Opinion · Supreme Court of the United States
United States v. Western Pacific Railroad
1 L. Ed. 2d 126
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1956-12-03
- Topic
- general
holding that the Interstate Commerce Commission, not the court, should decide whether napalm gel bombs without fuses or bursters are "incendiary bombs" within the meaning of an ICC tariff | holding that the STB has primary jurisdiction to determine whether operations conducted by an STB-certified carrier are within the scope of its certificate | holding that the Interstate Commerce Commission, not the court, should decide whether napalm gel bombs without fuses or bursters are “incendiary bombs” within the meaning of an ICC tariff | finding that rate unreasonableness is a defense in an action to collect rail freight undercharges | explaining that, like an exhaustion of remedies requirement, the primary jurisdiction doctrine "is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties" | noting that “the application of the doctrine of primary jurisdiction is a matter of deference, policy[,] and comity, not subject matter jurisdiction.” | indicating that the ICC had primary jurisdiction to determine whether filed rates are reasonable | noting that in cases referring issues on the basis of primary jurisdiction, “the judicial process is suspended pending referral of such issues to the administrative body for its views.” | explaining that, like an exhaustion of remedies requirement, the primary jurisdiction doctrine "is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties” | explaining that, like an exhaustion of remedies requirement, the primary jurisdiction doctrine “is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties” | using statute of limitations to cut off defense is contrary to statute’s purpose of keeping stale litigation out of the courts | discussing the factors relevant to the decision whether to refer questions of tariff construction to the ICC | discussing the factors relevant to the decision whether to refer questions of tariff construction to the ICC | deferring to the agency’s primary jurisdiction to ensure needed uniformity in an area or when the agency has “special competence” over the issue | discussing the re- quirements for referral to an agency under the doctrine of pri- mary jurisdiction | stating that “because we regard the maintenance of a proper relationship between the courts and the [Interstate Commerce Commission] in matters affecting transportation policy to be of continuing public concern, we have been constrained to inquire [as to the reasonableness of rates]” | describing billing, payment, audit, and then deductions of carriers, there railroads | stating "[n]o fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation." | stating “[n]o fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation.” | " 'agencies created by Congress for regulating the subject matter should not be passed over' " | “ ‘agencies created by Congress for regulating the subject matter should not be passed over’ ” | estoppel defense not available to private shipper to prevent carrier from collecting higher tariff rate than quoted by carrier | “Where the question is simply one of construction, the courts may pass on it as an issue ‘solely of law'" | under circumstances of case, tariff construction was within exclusive primary jurisdiction of Interstate Commerce Commission | exhaustion of remedies doctrine applies “where a claim is cognizable in the first instance by an administrative
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delivered the opinion of the Court.
The three respondent railroads each sued in the Court of Claims to recover from the United States as shipper the difference between the tariff rates actually paid and those allegedly due on 211 Army shipments of steel aerial bomb cases filled with napalm gel.1 Approximately 200 of the shipments were made over the lines of respondents Bangor and Seaboard in 1944; the remainder were carried by respondent Western Pacific in 1948 and 1950.
Napalm gel is gasoline .which has been thickened by the addition of aluminum soap powder. The mixture is inflammable but not self-igniting. In a completed incendiary bomb the napalm gel is ignited by white phosphorus contained in a burster charge, which in turn is fired by a fuse. These shipments, however, involved only the steel casings and the napalm gel; burster and fuse had not yet been added.
