Baltimore & Ohio Southwestern Railroad v. Settle

Background

A railroad had published interstate freight rates to two stations in Cincinnati: Oakley and Madisonville. A local lumber dealer in Madisonville shipped lumber from the South to Oakley, paid freight to Oakley, took delivery there, and shortly afterward reshipped the loaded cars to Madisonville on local bills at the lower local rate. The railroad sued to recover the difference between the lower combined charges the shippers paid and the higher published interstate rate to Madisonville. The shippers won at trial and on appeal, and the case reached this Court.

Reasoning

The Court addressed whether the original and continuing intention to send the cars on to Madisonville made the whole trip a single interstate movement. It held that the intent with which the shipment was made and carried out determines the movement’s real character. The Court explained that the contract of carriage at origin does not alone decide the question, and that allowing shippers to split a trip into stages to use lower local rates would defeat proper interstate rates, cause unjust discrimination, and deplete carriers’ revenues. Because it was undisputed the shippers intended and completed the trip to Madisonville, the Court treated the movement as interstate and reversed the lower courts.

Real world impact

The decision prevents shippers from avoiding higher through interstate freight charges by dividing a planned interstate trip into local legs. It reinforces carrier enforcement of published interstate rates and protects railroad revenue where the ultimate destination was intended from the start. Practically, taking short-term delivery at an intermediate point will not automatically convert an intended through movement into a purely local one.

Dissents or concurrances

Justice McReynolds dissented, but the provided opinion text does not give the contents of his disagreement.