date of the Commission’s hearing, only commercial traffic for export was handled over port properties leased by Stevenson & Young and operated by Stevenson & Young as a terminal facility of the railroads.

    Secondly, that no military traffic was stored on or handled over any form of property under a lease or permit to Stevenson & Young for commercial traffic at any time during that period.

    But rather, all such export military traffic after delivery to the base was in the possession of and under the exclusive control of the Army.

    It was handled over port facilities under exclusive permit of the Army and the unloading services were performed by labor furnished by the agent of the Army, Stevenson & Young, by the agent of the Army and not by the agent for the rail carriers.

    And the Commission also found, as I just indicated, that the railroad serving the Norfolk port area had had available port facilities more than ample to handle all the military traffic moving over the Army Base at Norfolk at least since May 1, 1951.

    What page is that finding of it?

    Robert W. Ginnane:

    Page 21 of the record.

    As Your Honors have heard, the Commission also found that there was a substantial difference between the handling of commercial export traffic by the railroads and the manner in which the Army’s military export freight was handled.

    This finding was based upon the — the testimony of — of the Army’s own witnesses on such matter as the complexity of the Army’s freight operation, including pre-storage planning, the nature of the overseas requirements, extra documentation and so on.

    Felix Frankfurter:

    But they don’t ask you (Inaudible)

    Robert W. Ginnane:

    No.

    At this stage in — at this stage of the case, the Government does not ask that the railroads perform.

    They don’t ask for performance.

    They ask only for the dollar allowance.

    Felix Frankfurter:

    Which they would (Inaudible) by the pier or not under their control or that’s (Inaudible) is that right?

    Robert W. Ginnane:

    That’s right.

    The piers were not under control of the shipper, in this case, the Army.

    So that the — so that the railroads could perform this wharfage unloading services at their convenience, rather than at the shipper’s convenience, the Government as the shipper would be entitled to this dollar allowance.

    Felix Frankfurter:

    So far as the railroads were concerned, that — that’s the question that I (Inaudible) so far as the railroads are concerned, so far as the railroads are concerned, is there any burden to cast upon them, does it make any difference to the railroad that the Army exercises its unique control over its freight (Inaudible) private ship?

    How does it affect the railway, physically or (Inaudible)

    Robert W. Ginnane:

    Perhaps, I can answer the question best this way.

    Farrell, the managing director for Stevenson & Young, was asked if he would do for the Army, what they would do for a dollar, what he was doing for the Army for 287, at least not by land.

    Felix Frankfurter:

    Yes.

    Robert W. Ginnane:

    The fact that — that the Army base —

    Felix Frankfurter:

    How about dollar’s worth?

    Is there any equation there between a dollar’s worth for the Army and a dollar’s worth for the (Inaudible)

    Robert W. Ginnane:

    Well, the core of the Commission’s case was that the – that — the core of the Commission’s position in dismissing the Army’s complaint was that no private shipper in the possession of the Army here would get – would get an allowance of a dollar for performing these services for itself.

    The Commission’s position was, basic position, the Army here, so far as the law is concerned, is in the position of a private shipment insisting upon receiving its export freight at its own pier.

    Robert W. Ginnane:

    A private shipper, in — in no circumstance, would not get an allowance for performing the services for its own.

    Felix Frankfurter:

    You mean that there’s — a private shipper who had a pier (Inaudible) conveniently could take care of the exportable freight and where it couldn’t (Inaudible) where it couldn’t be conveniently handled at a — at a competent market here wouldn’t get — wouldn’t have his (Inaudible)

    Robert W. Ginnane:

    Universal practice (Inaudible)

    And may I say that when — when the private — when the big oil company or big shipper, because only big shippers have their own piers, and he decides to take delivery at his private pier and therefore not get the benefit of — of its wharfage and handling charges, he does it, not as a matter of whim, but for rather compelling reasons.

    For example, it may be involved substantial periods of storage before the goods moved out by ship.

    So he — he may desire to — to store the good — goods on his own pier instead of paying the railroad storage charges or in many cases, he wanted to unload, reassemble, perhaps repack the goods, those are the — to do those things, he has to — he has to take possession of the export shipment and practically have his own facilities.

    Harold Burton:

    But if he did that at his pier at Norfolk under the present tariff, he — he would still have to pay the same amount of tariff that he does now, is it not?

    Robert W. Ginnane:

    The same rate.

    That’s right.

    Harold Burton:

    The same rate.

    In other words —

    Robert W. Ginnane:

    With — with — without —

    Harold Burton:

    — he — he would not get the dollar.

    Robert W. Ginnane:

    He would not get the dollar.

    He would get neither the services nor payment or an allowance from service.

    Harold Burton:

    And the device in that, device is, is in allowing the railroads to strict the service to their own — to these particular piers.

    Robert W. Ginnane:

    That may be so.

    Harold Burton:

    That question is not here.

    Robert W. Ginnane:

    And that question was never litigated in this case.

    Now, the — the Government talks quite a bit about it in their reply brief for the first time.

    No such question was litigated before the Commission.

    And the Commission’s original decision in 1929, which it held that it would permit carriers to provide these services under the line-haul rate instead of require them to file and publish separate charges for it, that the — while the Secretary of the Army appeared in that proceeding, the Commission’s proceeding — the Commission’s decision was never challenged in the Court.