The carriers billed the Government at the high first-class rates established in Item 1820 of Consolidated Freight Classification No. 17 for “incendiary bombs.” Pursuant to § 322 of the Transportation Act of 1940,2 the
The Government defended on three grounds: (1) that Item 1820 was inapplicable because absence of burster and fuse deprived these bombs of the essential characteristics of “incendiary bombs,” and hence no additional sums were due; (2) that if this tariff item was held to govern, the tariff would be unreasonable as applied to these shipments, and that as to this issue the court proceedings should be suspended and the matter referred to
The Court of Claims, relying on its earlier decision in Union Pacific R. Co. v. United States, 125 Ct. Cl. 390, 111 F. Supp. 266,4 entered summary judgment for respondents, two judges dissenting.5 It held that the shipments in question were “incendiary bombs” within the meaning of Item 1820 of the tariff and thus entitled to the higher rate. In addition, while seemingly recognizing the Government's right to have the defense of unreasonableness determined by the Interstate Commerce Commission, the court ruled that the running of the two-year period of limitations provided by § 16 (3) of the Interstate Commerce Act6 cut off the right of referral to the Commission. Lastly, the court overruled the defense of estoppel as to the respondents Bangor and Seaboard. Because of the importance of these questions in the administration of the Interstate Commerce Act, and alleged conflict among the lower courts on the issue of limitations, we granted certiorari. 350 U. S. 953.
I.
We are met at the outset with the question of whether the Court of Claims properly applied the doctrine of primary jurisdiction in this case; that is, whether it correctly allocated the issues in the suit between the jurisdiction of the Interstate Commerce Commission and that of the court. In the view of the court below, the case presented two entirely separate questions. One was the question
The doctrine of primary jurisdiction, like the rule requiring exhaustion of administrative remedies, is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties. “Exhaustion” applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. “Primary
No fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation. These reasons and purposes have often been given expression by this Court. In the earlier cases emphasis was laid on the desirable uniformity which would obtain if initially a specialized agency passed on certain types of administrative questions. See Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U. S. 426. More recently the expert and specialized knowledge of the agencies involved has been particularly stressed. See Far East Conference v. United States, 342 U. S. 570. The two factors are part of the same principle,
“now firmly established, that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts after they have been appraised by specialized competence serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by prelimi*65 nary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.” Id., at 574-575.
The doctrine of primary jurisdiction thus does “more than prescribe the mere procedural time table of the lawsuit. It is a doctrine allocating the law-making power over certain aspects” of commercial relations. “It transfers from court to agency the power to determine” some of the incidents of such relations.8
Thus the first question presented is whether effectuation of the statutory purposes of the Interstate Commerce Act requires that the Interstate Commerce Commission should first pass on the construction of the tariff in dispute here; this, in turn, depends on whether the question raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by that Act. Decision is governed by two earlier cases in this Court. In Texas & Pacific R. Co. v. American Tie & Timber Co., 234 U. S. 138, a shipper attempted to ship oak railroad ties under a tariff for “lumber.” . The carrier rejected them, urging that such ties were not lumber. In a damage action expert testimony was received on the question. This Court, however, held that the Interstate Commerce Commission alone could resolve the question. The effect of the holding is clear: the courts must not only refrain from making tariffs, but, under certain circumstances, must decline to construe them as well. A particularization of such circumstances emerged in Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285. There the Court held that where the
A tariff is not an abstraction. It embodies an analysis of the costs incurred in the transportation of a certain article and a decision as to how much should, therefore, be charged for the carriage of that article in order to produce a fair and reasonable return. Complex and technical cost-allocation and accounting problems must be solved in setting the tariff initially. In the case of “incendiary bombs,” since it is expensive to take the elaborate safety precautions necessary to carry such items in safety, evidently there must have been calculation of the costs of handling, supervising and insuring an inherently dangerous cargo. In other words, there were obviously commercial reasons why a higher tariff was set for incendiary bombs than for, say, lumber. It therefore follows that the decision whether a certain item was intended to be covered by the tariff for incendiary bombs involves an intimate knowledge of these very reasons themselves. Whether steel casings filled with napalm
