Great Northern Railway Co v. Delmar Co.

Background

A grain shipping company originally billed many shipments to Minneapolis and then reconsigned the same cars to Superior, Wisconsin, where delivery occurred. The railroad carried the cars over a longer route through Minneapolis instead of the shorter direct route via Willmar. Because the carrier charged local rates to Minneapolis plus a proportional rate beyond, those combinations sometimes exceeded the published through rate from the shipping points to Superior. The Interstate Commerce Commission awarded the shipper reparations, and lower federal courts affirmed that award before the case reached this Court.

Reasoning

The key question was whether the published through rate applied to shipments routed through Minneapolis when the tariff did not explicitly limit the route. The Commission had a longstanding rule that, when two open routes exist, a shipper may choose the route unless the tariff says otherwise. The Court found that applying the through rate to the longer Minneapolis routing would cause the railroad to carry some shipments to intermediate points for less than the rates charged to those nearer points, violating the long-and-short-haul provision of the Interstate Commerce Act. To avoid a construction that would force a statutory violation, the Court concluded the tariff must be read to apply only to the shorter route.

Real world impact

The decision reverses the lower courts and sends the case back for further proceedings consistent with this interpretation. In practical terms, rail carriers and shippers must follow tariffs that do not allow routing through a longer path at a through rate if that creates prohibited short-long disparities. Carriers may need clearer tariff language and shippers may lose the option to obtain lower through rates by routing via Minneapolis.