    And as I say, the question was not raised and litigated here either before the Commission or before the court below.

    Harold Burton:

    But — but that, in essence, that question is here, is it, when the Government asked to have the money returned to them, the dollar?

    Robert W. Ginnane:

    They disclaimed it, both in their main brief and in their reply brief.

    They say, “We do not challenge that they put up the dichotomy of the public-private — public pier-private pier dichotomy.”

    “Always says,” says the Government, “is that we, in the circumstances of this case, are entitled to different treatment than the private shipper in the same circumstances would get.”

    Felix Frankfurter:

    The opinion as to this, Mr. Ginnane, just give me the name of one big shipper who owns a pier (Inaudible)

    Any one.

    I suppose (Inaudible)

    Felix Frankfurter:

    What’s the name?

    (Inaudible)

    Robert W. Ginnane:

    Gulf Refining Company, Imperial Tobacco Company and so on.

    Felix Frankfurter:

    (Inaudible) when an oil for export (Inaudible) delivering at its pier?

    Robert W. Ginnane:

    Well, I — I have to — the — the terms of the tariff, I first needed to avoid you there, the tariff provides that the railroads will not absorb as it were these wharfage and unloading charges on commodities of freight cars.

    Felix Frankfurter:

    Well —

    Robert W. Ginnane:

    That’s a separate provision in the — in the tariff which is not being litigated in the case.

    Felix Frankfurter:

    (Voice Overlap) is there some — is there some way there is a tariff?

    What I want to know is that —

    Robert W. Ginnane:

    Yes, the law —

    Felix Frankfurter:

    — you tell me (Inaudible)

    Robert W. Ginnane:

    Imperial Tobacco Company.

    Felix Frankfurter:

    Imperial Tobacco Company.

    If a shipment of tobacco for the Imperial Tobacco (Inaudible) somewhere in Europe, would assume that maybe (Inaudible) of the car of tobacco can’t appear in (Inaudible)

    Is that supported as a matter of custom for its (Inaudible) for Imperial Tobacco, is that stuff delivered at the pier of the Imperial Tobacco?

    Robert W. Ginnane:

    If they so specify —

    Felix Frankfurter:

    If they do —

    Robert W. Ginnane:

    — there — there title to specify it.

    Felix Frankfurter:

    If they do specify, I was assuming that they so specify, and if they so specify (Inaudible) is delivered to their pier, is the dollar absorbed?

    Robert W. Ginnane:

    It is not absorbed by the railroad.

    Felix Frankfurter:

    No matter what the reason is why they want it delivered in that same pier, is that right?

    Robert W. Ginnane:

    I can only say it is my understanding.

    I have seen nothing that — that would contradict it that where the shipper — where — where the shipper specify the delivery at his private pier, the railroads did not absorb it.

    Felix Frankfurter:

    What is the —

    Robert W. Ginnane:

    So far as I know, that’s a universal practice.

    Felix Frankfurter:

    (Inaudible) that’s why he (Inaudible)

    First, can we know from this record whether the shipments for the Imperial Tobacco are or are not absorbed by the railroads I think in this record?

    Robert W. Ginnane:

    It’s in this record again and again without contradiction from the appellant’s witnesses, Army traffic witnesses.

    That is their understanding of — of a railroad’s tariff practices that if export shipment is delivered to the shipper’s private pier —

    Felix Frankfurter:

    It is not absorbed.

    Robert W. Ginnane:

    — that they did not take these allowances.

    I understood Mr. Spritzer to expressly agree with you on that point, is that right?

    Ralph S. Spritzer:

    That’s correct.

    Robert W. Ginnane:

    I believe there’s —

    Felix Frankfurter:

    And (Inaudible) that because that — that’s their choice.

    It would just as — if you want to (Inaudible) that’s their choice.

    Robert W. Ginnane:

    And for good business reasons such as —

    Felix Frankfurter:

    (Voice Overlap) —

    Robert W. Ginnane:

    — paying their own storage charges, the opportunity to resort or otherwise process the goods which they could not do if — if the export freight was delivered at a public or railroad pier and later ride along side this feature.

    Felix Frankfurter:

    And then — and then the difference to the narrow ones, that Imperial is free to have (Inaudible) but it could be delivered to some other pier without the necessity (Inaudible) without the necessity that it must be delivered to the Army.

    Robert W. Ginnane:

    Yes.

    Felix Frankfurter:

    Is that a narrow point?

    Robert W. Ginnane:

    That’s right.

    Imperial can have — can — can have delivery of its export shipment of tobacco.

    Felix Frankfurter:

    (Voice Overlap) they can.

    That’s supposed to be (Inaudible)

    It might (Inaudible) so far as — so far as the (Inaudible) in your control, it could be taken care of as in other and its own (Inaudible) but in the case of the Army, it could not.

    Robert W. Ginnane:

    In freight, I don’t know, sir.

    Felix Frankfurter:

    You don’t think so.

    Robert W. Ginnane:

    I say I do not know whether — what is — in fact is practiced over —

    Felix Frankfurter:

    Mr. Spritzer makes — Mr. Spritzer relies on the finding of the Commission that it’s necessary (Inaudible)

    Robert W. Ginnane:

    The Commission — as — in fact, I do not know whether it is necessary for — for the Imperial Tobacco Company to take delivery at a — at a private pier.