The main thrust of the Government’s argument on the construction question went to the fact that the shipments here involved were not as hazardous as contemplated by the term “incendiary bomb” as used in the tariff, and that therefore the tariff should not be construed to cover them.9 Similarly, the dissenting judges below emphasized the absence from the shipments of the commercial factors which call for a high rate on incendiary bombs: “If the reason for the high freight rate is the incendiary quality of the freight, and if the freight does not have the incendiary quality, the reason for the high rate vanishes and the rate should vanish with it.” 132 Ct. Cl., at 118, 131 F. Supp., at 921. The difficulty with this line of argument is that we do not know whether
This conclusion is fortified by the artificiality of the distinction between the issues of tariff construction and of the reasonableness of the tariff as applied, the latter being recognized by all to be one for the Interstate Commerce Commission. For the Government’s thesis on the issue of reasonableness is not that the rate on incendiary bombs is, in general, too high. It argues only that the rate “as applied” to these particular shipments is too high — i. e., that since the expenses which have to be met in shipping incendiaries have not been incurred in this case, the carriers will be making an unreasonable profit on these shipments. This seems to us to be but another way of saying that the wrong tariff was applied. In both instances the issue is whether the factors which call for a high rate on incendiary bomb shipments are present in a shipment of bomb casings full of napalm gel but lacking bursters and fuses. And the mere fact that the issue is phrased in one instance as a matter of tariff construction and in the other as a matter of reasonableness should not
By no means do we imply that matters of tariff construction are never cognizable in the courts. We adhere to the distinctions laid down in Great Northern R. Co. v. Merchants Elevator Co., supra, which call for decision based on the particular facts of each case. Certainly there would be no need to refer the matter of construction to the Commission if that body, in prior releases or opinions, has already construed the particular tariff at issue or has clarified the factors underlying it. See Crancer v. Lowden, 315 U. S. 631. And in many instances construing the tariff does not call for examination of the underlying cost-allocation which went into the making of the tariff in the first instance. We say merely that where, as here, the problem of cost-allocation is relevant, and where therefore the questions of construction and reasonableness are so intertwined that the same factors are determinative on both issues, then it is the Commission which must first pass on them.
II.
We come then to the question of whether referral of these issues to the Commission was barred by the two-year period of limitation contained in § 16 (3) of the Interstate Commerce Act. We hold that it was not.
Section 16 (3) (a) provides that "all actions at law by carriers subject to this chapter for recovery of their charges . . . shall be begun within two years from the time the cause of action accrues, and not after.” 11 This provision makes it clear that where a carrier sues a private shipper the action must be brought within two years. However, the Tucker Act, 28 U. S. C. § 2501, provides that “every claim of which the Court of Claims has jurisdiction shall be barred unless the petition thereon is filed . . . within six years after such claim first accrues.” Relying on the broad language of the latter act, the Court of Claims has, since 1926, consistently held that § 16 (3) does not apply to suits by carriers to recover alleged undercharges from the United States as shipper. Southern Pac. Co. v. United States, 62 Ct. Cl. 391; Seaboard Air Line R. Co. v. United States, 113 Ct. Cl. 437, 83 F. Supp. 1012; Union Pacific R. Co. v. United States, 114 Ct. Cl. 714, 86 F. Supp. 907. The present suits were thus held timely brought,12 even though more than two
We may assume, without deciding, that the Government would have been barred by § 16 (3) from filing an affirmative suit before the Commission to recover overcharges from a carrier. Nevertheless we do not think that the statute operates to bar reference to the Commission of questions raised by way of defense in suits which are themselves timely brought. Respondents in effect ask us to hold that a suit may be brought for six years but that certain defenses thereto may be raised only for two years. Only the clearest congressional language could force us to a result which would allow a carrier to recover unreasonable charges with impunity merely by waiting two years before filing suit.
