Texas & New Orleans Railroad Company v. Sabine Tram Company (227 U.S. 111)
The question in the case is whether shipments of lumber on local bills of lading from one point in Texas to another point in Texas, destined for export under the circumstances presently to be detailed, were intrastate or foreign commerce.

The action was brought by defendant in error, here called the Sabine Company, against the railroad companies (we shall so designate them unless it be necessary to distinguish them), to recover the sum of $1,788.33, alleged to be due for overcharges in freight on thirty-three cars of lumber shipped by the Sabine Company from Ruliff, in the state of Texas, to Sabine, in the same state, the shipments moving from the initial point to Beaumont over one of the roads, and from Beaumont to Sabine over the other. It was alleged that the legal rate applicable to the shipments under the orders of the Railroad Commission of Texas was 6 1/2 cents per hundred pounds, and that the railroad companies collected, over the protest of the Sabine Company, 15 cents per hundred pounds under tariffs filed with the Interstate Commerce Commission, amounting to an illegal charge of 8 1/2 cents per hundred pounds. Recovery was also prayed for penalties for extortion under the laws of the state in the sum of $16,500, the maximum penalty of $500 per carload, upon the assumption that each car was a separate act of extortion, or the sum of $13,000, if shipment on different days should be adjudged to be separate acts.

The railroad companies defended on the ground that the shipments were foreign commerce and subject to a charge of 15 cents per hundred pounds, and that such rate had been established by them and regularly filed with the Interstate Commerce Commission in accordance with the act to regulate commerce.

The trial court charged against the defense, and also that the freight charges collected having been paid in five separate payments, there were five distinct acts of extortion for which the Sabine Company was entitled to recover penalties in the sum of not less than $625 nor more than $2,500; that is, not less than $125 nor more than $500 for each act.

The jury returned a verdict for $1,788.33 as overcharges, with interest at 6 per cent per annum from January 1, 1907, and $1,785 penalties. Judgment was entered on the verdict. A motion for a new trial was denied, and the case was then taken to the court of civil appeals. There was a cross assignment of errors by the Sabine Company, complaining of the ruling of the trial court in finding that the company was only entitled to five penalties. It consented that if the assignment of errors be sustained, the court could render judgment for the lowest penalty, $125. The court sustained the assignment and modified the judgment of the trial court, and rendered judgment for penalties in the sum of $125 for twenty-four shipments, aggregating $3,000. A writ of error to review the judgment of the court of civil appeals was denied, and the judgment thereby becoming final, this writ of error was prosecuted.

The facts were found by the court of civil appeals and are not in dispute:

'At the date of the transaction in question the Sabine Tram Company was engaged in the manufacture of lumber at its mill at Ruliff, a station in Texas on the line of the Texarkana & Fort Simth Railway Company. W. A. Powell Company, Limited, was engaged in buying lumber for export to different points in Europe, through the ports of Sabine and Port Arthur, both in the state of Texas. On August 28, 1906, having made sales to customers for future delivery in Europe of large amounts of heavy pine lumber, for the carriage of which steamships had in part already been chartered, to fill such contracts, W. A. Powell Company bought of the Sabine Tram Company 500,000 feet of heavy pine lumber of certain dimensions, to be delivered during the months of September and October. The contract provided for delivery either in the water at Orange, Texas, or f. o. b. cars at Sabine, Texas, at the option of the seller. The seller exercised the option to deliver at Sabine, a station on the line of the Texas & New Orleans Railway. During the months of September and October the lumber purchased was delivered to the Texarkana & Forth Smith Railroad at Ruliff, to be by it transported to Beaumont, the terminus of its line, and thence by connecting carrier, the Texas & New Orleans Railway, to Sabine, and delivery to the Sabine Tram Company. There were twenty-four several shipments of the lumber on as many different days, the shipments embracing thirty-three cars, for which thirty separate bills of lading were executed by the Texarkana & Fort Smith road, for delivery at Sabine to the Sabine Tram Company, 'Notify W. A. Powell Company, Limited.' No other contract or arrangement was made by the Sabine Tram Company for the carriage of the lumber except that evidenced by the bills of lading aforesaid. Waybills accompanied the shipments, upon which were marked in pencil 'for export, but the Sabine Tram Company had no connection with, or knowledge of, the making of these waybills, which was the act of the railway company alone. According to the course of dealing between the parties these bills of lading were indorsed by the Tram Company and sent through [a bank] to W. A. Powell Company, Limited, at New Orleans, Louisiana, attached to a draft for the price of the lumber, which being paid, the bills were delivered to Powell Company and by them transmitted to their agent, Flanagan, at Sabine. In case of most of the shipments in question the bills of lading reached Flanagan at Sabine before the arrival of the lumber for which they were given. The lumber was carried under the shipping contracts or bills of lading aforesaid, by the Texarkana & Fort Smith road to Beaumont, and there delivered to the Texas & New Orleans road, by which it was carried to Sabine. Upon arrival at the station of Sabine it was, by direction of the agent of Powell Company, carried without delay about a quarter of a mile beyond the station to the dock, where the lumber was to be unloaded. The lumber was unloaded from the cars into water of the slip in reach of ship's tackle, ready for loading onto the ships. The Sabine Tram Company had no connection with this further carriage or switching of the lumber to the docks after its arrival at the station of Sabine, but this was done solely at the instance and under the direction of the agent of Powell Company. The transportation from Ruliff to Sabine was entirely within the state of Texas.