    Felix Frankfurter:

    Well, according to — what I understood Mr. Spritzer’s argument, that’s the conclusion to the problem.

    Robert W. Ginnane:

    What the —

    Felix Frankfurter:

    So is it —

    Robert W. Ginnane:

    — what the Commission —

    Felix Frankfurter:

    — so the Army, that it — and — and therefore, it must be absorbed.

    It must be just as valid in the case of a private shipper.

    Robert W. Ginnane:

    It’s — it’s often a great imports, the important convenience to private shippers to — to receive export shipments at their piers so — for their convenience, for their reason.

    They can do things to the freight that they couldn’t do if it were delivered on a public pier unloaded right beside the ship, storage for their own purposes.

    In that situation, you are (Inaudible)

    Robert W. Ginnane:

    The line-haul rate adjustment —

    (Inaudible)

    Robert W. Ginnane:

    The line-haul rates of these railroads would serve the North Atlantic ports to absorb the wharfage and unloading charges except where the freight is delivered to the shipper’s private pier.

    The freight — the export, where it is delivered to the shipper’s private pier, the railroads do not, under these tariffs, absorb the wharfage and handling charges.

    Stanley Reed:

    (Inaudible) delivered its stuff to the Government pier, it would get a lower rate than the Government would enlist up, wouldn’t it?

    Robert W. Ginnane:

    If it — if it delivered its — its freight —

    Stanley Reed:

    Suppose it is — suppose (Inaudible)

    Robert W. Ginnane:

    It delivered its freight to that portion of government piers 1 and 2, which are being operated by Stevenson & Young under permit as a — as a public terminal facility for the railroads, they would — they would get the $1 allowance.

    Stanley Reed:

    And — and the Government would.

    Robert W. Ginnane:

    The Government would not because it takes exclusive possession and control of its freight for its convenience under the portions of the piers.

    Stanley Reed:

    What — what —

    Robert W. Ginnane:

    It’s the same as — separate piers were involved.

    It’s just an accident in this case that — that the same two piers — portions of the same two piers are used partly for commercial freight, partly for military freight.

    The terms of principle, the legal problem involved, the question — the issue is — is — I — the same.

    (Inaudible)

    Robert W. Ginnane:

    As for their — at one pier, at a railroad pier, it was absorbing, on commercial shipments, these wharfage and handling charges, but it was refusing to do so at the next pier over here where the Army is insisting upon receiving its own freight and is insisting that the wharfage and handling services be — be performed at its convenience rather than the railroads’ convenience as in the case of the first pier which is controlled by the railroad.

    Are there any other situations, any other ports or — or are there any ports where there is no public pier, where there’s only a private pier, sort of this, and where private piers are leased out for public purpose?

    Robert W. Ginnane:

    I doubt it.

    (Voice Overlap) —

    Robert W. Ginnane:

    I — I would doubt, Your Honor, if there is a major seaport whether or not —

    No public piers.

    Robert W. Ginnane:

    — both public and private piers.

    I assume not.

    Robert W. Ginnane:

    But I doubt it.

    Hugo L. Black:

    What you say — what you say is that — your position has been that if tariff applies that the railroads will absorb the wharfage and handling charges where a company owned by the railroad, wharfage company owned by the railroad are run by its agents, does the working —

    Robert W. Ginnane:

    That’s right.

    Hugo L. Black:

    — and no other.

    Robert W. Ginnane:

    That’s right.

    Hugo L. Black:

    As I understand it, they insisted about the different (Inaudible) I have been enlightened maybe — what Justice Frankfurter said, it seems to me the difference.

    Hugo L. Black:

    The rail — the Government says that while the railroads have provided for such an absorption of charges for the ordinary shipment, that its shipments are certain that it’s fully impossible for the Government to take advantage of that absorption of wharfage and handling charges and he relies on findings that that is certain.

    Now, if that’s true, is it — does the railroad has the right to enter to the wharfage business for such a limited character that they can give it to some shippers who could utilize and deny it to others when the Government will not supply them the kind of — cannot supply them the kind of service they need?

    Is that question here?

    You say that question is not here?

    Robert W. Ginnane:

    No, that question is here.

    Hugo L. Black:

    But if that question is here —

    Robert W. Ginnane:

    And — and (Voice Overlap) —

    Hugo L. Black:

    — how do you answer the argument?

    Maybe you can, I want to hear it.

    How do you answer this argument?

    If you have findings that the Government must ship so — its — its nature that it would do it no good, it just can’t take it bad and you put the railroads off, but others can.

    The railroads offer either through their own wharfage and handling agencies or through an agent to survive or to absorb the wharfage charge, is that right?

    Robert W. Ginnane:

    And that arrangement is satisfactory with a great majority of shipper.

    Hugo L. Black:

    That’s right.

    But it is not — some of them cannot take advantage.

    Robert W. Ginnane:

    That’s right.

    Hugo L. Black:

    The Government being one of them.

    Robert W. Ginnane:

    The — the Government is one of them.

    As the Commission found, it had special needs which could not be satisfied by the routine, regular wharfage and handling services.

    Hugo L. Black:

    Stated in another way, it had —

    Robert W. Ginnane:

    Provided by the railroads under the tariff.

