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SAMUEL P. MANDELL CO. v. PENNSYLVANIA R.R. CO.

December 6, 1971

SAMUEL P. MANDELL COMPANY
v.
PENNSYLVANIA RAILROAD COMPANY and Baltimore & Ohio Railroad Company


Edward R. Becker, District Judge.


The opinion of the court was delivered by: BECKER

EDWARD R. BECKER, District Judge.

 I. Preliminary Statement

 In this suit under § 16(2) of the Interstate Commerce Act, 49 U.S.C. § 1 et seq. (Act), Plaintiff, Samuel Mandell Co. (Mandell), a shipper of produce, seeks to compel the payment of a reparations award by the Interstate Commerce Commission (ICC) against defendant rail carriers (Carriers) arising out of an alleged overcharge. Trial was had before the Court on a written stipulation of facts. The case involves the interpretation of certain railroad tariffs affecting goods shipped from central California to Philadelphia, and, in particular, the application of the so-called "intermediate point rule". This Opinion constitutes our findings of fact and conclusions of law under Fed. R. Civ. P. 52(a).

 Plaintiff is a Pennsylvania corporation engaged in the wholesale distribution of fresh fruits, melons and vegetables throughout the eastern half of the United States. Defendants are carriers by rail in interstate commerce, subject to the provisions of the Act, and each of the defendants was a delivering carrier of one or more of the shipments in question. *fn1" The shipments involved carloads of fruits and vegetables moving from points of origin in central California (Salinas, Tipton, Watsonville Junction, Brentwood and Firebaugh), to Philadelphia on the Southern Pacific Railroad via the Ogden, Utah Gateway during the period May 2, 1949 to August 30, 1949. An exegesis of the history of the case (and of how its disposition has been so long delayed) is as follows.

 On August 29, 1951, Mandell filed a complaint with the ICC claiming that the carriers, named and otherwise, had assessed and collected rates in excess of those published, on shipments originating in central California consigned to the eastern United States. Since around 1940 there have been two principal origin rate groups in California for certain perishable shipments to transcontinental destinations. One group covers California generally, but particularly the important growing areas in the broad central valley of California and the small valleys of the coast ranges. The other rate group covers the Imperial Valley region, situate in the extreme southeast corner of California and centered around the city of El Centro.

 Mandell contended that the rate applicable to the shipments in question was that published from El Centro to Philadelphia in Item 1399H of § 3 of Agent L.E. Kipp's *fn2" Tariff, ICC No. 1508 (Kipp's Tariff). This rate, which was sought to be made applicable via the intermediate point rule, was ten cents per hundred pounds less than the rate claimed as the proper charge by the Carriers for central California points. *fn3" The intermediate point rule provides essentially that the commodity rates established by it apply to "any destination point . . . via a given route" where the intermediate point is "not named in the tariff, which point is intermediate to a point to which a commodity rate . . . is published . . . via a route through the intermediate point, and via such route . . . to the next point beyond." *fn4"

 Mandell claims that the intermediate point rule makes the El Centro rate applicable because: (1) Salinas, Watsonville Junction, Tipton, Brentwood and Firebaugh, even though not named in § 3 of the tariff, are intermediate points between El Centro and Philadelphia; and (2) El Centro is the "next point beyond". Mandell contends for the El Centro rate, notwithstanding the fact, upon which all parties agree, that no shipments of any goods have ever traveled over a route from El Centro to Philadelphia via Salinas, Watsonville Junction, Tipton, Brentwood or Firebaugh (hereinafter the "El Centro route"). The El Centro route is therefore one hypothetically constructed for tariff purposes by use of the intermediate point rule.

 The carriers claim that the applicable tariff is that published from the named central California points from which the goods were actually shipped to Philadelphia via the Ogden Gateway in Item 1147 D of § 1 of Kipp's Tariff. They assessed and collected freight charges accordingly. The Carriers argue that the hypothetically constructed El Centro route is not only inapplicable, but that it is also arbitrary, unreasonable and contrary to law.

 It is appropriate at this juncture to describe the hypothetical El Centro route. The parties agree that such "route" between El Centro and Philadelphia, utilizes the lines of the San Diego and Arizona Eastern Railway Co. (San Diego Railway) to San Diego, the Atchison, Topeka and Santa Fe Railway Co. (Santa Fe Railway) to Los Angeles, and the Southern Pacific Railroad (Southern Pacific Railroad) through Salinas to Ogden, and thence to connections to the East. They also agree that the El Centro route differed from the route to which the Carriers claim the rates in § 3 apply, i.e., from El Centro to Philadelphia using the Southern Pacific Railroad and connections to the east via Arizona and New Mexico, *fn5" in the following particulars:

 1. The El Centro route takes traffic in a directional back haul from El Centro through Mexico to San Diego, a distance of 147 miles, thence 732 miles in a northwesterly direction to Roseville, California via the San Joaquin Valley (or 834 miles in a northwesterly direction to Roseville, California, via the coast) before turning and starting towards eastern destinations;

 2. The route crosses three mountain ranges with over 2 per cent grade before returning to a point comparable to El Centro;

 3. The route utilizes a railroad over which regular through perishable schedules to the east have not been maintained from El Centro;

 4. The San Diego Railway did not have industries at El Centro;

 5. Traffic moving to the east via the actual Southern Pacific Railroad route via Arizona and New Mexico would require no interchanges until it reached Deming, New Mexico, El Paso, Texas, or Tucumcari, New Mexico, on the Southern Pacific Railroad, whereas traffic loaded at Southern Pacific Railroad perishable sheds at El Centro and routed through central California via the San Diego Railway and the other connections outlined on the El Centro route would require three interchanges between carriers before it was turned over to a connecting line at Ogden;

 6. The scheduled time to move a car from El Centro to eastern points via the El Centro route exceeded the guaranteed scheduled time using the Southern Pacific Railroad route via Arizona and New Mexico by five days, and for perishable traffic expedited service is essential.

 Notwithstanding these facts, the ICC found in plaintiff's favor and awarded reparations. *fn6" It found that the rate to Philadelphia, Pa. from the origin points of the shipments in question, i.e., central California, was the lower rate from El Centro since the central California origin points were, in its view, points intermediate from El Centro, California to Philadelphia under the routing and intermediate point rules published in Kipp's Tariff. The ICC entered a final order on December 19, 1956 in the sum of $1,314.69 with interest at 4% from the Pennsylvania Railroad, and $24.33 with interest at 4% from the Baltimore & Ohio. The Carriers refused to pay the reparation award, and in accordance with the statutory procedure, 49 U.S.C. § 16, the plaintiff has brought this action to enforce the award. *fn7"

 Finding the hypothetically constructed El Centro route to be arbitrary, unreasonable and contrary to law, we refuse to enforce the Commission's order. *fn8" Resolution of the question before us will require a rather lengthy reconstruction of the tariff provisions, including an examination of the few cases which have construed similar tariff provisions, especially the pivotal decision of the Eighth Circuit in A.E. West Petroleum Co. v. Atchison, T. & S.F. Ry., 212 F.2d 812 (1954) which we elect to follow.

 Because Mandell asserts that the Court is without power to set aside a Commission order, we must first address our attention to the question of the scope of ...


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