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'When the lumber had been switched to the docks, W. A. Powell Company, through their agent, presented the bills of lading and demanded the lumber, offering to pay the freight charges, which, according to the course of dealing between the parties, they were to pay for the Sabine Tram Company, who owed the same, and which it was to repay to Powell Company. The Texas & New Orleans Company, acting for itself and the Texarkana & Fort Smigh Company, demanded the Interstate Commission rate of 15 cents per hundred pounds, having been previously instructed by the Texarkana & Fort Smith Company that 10 cents per hundred pounds was its rate from Ruliff to Beaumont. This Powell Company, under instructions of the Sabine Tram Company, at first refused to pay, but after communicating with the Tram Company, finally paid the freight at this rate under protest, in order to get possession of the lumber.

'For switching from Sabine to the docks, the rules and orders of the Texas Railroad Commission would allow a switching charge of $1.50 per car on domestic shipments, and if foreign or interstate shipments, the Interstate Commerce Commission tariffs would allow a switching charge of $2.50 per car, had not the charge for this service been absorbed in the 15-cent rate established as aforesaid.

'Upon shipment of freight not for export, only forty-eight hours free time was allowed for unloading cars, after which demurrage was charged, and if not removed from railroad premises when unloaded, a atorage charge was made in addition. No such charge was made upon any of the lumber involved in this suit.

'W. A. Powell Company, Limited, regarded the shipments in controversy as export shipments, and demanded expected, and received the use of terminal facilities, additional free time, and other privileges accorded to shippers of export freight under export tariffs.

'The railway company knew, when the freight charges were collected, that the lumber was to be placed in its slips and exported to Europe on incoming ships, and the freight was believed by the officers and agents of the railroad company at the time the charges were collected to constitute foreign commerce, and to both permit and require the application of the rate fixed by the tariff on file with the Interstate Commerce Commission, and this rate was applied.

'All the lumber in question was in fact unloaded from the cars by W. A. Powell Company, Limited, into the Texas & New Orleans Railroad Company's slips, or upon its docks, in reach of ship's tackle, and loaded into the ships previously chartered for the purpose by W. A. Powell Company, Limited, which steamships carried same thence direct to Europe, where this lumber was applied upon contracts for sale in Europe, made before the lumber began to leave Ruliff, and made in fact before the lumber was purchased from the Sabine Tram Company, and before it was sawed, and before the logs from which it was sawed left the state of Louisiana for the Sabine Tram Company's mill at Ruliff, in the state of Texas. One of the ships actually waited at the docks at Sabine for the arrival of part of the lumber, which constituted a portion of its cargo.

'The ship which carried the last of this lumber from Sabine to Europe was chartered by W. A. Powell Company, Limited, for this purpose after these lumber shipments began to arrive at Sabine, but before all of the shipments had left Ruliff.

'None of this lumber remained in the slip at Sabine, or on the docks, except for the time necessary to await the arrival of the particular ship which had previously been chartered for the purpose and designated by W. A. Powell Company as the ship which was to carry that particular lumber from the port of Sabine to Europe.