    Hugo L. Black:

    — it had special demand that although the Government — although the railroads are providing that those who do not have special demands can get their line-haul freight reduced.

    Those who have special demand can neither get their line-haul reduced nor get absorption of wharfage rates.

    Robert W. Ginnane:

    Because that is not a service which the Government provides.

    And even look at in that point of view, we — and that the Government — the shipper, the Army as a shipper is still in the position of a private shipper.

    Hugo L. Black:

    Oh, undoubtedly, I — I would say that —

    Robert W. Ginnane:

    Because the private shippers will — will decline to take advantage of the services off within the line-haul rate, again, only for special compelling practical reasons where — where they can do so, they do.

    Hugo L. Black:

    If a private — if a private shipper — one — the question I asked in relation to the government law, if a private shipper, by reason of some special situation that it has to meet the connection with its — it’s commodity, cannot possibly take advantage of your railroad — of the wharfage companies that the railroad will absorb, if it cannot do it, it would be in precisely the same situation that the — the Commission has found the Government knew, wouldn’t it?

    Robert W. Ginnane:

    That’s right.

    Hugo L. Black:

    And of course, there’d be no more reason to grant the — just merely the fact that the Government wouldn’t give it any right, but it gets down to a question, does it not, whether the railroad, which is primarily in the railroad business, can provide that for line-haul charges to shippers, it provides some service for those who can take advantage of it and will absorb the charges but declines to provide that services that — that absorb that rate or to absorb the rate or refund it for shippers who need the wharfage services just as much but are unable to utilize the services of the companies that the railroad has approved?

    Robert W. Ginnane:

    Long ago, the Commission held that for the railroads to offer under the line-haul rates these services, available, but not to private shippers who received — not available to private shippers, who, for their own practical reasons, chose to receive their freight at their private piers, held that that was a reasonable practice.

    Hugo L. Black:

    But did it hold?

    Did have the —

    Robert W. Ginnane:

    And that has not been —

    Hugo L. Black:

    — port?

    Robert W. Ginnane:

    — and that has not been challenged in —

    Hugo L. Black:

    Did it litigate in that case or was it litigated or decided or would agree that there were some shippers who wanted to haul and had to haul on that line-haul service but who could not possibly take advantage of the railroad wharfage and handling matters and who would thereby, in the long run, be compelled if they were line-haul charge than those who are more fortunate?

    Was that litigated in the case you’re talking about?

    Robert W. Ginnane:

    I would have to admit in — in all honesty that the earlier controversies before the Commission, relating to this practice, have consisted of various private warehouse — houses trying to get — trying to get the benefit — trying to get treated as in — the same — trying to be — kept the Commission to hold that they must be allowed.

    They must be permitted by the railroads to perform for them these — these terminal services.

    Now, the precise question which — which Your Honor has asked has not been in the forefront of this earlier administrative litigation.

    And it has not — it is not been litigated here before the Commission or in the court below.

    The Government —

    Hugo L. Black:

    Isn’t it necessarily involved?

    Robert W. Ginnane:

    — disavows —

    Hugo L. Black:

    Isn’t it necessarily involved?

    Robert W. Ginnane:

    Pardon?

    Hugo L. Black:

    Is it not necessarily involved?

    Maybe it’s not.

    Robert W. Ginnane:

    I think all is necessarily involved.

    It’s — it’s the claim which the Government presents to the Court.

    Hugo L. Black:

    And this is all that —

    Robert W. Ginnane:

    And they say — and they say that — that they disavow any quarrel of what they call private pier, public pier dichotomy.

    And they say, “We’re different.

    We’re different from the private shippers.”

    They say, “We’re different because we’re the Government and because we were dealing with national defense needs.”

    In their main brief, the only authority they cited for this claim of difference —

    Hugo L. Black:

    I don’t take it personally.

    I don’t think it’s any of all that.

    But Commissioner Aldrich took the position that the act itself requires that it be not rates fixed which result in effecting an unfair charge or — or unfairly making some shippers pay more than others for the same line-haul service.

    Robert W. Ginnane:

    Well, the majority of the Commission took a contrary position as you know.

    Hugo L. Black:

    But what it —

    Robert W. Ginnane:

    They relied heavily —

    Hugo L. Black:

    — what it indicated is it was litigated and determined that question.

    Robert W. Ginnane:

    Thought it was not unreasonable here.

    Felix Frankfurter:

    Mr. Ginnane, is — is such subtle as (Inaudible) that the legal question is so subtle in what (Inaudible)

    But I just like to ask you a question before I proceed what I fully understand that the Commission’s position (Inaudible)

    The Interstate Commerce Act allows you to make charges for — for services rendered in the transportation (Inaudible) the railroad can only be in transportation business, that is the (Inaudible)

    But transportation isn’t a technical and exclusive form, there’s an area of (Inaudible) and not be deemed transportation and certainly, one must started the proposition that the railroads have been allowed as part of the transportation services to indulge in the wharfage business in their hand after the (Inaudible)

    Now, then, is your position is that the railroads tomorrow, if they want to, could say, “We just come up to our terminal in the Norfolk as everybody — we are not going to do a thing.

    We’re not going to unload.

    We make no positions for unloading every shipper, we must do the best that we can.”

