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July 6, 1966


Before Major, Senior Circuit Judge, and Juergens and Poos, Chief District Judges.

The opinion of the court was delivered by: Major, Senior Circuit Judge.

This action was brought under Sections 1336, 1398, 2284 and 2321-2325 of Title 28 U.S.C.A., to enjoin, set aside, annul and suspend a report and orders of the Interstate Commerce Commission entered January 11, 1965 and April 29, 1965, in the Commission's Docket No. 34274, Calcium Carbonate Company v. Missouri Pacific Railroad Co. et al., reported at 323 I.C.C. 688.

Plaintiffs are and have been for many years engaged, inter alia, in the business of selling ground limestone and shipping it from Carthage and Joplin, Missouri, to destinations throughout the southwest. For many years they have been shipping this commodity under a scale of rates published in Section 4 of Southwestern Freight Bureau Tariff No. 162 Series (sometimes referred to as the "Section 4 rates"). This controversy arose out of an attempt by the railroads to collect retroactively a higher scale of rates than those provided by Section 4.

The shipments here involved moved from Carthage and Joplin, Missouri, to various destinations in that state as well as in the states of Arkansas, Kansas, Louisiana, Oklahoma and Texas, during the period 1960 to early 1963. Throughout that time the railroads had rendered freight bills for such shipments at the Section 4 rates which had been duly published and filed with the Commission, pursuant to the provisions of Section 6(7) of the Interstate Commerce Act (49 U.S.C.A. § 6(7)), which plaintiffs had paid. In early 1963, the railroads submitted revised freight bills to plaintiffs, based on the contention that Section 4 rates previously charged and collected throughout the preceding three years on shipments of ground limestone to feed mills were inapplicable and that the higher scale of rates contained in Section 3 of the same tariff was controlling.

Plaintiffs refused to pay the higher rates demanded by the railroads in 1963, retroactively for the shipments made during the preceding three-year period, whereupon the railroads initiated civil actions to collect the difference in charges. The Missouri Pacific Railroad Company and the St. Louis-San Francisco Railway Company filed suits against Calcium Carbonate, the former in the United States District Court for the Western District of Missouri, and the latter in the Southern District of Illinois, seeking to collect the difference in such charges. The same two railroads also filed suits against Calcium Products Company in the United States District Court for the Western District of Missouri, also seeking to collect the alleged undercharges on the shipments of ground limestone.

Plaintiffs as defendants duly filed appropriate answers in the suits commenced by the railroads. During the pendency of such suits, Calcium Carbonate filed complaint with the Commission, alleging that the Section 4 ground limestone rates it had been paying were applicable and, in the alternative, if inapplicable, the higher rates of Section 3, if imposed, would be unjust and unreasonable. The railroads claiming the higher rates on the shipments were named as the defendants before the Commission. A similar complaint was filed with the Commission by Calcium Products, which presented the same issues as those raised by Calcium Carbonate.*fn1

A hearing was held before a Commission Examiner, at which evidence was adduced by Calcium Carbonate and by the railroads. The Examiner issued a recommended report and order dated May 1, 1964, sustaining the contention urged by Calcium Carbonate that the Section 4 rates which had been collected were and are the legally applicable rates. Upon appeal by the railroads from this report, Division 2 of the Commission issued its report on January 11, 1965, reversing the Examiner and holding that the Section 4 rates were inapplicable and that the higher Section 3 rates sought by the railroads were and are the applicable rates on plaintiffs' shipments. It further held that the higher Section 3 rates were not shown to have been unjust and unreasonable or otherwise unlawful.

On July 12, 1965, Calcium Carbonate and Calcium Products (which had agreed to be bound by the disposition of the Calcium Carbonate complaint) filed a joint complaint in this Court for a judicial review of the Commission's decision. Answers were filed by the respective parties, including the railroads as intervening defendants.

On plaintiffs' request and pursuant to statute, a special Court of three Judges, including a Circuit Judge, was constituted to hear and decide the case. No question is raised as to the propriety of this procedure.

Plaintiffs raise two questions: (1) Did the Commission err as a matter of law in concluding that Calcium Carbonate's ground limestone does not fall within the tariff commodity description in Section 4 of the tariff? and (2) Is there a rational basis for the Commission's conclusion that the Section 3 rates are not shown to be unjust or unreasonable?

The Examiner in his recommended report decided the first issue in favor of plaintiffs and, therefore, had no occasion to consider the second issue. The Commission decided the first issue against plaintiffs, thereby disagreeing with the Examiner's report. It then proceeded to a consideration of the second issue, which it also decided adversely to plaintiffs.

Section 4 rates were established in 1940, and from that time until this controversy arose plaintiffs shipped their limestone under the rates therein provided. The limestone description governing the application of the section was twice amended prior to December 1, 1959, when, as proposed by the railroads and at their insistence, it was amended to describe the commodity as follows: "Limestone, having value only*fn2 for building, paving, road-making or roofing purposes (and so certified by shipper on Bill of Lading), broken, crushed, ground or pulverized, in bulk or in paper bags, in straight CL or in mixed CL with common shells having value only for building, paving, road-making, or roofing purposes."

The commodity description in Section 3 reads, "limestone, ground or pulverized," without qualification.

While the sections evidently provide different rates for the same commodity, "the tariff specifically provides that, wherever the lower section 4 rates apply on a commodity for which rates are also provided in section 3, the section 4 rates take precedence and are the applicable rates." Thus, for the present we need only be ...

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