Pennsylvania Railroad v. S. M. Hamilton Coal Co.

Adkins, J., delivered the opinion of the Court. This appeal is from a judgment in favor of the appellee for failure of appellant to collect for appellee from certain other members of the Tidewater Goal Exchange, Inc., freight which had been prepaid by appellee on coal, shipped by it to Canton Piers over a subsidiary line of the Pennsylvania Railroad system, consigned to the exchange for aeeonnt of appellee and, in accordance with the rules and regulations, of the exchange, loaded on a ship for account of such other members. Tbis exchange was incorporated or began operations, on the first day of May, 1920. It was the successor of an unincorporated concern lmown as “Tidewater Obal Exchange” which was organized and operated by an agency of the United States.

Government during the world war to facilitate the shipment of coal. Canton Piers belonged to the Pennsylvania. Railroad Cbmpany and, prior to the taking over by the Government of the railroads of the country, freight to those piers was carried only on the Pennsylvania Railroad system,. But during Government administration coal was delivered there indiscriminately by the Pennsylvania, Baltimore & Ohio and Western Maryland Railroads., the Railroad Administration, however, continuing the regulations, which as to payment of freight had previously existed on the respective roads, under which regulations freight, was prepaid at the point of shipment on the Pennsylvania system, while on the other roads it was collected on delivery.

To prevent confusion, arrangement was made by the. Railroad Administration with shippers ⁵⁵⁸ over the Pennsylvania system, where coal was not loaded on a vessel at the piers, for the account of the original shipper, to collect for him from those for whose account the coal was re-shipped the freight which had been prepaid by the original shipper. All shippers to these piers were members of the exchange, and all coal shipped there was pooled. There were a number of pools corresponding to the number of grades of coal.

All coal was consigned to the exchange for account of the member whose coal it was, the exchange, on the arrival of the coal, notifying the member and giving him credit for1 the tonnage. The coal remained in the cars until transferred to vessels, but frequently was not re-shipped for account of the original shipper. Any member of the exchange could give an order to the exchange for such number of tons as be desired to have loaded on a vessel, designating the number of the pool from which it was to be taken; whereupon the exchange ordered the carrier to dump the coal from any available oars containing coal of that character, the carrier reporting to the exchange the numbers and initials of the cars dumped iu compliance with the order, thus enabling the exchange to adjust its accounts with the members. On giving such an order the exchange charged the account of the member with the number of tons designated in the order.

If this overdrew the account of the member, he was obliged to ship in to the piers enough coal to make his account good. If he shipped this coal over the Pennsylvania system, he paid the freight in advance; and if it was loaded on a vessel for account of some other member, the freight was collected by the Railroad Administration from the member for whom it was loaded and returned to the original shipper, who had made his account with the exchange good. When the railroads were turned back to the companies on March. 1st, 1920, shipment of coal by-the Baltimore & Ohio and Western Maryland Railroads to Oantou Piers ceased, hut for some time thereafter there remained coal in storage on the piers in cars of these ⁵⁵⁹ companies in which coal had been shipped, freight collect by members of the exchange, as well as coal in cars of the Pennsylvania system on which freight had been prepaid. All the coal thus remaining was taken over by The Tidewater Goal Exchange, Incorporated, organized by shippers of coal, which succeeded the old exchange, which had been organized and operated by the Railroad Administration.

The railroad companies were not members of the new organization and had no vote therein. They were invited, however, by the members to appoint, and did appoint, representatives to act in an advisory capacity, tbe representative of the Pennsylvania Eailroad Company, the appellant herein, appearing from the testimony to have been quite regular iu attendance at tbe meetings and to have been familiar with the rules and regulations of the association. The railroad companies paid the expenses of the exchange and the tariff filed by appellant showed that it was paying its part of these expenses. It further appears from the testimony that appellant, on resuming the operation of its railroad, continued for a time the practices inaugurated by the Government above set out, including tbe double freight collections.

This seems to have continued until June 25th, 1920, by which time the cars of the Baltimore & Ohio and Western Maryland Railroads had all been dumped. A week or two prior to this date all members of the exchange were notified of the proposed abandonment by appellant of the practice of collecting freight at Oanton Piers. The following correspondence will show the notice received by appellee: “Pennsylvania System, Mr. H. P. Conner, Assistant Treasurer, Philadelphia, Pa. Lear Sir: About a week ago I had a telephone conversation with you relative to handling freight on coal shipped into Oanton Piers for export.

My memory is that you told me at that time that as soon as the B. & O. and ⁵⁶⁰ Western Marylaiad coal that had been shipped into Canton Piers had been cleaned np that the collecting of freight at Canton would be discontinued, and that all shipments into the pier would be prepaid, and that would be the only freight collected by the Pennsylvania Road. What I am now after is some advise from you as to when this new system of yours will go into effect; that is to say, when and where will we find the dividing line? On May 27th we completed loading at Canton Piers the SS. ‘T'eespool.’ Quite a number of the cars dumped into this boat were shipped into the piers by other shippers, and the agent at Canton sent us bills for the freight on coal shipped by other shippers, on a collect basis, which we have paid. We expect shortly to put another boat into these piers for loading, and I would like -to have your advices as to how this freight will be handled.