    It could, couldn’t it?

    Robert W. Ginnane:

    Oh, I think I have to answer you yes because the Commission on the wharfage —

    Felix Frankfurter:

    I don’t — I don’t — it’s not arguable.

    I don’t think it’s arguable.

    Robert W. Ginnane:

    No, because the Commission on wharfage case merely said that — that the carriers might add service charge.

    Felix Frankfurter:

    I — I don’t think that’s —

    Robert W. Ginnane:

    Didn’t say they must.

    Felix Frankfurter:

    — I don’t suppose that was arguable.

    I’m assuming that the (Inaudible) having the — the railroads may — are allowed without indulging in services that are not — that are nontransferable services, the concept of transportation (Inaudible) the number as it is.

    They may give this wharfage and just wharfage services and that your position or the Commission’s position is that the Government decrees that the railroads will give wharfage service on condition, on their condition that they will undertake the wharfage even themselves or for appropriate agents but if any shipper for any reason, convenience and necessity or what it wants to do in all (Inaudible) then we will give you that service or include it, absorb it in the line-haul.

    Isn’t that the position of the Commission?

    Robert W. Ginnane:

    Yes.

    Harold Burton:

    Now, what — what is the reason that all these excess story of services like wharfage in this case or stories that seems to be an old case and so forth are not added on to the line-haul, that is separate in the part from it?

    That’s all that they’re asking for here.

    Is that all that the Government is asking for?

    Robert W. Ginnane:

    No, the Government is not here asserting.

    Harold Burton:

    Well, but it — it affects —

    Robert W. Ginnane:

    That — that the charges should be separately stated.

    Harold Burton:

    It — it affects just to get to that?

    Robert W. Ginnane:

    They don’t care what happens to other — to — to truly private shippers.

    They say they don’t.

    They say, “We want separate and distinct treatment, treatment which we will assume,” they say, “that no private shipper would be entitled to”.

    Harold Burton:

    What if it is given to the Government, does it have to be given to private shippers?

    Robert W. Ginnane:

    It — it’s very — it — it — that may very well be so —

    Harold Burton:

    (Voice Overlap) —

    Robert W. Ginnane:

    — and that was obviously said that they —

    Harold Burton:

    The determination which you’re objecting to (Voice Overlap) —

    Robert W. Ginnane:

    And that was obviously the — the apprehension of the carriers down the Norfolk area when they were asked for this back in 1951.

    They were afraid that it would spread.

    And — and the Commission agreed to them because the Commission — the — the Commission held in this case that for the — that for the carriers to make such an allowance to the Government as a shipper, while not making such an allowance to private shippers in the same circumstances, would be a — would be a discrimination, a deviation from — from tariffs in violation of Section 6.

    The Commission relied heavily in what we think is the persuasive analogy of the switching cases as decided by the Commission and with the approval of this Court.

    In brief, in those cases, it was pointed out that the line-haul rates generally include delivery to shippers and delivery, among other things, usually includes delivery at the unloading point on a shipper’s spur per switch.

    But in the case of large industrial shippers, the Commission found where there are many loading and unloading points within — within the — the limits of the shipper’s plant, the Commission held, and this Court sustained its decision, that this duty to deliver under the line-haul rates did not include delivery beyond and — beyond an uninterrupted movement at the carrier’s convenience which usually meant that the line-haul obligation seized to interchange tracks at the — at the beginning of the plant limits.

    The principle of those cases was that if a shipper’s convenience is interposed to prevent terminal services at the carrier’s convenience, then the carrier is relieved of obligation even to perform a service or to make an allowance to the shipper for doing so.

    And — and we think that that principle long applied by the Commission and by the — by the courts applies here.

    Felix Frankfurter:

    One of the reasons behind that line of decision, Mr. Ginnane, is that a contrary decision would open the door to cover rebates (Inaudible) that is you take to break the company like the (Inaudible) process if it once require to deliver the interchange traffic, they could have the benefit of their (Inaudible) 15-20 miles, isn’t that true?

    Robert W. Ginnane:

    And that —

    Felix Frankfurter:

    Is there any such consideration here (Inaudible)

    Robert W. Ginnane:

    It’s — I — it seems to me that similar possibilities exist here.

    The railroads get in the business of making allowances for wharfage to big shippers.

    I say big shippers because only big shippers, who have lots of traffic to dispose of, operate pier — operate private piers.

    And that — and that’s been the sort of situation which has led to various types of discriminatory practices in the — in the history of American railroads.

    Hugo L. Black:

    Under some that operates private piers or sort of peculiar type of business they have they — they hold in their piers just to provide the kind of services they need.

    Robert W. Ginnane:

    That’s right and — and where — because the necessities of the business, they want to do things to the freight that they couldn’t do in the ordinary wharfage and handling services provided by carriers.

    I think we should assume that a private shipper takes delivery at his private pier only for what seemed to him to be pretty compelling reasons which more than offset what he losses by — by not receiving absorption of this wharfage and unloading charges.

    Hugo L. Black:

    Well, if there’s —

    Robert W. Ginnane:

    It wouldn’t be just whim.

    Hugo L. Black:

    — to be in which it depends on reasonableness and fairness, which I state in advance might be an issue that the Commission would have to decide, the reasonableness and fairness.

