Patterson v. Louisville & Nashville R. Co.

Background

A group of shippers sued several railroad companies and the Director General’s agent after paying higher “through” shipping rates on shipments made between January 1, 1916 and December 1, 1918. The Interstate Commerce Commission had issued an order on April 9, 1923 awarding $30,000 in reparation to the shippers. The shippers brought suit in federal court in northern Georgia to enforce that order. The railroads and the Director General’s agent demurred, the District Court sustained the demurrer, and the Circuit Court of Appeals affirmed, leading to this review.

Reasoning

The main question was whether the Commission could suspend the statute’s “aggregate-of-intermediates” rule that normally forbids charging more for a through haul than the sum of the intermediate segments. The Court found that the Commission, under the 1910 amendment, has authority to relieve carriers from that rule when a proper application is made, and that the Commission had consistently interpreted the law that way. The Court read the Commission’s report as finding that a timely and adequate application for protection had been made, so the through rates were effectively protected and no violation of that clause occurred. Because of that protection, the shippers could not recover under that particular clause, and the lower courts’ judgments were affirmed. The Court did not decide other questions about whether the rates were “unduly high” under other parts of the law.

Real world impact

The ruling means shippers who paid higher through rates cannot recover under the aggregate-of-intermediates rule when the regulator has an adequate, timely application protecting those rates. It confirms the regulator’s power to suspend that statutory rule, and leaves other questions about rate reasonableness under different parts of the law open.