'Any shipment of lumber intended for export to Europe, and in fact shipped from any point in Texas, to and through Sabine as its port of transhipment, could be contracted for, billed to and from Sabine, shipped, transported, and handled in every particular just as was this lumber.

'W. A. Powell Company, Limited, before this lumber began to arrive at Sabine, took out a blanket policy of insurance, protecting same against loss, from the time this lumber should come into the possession of W. A. Powell Company, Limited, at Sabine, until its final delivery by W. A. Powell Company, Limited, in European ports.

'At the time this lumber was shipped, it was destined by Powell Company for export to some foreign port, but the particular destination of any particular portion of the lumber was not fixed, although the destination of all the lumber to certain foreign ports was known and fixed. The Sabine Tram Company had no concern with the destination of the lumber after it came into the hands of Powell Company, and had no particular knowledge thereof. It supposed from the fact that it was known that Powell Company were exporters of lumber, from the character of lumber, which was such as was intended for export, from the fact that Sabine was an unimportant place at which very little lumber was used, and from other facts and circumstances, known to millmen generally, that the lumber was intended for export, but gave that matter no concern, being only concerned with the delivery of the lumber to Powell Company at Sabine station, and paying the freight thereon. What was done by the Texas & New Orleans Railroad Company after the arrival of the lumber at Sabine, in the way of switching to the docks, allowance of certain privileges allowed only to export freight, was done at the instance and for the benefit of Powell Company, with which the Tram Company had no concern.

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'Upon the freight bills was a charge for wharfage against the Tram Company, which was paid by Powell Company as a proper charge against them, and not against the Tram Company. Export freight was entitled to seven days' free time for unloading, and thirty days' free storage on the docks, or in the slips, which privileges were availed of by Powell Company in this lumber.

'The freight bills were made out against the Sabine Tram Company, and defendants knew that Powell Company were paying the freight for the Tram Company.

'The defendants, in charging the export rate, acted under the advice of their attorneys, that the facts constituted the lumber an export shipment and subjected it to the Interstate Commission Commerce rate.'

On motion the court modified its findings as follows:

'Powell & Company purchased lumber from other mills in Texas, with which to supply its said sales in part; it did not know when any particular car or stick of lumber left Ruliff, into which ship or to what particular destination it would ultimately go, or on which sale it would be applied; this not being found out until its agent, Flanagan, inspected the invoice mailed to, and received by, him after shipment. Upon inspection of the invoice, he determined from the character of the lumber described whether it was suited for one cargo or the other. The lumber remained, after arrival, in the slips or on the dock from one to thirty days until a ship chartered by Powell & Company arrived, when that company selected out the lumber suited for that cargo, and shipped it forward to the destination for which Powell & Company intended it.

'We withdraw our finding that rules and orders of the Texas Railroad Commission would allow a switching charge of $1.50 per car on domestic shipments. The only testimony we can find on this point is that of witness Beard, General Freight Agent of the Texas & New Orleans Railroad Company, that 'the Texas rate for switching these cars would have been $1.50 per car,-that is, if Powell Company owned the docks,-if it was shipped to the warehouse owned by consignees or his place of business.' This testimony does not authorize the general finding on this point made by us.

'The freight rate due under the tariff on file with the Interstate Commerce Commission and collected on these shipments was 15 cents per hundred pounds, and under this rate, the services rendered without other charge included switching from Sabine station to the docks, seven days' free time, exclusive of Sundays, within which to unload the lumber from the car, and thirty days free storage of the lumber upon the docks at the wharves or in the slips belonging to the Texas & New Orleans Railroad Company. W. A. Powell & Company, Ltd., availed itself of all these services and privileges which were stipulated for by the Interstate Commerce Commission tariff and included in the 15-cent rate charged on export freight.

'There is not now and was not, at the time these shipments moved, any local market for lumber at Sabine, the population of which place does not exceed fifty in number. Appellees have never done any local business at that point. For the year 1905 there was exported through the port of Sabine 14,667,670 feet of lumber; for the year 1906, 39,554,000. The shipments in controversy, together with other shipments of lumber to Sabine and Sabine Pass, constitute a large and constantly recurring course of foreign commerce passing out through the port of Sabine.' [--Tex. Civ. App.-, 121 S. W. 258.]

After stating the facts as above, Mr. Justice McKenna delivered the opinion of the court: 

Notes
Uncategorized United States Supreme Court decision