It is argued that this Court has construed § 16 (3) as “jurisdictional” and that the Commission is therefore barred absolutely from hearing questions as to the reasonableness of rates arising in suits brought after two years, whether such questions come to the Commission by way of referral or in an original suit. Reliance is placed upon A. J. Phillips Co. v. Grand Trunk R. Co., 236 U. S. 662; William Danzer & Co. v. Gulf & S. I. R. Co., 268 U. S. 633; Midstate Co. v. Pennsylvania R. Co., 320 U. S. 356. But these cases all dealt with affirmative claims for the recovery of transportation charges, and not with referrals incident to suits which were originally brought in time. The teaching of the Midstate case, for instance, is that the running of the statute destroys the right to affirmative recovery as well as the remedy, so that the period of limitations cannot be waived by the parties. But here the
We are told that the Government can protect itself, when it believes it has been charged an unreasonable rate,
We hold, therefore, that the limitation of § 16 (3) does not bar a reference to the Interstate Commerce Commission of questions raised by way of defense and within the Commission’s primary jurisdiction, as were these questions relating to the applicable tariff.
III.
There remains the question of whether the Court of Claims properly dismissed the Government’s defense of estoppel as to the respondents Bangor and Seaboard. We deal with it now because that defense would be reached should the further proceedings below, which must follow in consequence of what we have already said, result in
The Government’s claim is that the Bangor and Seaboard were estopped from charging the “1820” rate because of the Army’s reliance on a ruling of the Official Classification Committee, a railroad tariff agency to which these two respondents belonged, that this type of napalm gel bomb shipment would be carried at a lower rate. The Court of Claims rejected this defense because (1) the ruling was later withdrawn by the Committee; (2) the Government had shown no detrimental reliance on the ruling; (3) it had paid the high rate billed for all shipments; and (4) neither carrier had acquiesced in the Committee’s ruling.
We think that the Court of Claims erred in disposing of this defense by summary judgment. It appears to be undisputed that the ruling in question was not rescinded until after all of these shipments had been made.19 The Government’s affidavits in opposition to the motion for summary judgment were, in our opinion, sufficient to entitle it to an opportunity to prove reliance and detriment. The fact that the Government paid the carrier’s bills as rendered is without significance in light of § 322 of the Transportation Act, supra, requiring payment “upon presentation” of such bills and postponing final settlement until audit. And the question whether the Official Classification Committee had authority to bind these two carriers to acceptance of a lower rate presents
The judgment below must be reversed and the case remanded to the Court of Claims for further proceedings not inconsistent with this opinion.
It is so ordered.
The suits were brought under the Tucker Act, 28 U. S. C. § 1491.
54 Stat. 955, 49 U. S. C. § 66. This section provides: “Payment for transportation of the United States mail and of persons or prop
It is not entirely clear from the record just what rate the Government believes is applicable to these shipments. It seems to concede that Item 1895 of Consolidated Freight Classification No. 17, covering “Empty Aerial Bombs,” does not apply, although this was the original classification assigned to such shipments by the Official Classification Committee, a railroad tariff agency. The essence of the Government’s position seems to be that these shipments, being nonincendiary, were a mere combination of gasoline, napalm thickener, and steel casings. Since these three items, standing alone, are all carried at the fifth-class rate, the Government urges that the “combination rule” should apply and the articles be carried at the same fifth-class rate under Rule 18 of Consolidated Freight Classification No. 17.
In that case the Court of Claims held Item 1820 applicable to shipments similar to those involved here. The Government did not seek review of that decision.
132 Ct. Cl. 115, 131 F. Supp. 919. The dissenters were Judge Madden and Chief Judge Jones.
24 Stat. 384, as amended, 49 U. S. C. § 16 (3).
The Court of Claims stated in the Union Pacific case, 125 Ct. Cl., at 393, 111 F. Supp., at 268: “At the outset, it should be noted that while this court has no rate-making functions . . . the construction and application of published rates and classifications are proper matters for the courts as well as for the Interstate Commerce Commission.”
Jaffe, Primary Jurisdiction Reconsidered, 102 Univ. Pa. L. Rev. 577, 583-584 (1954).