Yours very truly, S. M. HAMILTON COAL COMPANY, Auditor.” “Philadelphia, June 18, 1920. S. M. Hamilton Coal Co., Mr. R. T. Naylor, Auditor, Marine Rank Building, Baltimore, Md. Dear Sir: Replying to your letter of yesterday, you should have no further trouble at Canton Piers in the matter of paying freight charges on coal on the collect basis when the coal has reached Baltimore on a prepaid basis, whether the coal, which is dumped for your account,-was shipped by you or by others. Instructions are going forward today to our agent to discontinue collections on a collect basis on coal which has been shipped on a prepaid basis, the understanding being that members of the pool will adjust between ⁵⁶¹ tliemselves any difference that may exist in the freight charges on coal consigned to the member shippers. I trust I have made myself clear, and should you have any further trouble I will ask you to please notify me at once.

Of course, the prepaid charges must be paid. If they are not paid, by reason of the refusal of our drafts, the above arrangement cannot be carried out. Yours very truly, H. P. CORNER, Assistant Treasurer.” It will he seen from, the above that appellee was notified, two weeks before it went into operation, of the proposed change, and that on June 18th, 1920, one week before the change went into- effect, appellee was informed that instructions were that day going out to agents of appellant, to discontinue collection of freight at the piers. In loading the ship “Teespool” on May 27th, 1920, appellee overdrew its account with the exchange more than 2,000 tons of coal, and paid the “collect freight” on the borrowed coal.

It was still to that extent on the debit side of the books of the exchange on June 26th, 1923, when the new arrangement went into effect, although it appears1 from the testimony that, prior to this date, coal had been shipped by appellee to meet this shortage, and was then on the wav, freight prepaid, on the oars of one of the subsidiary companies of the Pennsylvania system; but it was not delivered within the time limit fixed by appellant, and the result was that appellee had paid double freight on the amount of the borrowed coal, while the creditor members of the exchange, to whom was delivered the coal shipped by appellee to pay the amount borrowed, bad paid no freight at all. It was just such a situation that the suggestion contained in appellant’s' letter of June 18th, 1920, was intended to meet, viz: “that members of the pool will adjust between themselves any difference that may exist in the freight charges1 on coal consigned to the member shippers.” ⁵⁶² Nothing appears to* have been done by the members as a body to make the adjustment; or by appellee individually to collect the freight at the piers from the members who got the coal on which it had prepaid the freight. There were several meetings of representatives of appellant and members of the exchange during the summer of 1920, at which the situation was discussed. No claim was ever filed by appellee with* appellant for the freight involved in this suit.

Later on appellant wrote appellee the following letters: “Pennsylvania System, Eastern Region, Treasury Department, Philadelphia. December 14, 1920, Desk A. Subject: Tidewater Coal Exchange, Inc. S. M. Hamilton Coal Co., Marine Rank Building, Baltimore, Md. Dear Sirs: As you are aware, the tariffs of our company require the prepayments of freights on bituminous coal to our several piers for trans-shipment by water. Owing to the fact that for some time prior to June, 1920, we were obliged to handle over our piers at Canton, Baltimore, coal originating on other lines whose tariffs did not contain a prepaid freight requirement, during such period, with respect to coal consigned to the Tidewater Coal Exchange, we had an arrangement in effect under which the freight charges, on such cars as were dumped for the account of trans-shippers other than the original consignees, were collected at Canton piers from such trans-shippers and the prepaid charges refunded to the shippers. On coal dumped for the account of the original consignees no freight charges were collected at the piers, the prepaid freights as collected by our scale agents being retained. ⁵⁶³ As soon as it could be arranged after our Canton piers had disposed of all cars originating on lines other than the Pennsylvania System the practice of collecting freight charges at the piers was discontinued, this beiug effective on June 26, 1920.

While it is a fact that our company had only collected the freight charges on each car shipped, the trans-shippers who had credits with the Exchange as of the close of business on June 25th were enabled to obtain coal on these credits without having paid any freight charges thereon, those having debits being in the position of having to ship cars to fill such debits on which they were required to prepay the freight, having previously paid the freight on the coal drawn from the pool, this resulting in their having paid the freight charges twice on this tonnage. Although our company, as stated above, has only collected the freight charges once on each car shipped, we are willing to use our best endeavors to have these freights adjusted among the members of the Exchange. As the result of several conferences at Baltimore, at which representatives of our company, the Exchange, and of a number of the trans-shippers were present, it is proposed that the members having net credits with the Tidewater Coal Exchange, Inc. (the New Exchange), as of close of business on June 25, 1920, deposit with the Exchange the freight charges on such credits, the aggregate of such deposits, when all of them have been received, to be