George Sutherland

“ The Commission was concerned and dealt with far more important questions than the determination of the reasonable per diem rental of a freight car. Its declared purpose in instituting the proceeding was to investigate the rules of car-hire settlements and to make 'such order * * * in the premises as might be warranted by the record.' The reasonableness of the two days' free time allowance and that of the switching reclaim were the chief subjects of its inquiry. The one which the Court has disapproved is no more an exception to the general finding than the other which it approves. ”

“ The appellants have no vested right not to pay their share of the hire of cars engaged in a joint service to which they are parties, simply because those cars are temporarily off their own rails. They are entitled only to have the Commission make reasonable rules for car-hire apportionment; and the reasonableness of any rule which it may adopt is a question wholly independent of its conformity to the measure of time of detention or to the Per Diem Rules of the American Railway Association. ”

“ If nonsubscribers are entitled to be put on terms of equality with subscribers in the matter of liability for car rental payments, it is hard to see why they should not also be entitled to the same equality in respect of refunds of such portions of the payments as represent switching charges, provided, of course, that the nonsubscribers are also required to assume like obligation in respect of reclaim allowances when they in turn are owners of the used cars. ”

“ The Commission's power to remedy an unfair basis of car-hire apportionment is not confined to remitting the injured carriers to the uncertainties of rate litigation which, but for that unfairness, would be unnecessary, and which opens up a multitude of unrelated questions serving only to obscure the immediate issue. Many of the short lines are not able financially to litigate a divisions case. Rates established to absorb unduly heavy car-hire costs, moreover, must themselves be unduly high ”

“ Far from representing any universal standard of natural justice for the fair apportionment of car-hire costs, the per diem system is of recent origin, and adopted with purposes primarily in view quite foreign to the simple end of accurate compensation. ”

“ This freedom of car movement has been attained without impairment of the basic obligation of rail carriers to furnish equipment for carriage, either by owning it or hiring it, and, if by hiring it, to pay proper compensation. [3] Until comparatively recent years, the standard of compensation has been fixed by the railroads themselves, by custom or agreement. Before 1902 the prevailing and customary basis was mileage; but this proved unsatisfactory. The then existing mileage rates are said to have been inadequately compensatory; the car owner had no means of verifying mileage on foreign lines ”

“ That common-carrier railroads which interchange freight cars with more than one subscriber railroad, and which deliver to one or more subscribing carriers, freight cars which are received from another such carrier, and railroads 100 miles or more in length, regardless of the number of railroads with which they connect, shall make car-hire settlements direct with car owners in accordance with the per diem rules. ”

“ The cars of nonsubscribers are not paid for on a per diem, but on a mileage basis, concededly less remunerative. They are denied the privilege, granted to Association members, of the switching reclaim. In addition, since 1922, trunk line members have been expressly prohibited from making car-hire arrangements with their nonsubscribing connections on any other than a strict per diem basis-arrangements to which the short lines assert their special situation entitles them, and which many trunk line members of the Association have granted in spite of the Code ”

“ The Commission is a body of trained and experienced experts, and in respect of such matters a reasonable degree of latitude must be allowed for the exercise of its judgment. The mere fact that, in application, mathematical accuracy in the adjustment of the burden may not be attained is not enough to pur upon the Commission's order the stamp of invalidity. ”

“ Under this exemption, denominated 'switching reclaim,' a carrier using cars in so-called 'terminal switching service' pays per diem costs in due course on each car, but is entitled to recover from the connecting line haul carrier an amount per car based on the average detention period of cars in such service.
The American Railway Association is, and has been since its inception, a purely voluntary organization. No carrier is bound to subscribe to its Code of Per Diem Rules ”

“ In this case an industrial common carrier specifically besought the Commission to fix reasonable charges under section 1 (14) , asking for a per diem system with reclaims for all cars, whether handled under switching rates or under joint rates with divisions. The Commission denied this relief, and condemned reclaims, but prescribed a demurrage system, giving the short line 72 hours free time on cars loaded one way, credits for cars sooner returned to be averaged against debits, and the short line to be free to execute average demurrage agreements with shippers. ”

“ That short-line railroads which are less than 10 miles in length, and which return railroad-owned equipment to the road from which received, shall not be required to report per diem accruals to numerous car owners throughout the country, but shall be attached to their connecting carriers for purpose of car-hire settlement. ”

“ In both cases, the reduction of the broad statutory injunction of reasonableness to a single one of its constituent elements, disregarding all others, produces a result with a false appearance of reasonableness, which, when gauged by the standard which the regulatory statute sets up, is unreasonable and unjust. ”

“ The record justifies the opinion that only rarely would the short lines escape the payment of substantial sums, and then only under circumstances as exceptional as those created by the midnight rule already mentioned. ”

“ This is a blanket order in opposition to the express finding of the Commission quite as much as that part of the paragraph which grants to the short lines two days free use of cars. The general rule in respect of the obligation of a railroad, whether a short line or a trunk line, to furnish equipment for the transportation of freight tendered to it, applies to the case of coal loaded at coal mines as well as to other traffic. ”

“ Subscription to the Per Diem Code entails substantial burdens, some of them peculiarly onerous for short lines. [7]
Of the 1731 steam railroads in the United States, 384 do not subscribe to the agreement, and of these nearly all are short-line, Class III roads, that is, roads having annual operating revenues of less than $100,000. Many of them are less than ten miles in length. Several important rules of the Association deal with relations between subscribers and this group of nonassenting lines. ”

“ Divisions of Joint Rates and Fares of Missouri & North Arkansas R. R. Co., 68 I. C. C. 47, 59. Compare Transportation Act 1920, February 28, 1920, c. 91, § 418, 41 Stat. 456, 486 (49 USCA § 15 (1-7) ; New England Divisions Case, 261 U.S. 184, 195, 43 S.C.t. 270, 67 L. Ed. 605; New England Divisions, 126 I. C. C. 579, 667.↑ See note 10, supra; Haines, loc. cit. supra, note 2; L. F. Loree, Railroad Freight Transportation (2d Ed. 1929) pp. 383, 390.↑ Under section 1 (14) , the Commission has several times prescribed reasonable rates of compensation on a mileage basis for private cars. ”