    Hugo L. Black:

    Why would it be fair to impose a heavier charge in effect to railroads for transporting goods from one place to another than some other goods, which are such nature that the person has to handle its — its — forfeit himself?

    That seems a little difficult.

    When you take it back and make them pay more for carrying the goods because of the peculiar nature, I think there are quite a number of businesses in the country that do manufacture and ship commodities that is called for special services, but each one is entitled, I should suppose, to a fair railroad rate without regard to the fact that the peculiar type of the commodity requires different type of handling.

    Robert W. Ginnane:

    Well, when that issue was before the Commission in 1929, sir, it became very clear that in the background of the system of — of a terminal charge absorption in the line-haul rate, whether or not that should be permitted, involved intense delicate factors of competition.

    I mean such a port as New York with its unique and heavy-lightweight charges in Philadelphia, Boston, Norfolk and Baltimore.

    In other words, lurking under the — under these and — related cases, it’s probably the most controversial delicate problem in transportation that has ever been put before the Interstate Commerce Commission or before Congress, the competition in these North Atlantic seaports.

    Thank you.

    Earl Warren:

    Mr. Cousins.

    Windsor F. Cousins:

    If it please the Court.

    This case, including the other Norfolk case, had been decided four times by the full Commission.

    Its decisions were in line with 12 or 15 other opinions of the Commission over the past four years.

    The principles that the Commission has established are strictly in accord with the rules laid down by this Court in the famous allowance cases such as the old Arbuckle Case, U.S. versus B. & O., 231 U.S. 274.

    Now, not only has the Commission held that it is not discriminatory to do what we do, but the Commission has held again and again that if we did for any private shipper such as Standard Oil, who has a pier at Norfolk, Swift, Army, only the biggest industries who can afford to track — track vessel, if we did for anyone of them what the Government asks us to do here, we’d be guilty of a rebate.

    So the Justice Department, instead of standing up for principles of regulation that have been established by the courts and by the Commission is attempting here for the sake of winning a money judgment to throw out of the window every rule that we know about and have kept strictly in action during the past four years to avoid rebates.

    Now, let me simplify this.

    To answer Justice Black, although, I don’t want to begin at this point, no shipper pays more than any other shipper.

    No shipper pays for service he doesn’t get, including the military.

    We don’t — we don’t charge anybody for providing piers and unloading their freight if we don’t render the service.

    Now, there is a great excess of pier facilities in Norfolk, probably 10 times more than can be used.

    Four railroads own their own pier facilities, an operator.

    Those piers are adequate to handle all the traffic that goes through Norfolk including the military.

    One of those railroads, the Chesapeake and Ohio also serves this so-called Army base, publishes the same export rates that the other railroads published but does not undertake to absorb any wharfage or handling charges.

    It never has and the Commission held in 1929 that it didn’t have to because there is nothing in the export rates, the line-haul rates that requires this service to be rendered.

    Therefore, the Commission has required one railroad to publish the same rates to the same terminal but not to render the services.

    Now, prior to 1951, this public wharfinger was in charge of the facility.

    He was an agent of the railroads.

    We didn’t just agree in a tariff for some place to pay him so much for doing something.

    He was a railroad agent.

    The contract, under which he acts, is in the record, page 479.

    He agrees to provide pier space for the railroad like their own pier space.

    Windsor F. Cousins:

    This is just a means of supplementing railroad facilities.

    Instead of building our own, we rent a facility, and that’s what we do here.

    This public wharfinger, who is in the nature of public utility himself, provides us wharfage space.

    He takes charge of all railroad shipments.

    He keeps custody.

    He agrees to collect our freight charges.

    He agrees to be liable to us for the goods.

    He agrees to collect the published railroad storage charges.

    In certain instance, he retains of — for his compensation.

    In others, he gives them to us, but he acts for the railroads in all respects that the railroad would have to act if it were there itself.

    Now, we pay him compensation, and we can pay him anything we want.

    The Commission has no control over it.

    The Supreme Court of the United States has no control over it.

    It’s solely a matter of bargaining.

    We do pay him certain amounts of money that total a dollar.

    And now, the — the Government wants us to pay it a dollar although it doesn’t purport to access our agent.

    It doesn’t purport to do the services that the — that our agent does for us, but this is what it does.

    Prior to 1951, when this was a railroad terminal, everybody, including the military, got the same service.

    And the military shipped over to that terminal as the record shows.

    The military today and all through the war has shipped through such a terminal in Philadelphia and has gotten the service.

    But the Government, not the Army, the Federal Maritime Board, dispossessed that public terminal operator in 1951 and split the terminal into three parts.

    One part, it leased to the United States Navy.

    They don’t call it a lease, they call it a permit.

    The document itself is in the record, whatever it is.

    One third — no, not — I’m not speaking of proportion, but one proportion went to the United States Navy.

    Whereupon, the United States Navy, from that day to this, has taken delivery of its own shipments.

    It has paid the export rates.

    It has not received nor requested wharfage and handling allowances and does not in this case.

    Another portion of the terminal was turned back to this public utility, Stevenson & Young, to continue its operator — its operation as a public facility and as agent of the railroad.

    And it remains so until the Army threw it off beginning in 1953, the first day of January 1953.