In response to the motion for summary judgment the Government presented affidavits by chemical engineers stating that napalm gel is not incendiary. But these affidavits become meaningful only if the court knows the precise relevance of the incendiary quality of the shipments to the setting of the rate.
The artificiality of trying to separate the issue of “construction” from that of “reasonableness as applied” is illustrated by the Court of Claims’ holding in the Union Pacific case, supra. There, after holding that the absence of bursters and fuses did “not affect the identity of the articles” as incendiary bombs, the court went on to say that “it may well be that a lower tariff rate should apply to the carriage of the less hazardous incendiary bomb [one without burster and fuse]. This question is not within our jurisdiction, however, as the question of the reasonableness of rates is a matter entrusted by Congress solely to the Interstate Commerce Commission.” 125 Ct. Cl., at 393, 394, 111 F. Supp., at 268. Similarly, the Government here concedes that the question of hazard “goes to the issue of reasonableness,” although arguing that it is “also relevant to the question of tariff interpretation, for, like any other instrument, a tariff is to be read in the light of its known purposes and in a manner which avoids unnecessary and gross unfairness.”
24 Stat. 384, as amended, 49 U. S. C. § 16 (3) (a).
The suits were instituted in 1954. In the Western Pacific case the carrier's claims accrued in 1948 and 1950, when the United States paid the lower rate instead of the “1820” rate for which it was billed. As to the Bangor and Seaboard cases, where the United States initially paid the “1820” rate as billed (presumably in 1944 when the shipments were made), and subsequently readjusted that rate on post-audit, it is impossible to say when the claims accrued as the record is silent as to when the post-audit readjustment was made.
Although questioning the soundness of this ruling which subjects carriers’ claims against the United States as shipper to a more lenient statute of limitations than that applicable to their claims against other shippers, the Government has not challenged it here. We therefore do not pass on it.
The opinion of the Court of Claims does not expressly refer to the two-year period of § 16 (3). The cases cited by the court, however, make it clear that it had in mind that provision, probably § 16 (3) (c), which reads: “For recovery of overcharges action at law shall be begun or complaint filed with the commission against carriers subject to this chapter within two years from the time the cause of action accrues, and not after . . . .”
The fact that in this instance the issues of tariff “construction” and “reasonableness” were both referrable to the Commission does not, of course, bring the ease within Morrisdale. Both of these questions were issues only by reason of the Government’s defense; neither was part of the carrier’s affirmative case. In other words, had the applicability of this tariff not been challenged by the Government, the carrier’s own ease would have presented nothing which was referrable to the Commission.
See n. 2, supra.
Statistics furnished by the Comptroller General show that since 1948 the General Accounting Office has post-audited 17,220,783 bills presented by carriers. In the same period post-audit revealed overpayment in 1,102,654 cases. The magnitude of these figures underscores the impossibility of requiring the Government to file anticipatory suits before the I. C. C. in every case where it thinks the carrier might later sue to recover the amount set off by the Government.
The estoppel defense is not asserted against the Western Pacific, so that this case must in any event go to the Commission. Hence adjudication of the estoppel defense as to the Bangor and Seaboard would no doubt await the Commission's determination as to whether the “1820” tariff was applicable to these shipments, and reasonable if so applied.
The ruling was made in 1943 and was confirmed in 1945. The Bangor and Seaboard shipments were made in 1944.
A private shipper may not invoke the defense of estoppel to prevent a carrier from collecting a higher applicable tariff rate than that which may have been actually quoted by the carrier. This results from § 6 (7) of the Interstate Commerce Act, 24 Stat. 380, as amended, 49 U. S. C. §6(7), forbidding departures from the published tariff. See Pittsburgh, Cincinnati, Chicago & St. Louis R. Co. v. Fink, 250 U. S. 577, 583. The same considerations do not obtain when the Government is the shipper, in view of § 22 of the Act, 24 Stat. 387, as amended, 49 U. S. C. § 22, providing that “nothing in this chapter shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States.”