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BAILEY v. PENNSYLVANIA R. CO.

November 2, 1932

BAILEY
v.
PENNSYLVANIA R. CO. et al.; TERMINAL WAREHOUSE CO. v. SAME



The opinion of the court was delivered by: DICKINSON

There are two of these cases, alike in the questions of law raised. The plaintiffs together seek to recover the rather tidy sum of $6,000,000. If the cases are tried, it will be at the cost of much time, labor, and expense. The questions of law raised go to the cause of action asserted, and hence "to the whole of the claim" made. Counsel in consequence join in the expression of the hope that it may be found that the fact and law merits of the cause may be brought before the court by the pleadings, so that the judgment to be rendered may be reached without the necessity of a protracted trial.

The parties are represented by experienced counsel, who have made an exhaustive investigation and present a complete analysis of the respective contentions made. We accordingly, knowing the opposing interests to be in competent hands, feel that we can safely follow the analysis thus made, and accept the questions discussed as the questions which arise in the case.

 In order to get the point of view of the defendants, it is helpful to premise that the railroad defendant is a common carrier engaged in interstate and intrastate commerce. Philadelphia is a city on its line. There is an advantage to consignors and consignees in availing themselves of the lower tariff rates given to shippers in carload lots, and hence the practice grew up for those who would otherwise be consignees of less than carload lots to join together in getting a car-load shipment. This made it necessary, or at least convenient, for them to choose one consignee to whom, or in whose care, the carload shipments could be made, and helpful further to have this consignee distribute the contents of the cars to the several real owners. There was the like necessity or advantage in making shipments. The shipments to and from Philadelphia were some to points within the state and some to points outside. There was need that this representative receiver and sender of shipments should be trained and equipped for the service he was to render. In response to this need and consequent demand, what are called warehousemen came into existence. The appellation is itself descriptive of the work they did. The plaintiff is one such warehouseman and the codefendant is another. The further practice years ago grew up for the different railroads each to select a warehouseman to render the service indicated. For it the warehouseman chosen was compensated by the railroad, and substantial sums of money were received by the codefendant for the services thus rendered by it. The codefendant was made, or made to figure as, an employee of the railroad, and its warehouse was made or called a freight station of the railroad. Incidentally, for whatever it may be worth, the averment is made that the railroad was part owner of the codefendant warehouse and received a share in its profits, and the suspicion would be justified that the officials of the railroad likewise profited by the arrangement made, for this, in former years, was the common practice. However, at the time this was done and for years afterwards, there was not thought to be, and there was not, any illegality in it. What was done was openly done and avowed, and was made the subject of a written agreement. When it is recalled that the plaintiff and the codefendant, as well as others, were competitors in the same field of business endeavor, it would be idle to deny that the arrangement thus made greatly favored the chosen warehouseman and put its competitors to a great disadvantage. Whatever wrongs the outsider warehousemen felt, there was no legal wrong done them, and they were obliged to submit and accept the situation as thus created. Then came the act of Congress creating the Interstate Commerce Commission, to which the complaining warehousemen finally went with their complaint. The Commission, after a full and lengthy inquiry, ruled in favor of the complainants, and the defendants (the codefendant here having been permitted to intervene) were ordered to desist from the practice above outlined. Gallgher v. Pennsylvania R. Co., 160 I.C.C. 563.

 The defendants brought this order before the statutory court, which was convened for the purpose, for review, and the Commission was by that court sustained and upheld in what it has done. Merchants' Warehouse Co. v. U.S. (D.C.) 44 F.2d 379.

 On appeal to the Supreme Court the rulings made by the Commission and by the statutory court were affirmed. 283 U.S. 501, 51 S. Ct. 505, 75 L. Ed. 1227.

 This recital will enable us to appreciate the questions of law raised by this statutory demurrer. They are:

 (1) The remedy to which the plaintiff has a right is that afforded by the Interstate Commerce Act (49 USCA § 1 et seq.). This is exclusive and has been exhausted by the plaintiff, hence no right of action is given by the Sherman Anti-Trust Act (15 USCA §§ 1-7, 15 note) under which the plaintiff is now claiming, nor does any cause of action arise thereunder.

 (2) The business charged to have been in part monopolized and restrained is not commerce within the meaning of the commerce clause of the Constitution, nor is it interstate.

 (3) The railroad defendant and the warehouse defendant are not competitors nor have they competed, so that no agreement nor arrangement between them could nor did restrict competition.

 (4) Interstate commerce is not directly affected by the agreement between the railroad defendant and the warehouse defendant nor by anything done thereunder, and in consequence no cause of action arises under the Sherman Act.

 Discussion.

 We are of opinion that the plaintiff was engaged in commerce and in interstate commerce.We see a well-defined difference between the Commerce Act and the Sherman Act. They have different objectives. The former is aimed at control of the carriers to the end that they may not exact excessive rate charges; the latter is aimed at those who would restrain or monopolize commerce. It is true that the forbidden thing in the former may, and we assume always would, tend to interrupt or diminish the flow of commerce, allthough it is conceivable that it might not. The forbidden thing in the latter is the restraint or monopoly of commerce. It might well be that the trade of A could be destroyed through a conspiracy which used as one of its instrumentalities the imposition of killing tariff transportation rates upon B. The distinction between the two injuries is no less real if A and B were the same person. If they were, we see no legal obstacle in either act to A appealing to the ...


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