    Windsor F. Cousins:

    Now, what happens since then, nobody knows because the Army has never been able or has been willing to tell the Commission or a court how their case was changed by the cessation of the Stevenson & Young operation.

    But in any event, on that pier operated by Stevenson & Young, as long as it remained in existence, and today, if it so operated, any shipper, including the military, can have his goods exported without paying the published plus charges because we absorb them.

    Now, we do that for this reason, the railroads.

    We offered to supply piers in these ports.

    It’s admitted on all sizes.

    We have no legal obligation to supply piers, but we do.

    So we supply piers, and it happens at Norfolk.

    We supply more than adequate piers.

    This record shows that even the Army, when it took over its pier, wasn’t used in it to more than one force — force of its capacity.

    There’s any amount of excess pier term space down there.

    Now, what we don’t do at Norfolk or any other port is to make a rebate to a shipper who says he does not want, for one reason or other, to ship his goods over the railroad pier but he’s going to have his own pier.

    This record shows who the big pier owners are, not only at Norfolk, but at all in the other ports.

    There are several exhibits, and they’re only the big ones, the Standard Oils, the U.S. Steels, the Armor and Swifts, the ones like that that the Justice Department would be watching more carefully than anybody else in the world if we made a rebate to them.

    There’s still a principle of law that says that when a railroad is agreeable to supplying a pier station, which is really a steamship station, it should be supplied by the water carriers rather than the railroads.

    But when we are willing for the purpose of attracting traffic to our rails and facilitating them over, when we are willing to supply that, there is no principle that we have to do something similar for the shipper who does not want to ship these goods over our pier.

    The — the cases are against that, the case that Mr. Spritzer explained, the Atchison case is against that.

    That’s the case that says, “Whatever service or facility, a railroad has the duty to supply, it has the right to supply.”

    And just in passing, so that I don’t forget it, let me say that Mr. Spritzer today attempts to distinguish the Atchison case on the ground that it dealt with transportation service whereas this is accessorial service.

    In the District Court below in this case, the Justice Department argued that this was transportation service, not accessorial service.

    It’s reversed its position completely.

    And in support of its position in the court below, it cited Railroad Retirement Board versus Duquesne Warehouse, which it said held that unloading services were transportation services.

    And it cited a whole lot of line of old Supreme Court cases holding that the duty of one railroad to deliver — of a railroad to deliver to a connecting carrier was a transportation service.

    Those — that suited the kind of argument what the Government was making in — in the District Court.

    Felix Frankfurter:

    The only point about accessorial as against physical transportation services is that you don’t have to deal accessorial services, but you do have to haul a train.

    Windsor F. Cousins:

    Yes.

    And a few minutes ago, when Mr. Spritzer read to you a quotation from the Atchison case, if he had only read on one sentence further, he would have found an entirely different result because the Court said right after his quotation saying that one party or the other might have the right and duty to furnish this service then the Court said, “At least until by tariff publication, the railroad undertakes it.”

    Hugo L. Black:

    May I ask you?

    Suppose your tariff, let’s say, use this language instead of the other, maybe — maybe I’m wrong in thinking it means the same thing but (Inaudible) Suppose the tariff said that all shippers who ship goods between points in certain districts shall pay 90 cents a hundred if after the goods to get to the Norfolk, they use the wharfage — take the wharfage services supplied by the railroad but all who do not take the wharfage services could be a dollar per hundred?

    Windsor F. Cousins:

    No, I wouldn’t defend that.

    Hugo L. Black:

    Well, isn’t that the effect of this?

    Windsor F. Cousins:

    Oh, no, not at all.

    Hugo L. Black:

    Well, if — if the person that uses your wharfage gets a dollar’s worth of service, 10 cents you say and reduces it to 90 cents or whatever it is, but the man who doesn’t use your service, doesn’t get the line-haul reduced.

    Windsor F. Cousins:

    No.

    Hugo L. Black:

    So what’s the difference?

    Windsor F. Cousins:

    Neither does he pay for it.

    The — the Commission found in this case on the facts which are undisputed of record because they were not only put in by the defendant’s witnesses but were admitted by the Army witness that the line-haul rates contain no element or factor of compensation to cover these services.

    Hugo L. Black:

    Well, what’s it for?

    Windsor F. Cousins:

    The —

    Hugo L. Black:

    One of them gets the service and one of them doesn’t.

    Windsor F. Cousins:

    Gets a —

    Hugo L. Black:

    The one that doesn’t get the services, it cost him more to get his goods to ship than the other.

    Windsor F. Cousins:

    Some — some shippers — if Your Honor please, you should understand that the freight rates are not published in a way that includes these services.

    The tariffs published extra charges for wharfage and handling.

    They are in addition to the rate.

    So the — the shipper who does not meet certain conditions, which are described in a moment, has to pay both the line-haul rate and the accessorial charges if he uses the railroad services.

    But on certain export freight, not all freight, much is excluded.

    This only applies to a limited amount.

    On certain export freight, the railroads say they will waive these plus charges.

    In other words, they give this service freight as closely as you can come in a realistic sense to free services because all they do when they say they will absorb the charges in the freight rate, what they mean is they will not charge these extra rates for these services published in the tariffs.

    And here’s why we do it.

    This — this is the reason why we only unload freight on railroad piers because this only applies to freight that is interchanged between railroad and water carrier.

    This is freight that moves with no great incontinuity from this country to a — to a foreign destination.

    When this practice began, we issued through bills of lading to London, wherever it went.

    We don’t do that anymore.

    But nevertheless, the rates apply only to shipments, which moved from the railroad to the vessel without possession being lost to the shipper.

    Now, at the port on our piers, somebody has to make the interchange from the car to the vessel.

    We cannot permit the shipper to come on the piers and do it for himself.

    We have never thought that was feasible.

    For one thing, the shipper isn’t at the port very often, so it has — the burden has been divided off between the railroad and the water carrier that we unload from the floor of the — from the car to the floor of the pier and the vessel picks it up from there and puts it in, in the ships.

    Now, the Army doesn’t want that service for this reason, and here is the distinguishing characteristic that prevents a finding of discrimination.

    Windsor F. Cousins:

    Army shipments are not consigned, like these commercial export shipments.

    They are not consigned to the steamship company or to a shipper’s agent.

    These military shipments are consigned to the Army itself at Norfolk.

    They are delivered by the railroad, not to a vessel, for interchange is necessary.

    The railroad never sees the ship that takes these goods.

    They are delivered to hauled tracks two miles back to the pier where the Army directs the railroad to deliver its shipments.

    There are 28 miles of track on this Army base.

    It’s just exactly like a big industrial track dealt with in the many switching cases, terminal-switching cases.

    And the Commission found in this case, as it found in all those cases, that when a railroad makes the delivery that is requested and demanded by the shipper, the obligation ends.

    Now, there is no occasion for us to unload army freight because we don’t deliver to the vessel.

    It isn’t that kind of freight.

    There is no dealing between us and the vessel.

    The Army wants to operate its piers for the same reason that the big shippers want to operate their piers because it finds it economical to change the character of its freight.

    Its own witness testified that the identity of the freight was lost while it was on the pier.

    That is the identity between the rail and the water movement, and you couldn’t follow it.

    Felix Frankfurter:

    The freight — the freight, the destination of which is — is Norfolk itself, the distribution from Norfolk.

    That freight doesn’t get the benefit of this doubt.

    It doesn’t.

    Windsor F. Cousins:

    No, and that’s the military freight, and that’s the way the other big shippers handle their piers, and that is the only reason why they have their piers because instead of dealing with their freight back at the point of production, they find it convenient and economical to — to deal with their freight on the piers.

    They assemble it.

    They breakup loads.

    They consolidate shipments.

    The Army processes it.

    And then, in addition, the Army does one other thing which big shippers don’t ordinarily do, it wants to load its freight in the ships in a certain manner.

    Load these things.

    Harold Burton:

    Does the — does the Army pay the export rate?

    Windsor F. Cousins:

    The Army pays the export rate because of a concession made for the railroads.

    They’re not entitled to it under their normal tariffs because there isn’t continuity.

    It isn’t export shipments in the — in the tariff sense.

    But during the war, at the request of the secretaries and the Army and the Navy, the railroads in the East, not in the West, the railroads in the East published special export rates applicable to these shipments moving over military bases.

    Windsor F. Cousins:

    It was necessary to give them a special provision because the regular one wouldn’t cover.

    That’s where we made our mistake.

    We gave this as a concession to the Government for shipments that wouldn’t comply with the tariffs and ever since then, the Justice Department has been trying to turn it against us and get a second concession based on the first.

    At Pacific Coast ports, the — the Western Railroads refused the secretaries of those departments those rates.

    And —

    (Inaudible)

    Windsor F. Cousins:

    Yes and no.

    If their — if shipments move over their pier direct to the steamship with no interference up by them, they get the export rates.

    If the shipment stop in their hands, delivered to them as to the Army, they pay the domestic rates, which are much higher.

    Felix Frankfurter:

    Is that — is that indicated in the bills of lading at the point of origin?

    Windsor F. Cousins:

    The bills of lading are entirely different, Your Honor, because contrary to what was said here today because the Government always uses a special form of bill of lading.

    Felix Frankfurter:

    No, I’m not talking about the Government.

    I’m talking the Imperial Tobacco.

    You say, if — if a stock goes straight from — from here — from the pier to the haul of the ship, that’s an export shipment and tied in to an export rate.

    Windsor F. Cousins:

    Straight from the car —

    Felix Frankfurter:

    (Voice Overlap) —

    Windsor F. Cousins:

    — from the car to the ship, yes.

    Felix Frankfurter:

    The car.

    Windsor F. Cousins:

    Yes.

    Felix Frankfurter:

    Now, what I want to know is whether that is indicated in the bill of lading —

    Windsor F. Cousins:

    Oh, yes.

    Felix Frankfurter:

    — at the point of origin.

    Windsor F. Cousins:

    Yes, it has to be consigned for export.

    It required some.

    And if I may have the indulgence to finish one sentence I began.

    Earl Warren:

    You may.

    Windsor F. Cousins:

    When I said that the Western Railroads refused to make this concession, which we made and got us into this fix where we have not tried this case in one place or another 12 times after they refused to do it and the Army didn’t get the service out there, they brought a complaint and the Commission held that it was not unreasonable or otherwise unlawful for them to have refused to do it.

    Thank you, Your Honor.

    Earl Warren:

    We’ll recess.