Texas & New Orleans Railroad Company v. Sabine Tram Company (227 U.S. 111)/Opinion of the Court

by Joseph McKenna

United States Supreme Court

227 U.S. 111

Texas & New Orleans Railroad Company  v.  Sabine Tram Company

 Argued: December 17 and 18, 1912. --- Decided: January 27, 1913

If we may regard the essential character of the shipments, we can have no hesitation in pronouncing them to have been in interstate commerce. This conclusion seems indeed to be determined by the last finding of fact. It is there declared that '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.'

If the shipments were foreign commerce it is hardly necessary to make explicit the principle that the national dominion over them was supreme; and, conversely, if the shipments were not of that character, they were subject to the regulating power of the state.

Messrs. Hiram Glass, H. M. Garwood, Maxwell Evarts, and S. W. Moore for plaintiffs in error.

Mr. George C. Greer for defendant in error.

[Argument of Counsel from pages 121-123 intentionally omitted]

The shipments having the character of foreign commerce when they passed 'out through the port of Sabine,' when did they acquire it? We have had occasion to express at what point of time a shipment of goods may be ascribed to interstate or foreign commerce, and decided it to be when the goods have actually started for their destination in another state or to a foreign country, or delivered to a carrier for transportation. Coe v. Errol, 116 U.S. 517, 29 L. ed. 715, 6 Sup. Ct. Rep. 475; Southern P. Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498, 527, 55 L. ed. 310, 320, 31 Sup. Ct. Rep. 279.

The Sabine Company, while not denying this general test, urges a more special one as applicable to the case at bar. The company contends that the supreme test is, 'Was the lumber when it left Ruliff actually launched on its journey to a point in Europe? that is to say, was it committed, by the contract or by any arrangement, between the shipper and the railroad company, or provided for by either, to a common carrier for transportation on its continuous final journey to a destination beyond Sabine, Texas?' Answering this question in the negative, it is contended that the contract of shipment did not contemplate, provide for, or even intend, that the freight should go beyond Sabine 'through the agency of that shipment.' Nor, it is further contended, were there any means or arrangements for its movement beyond that point, that being left to an intervening third party and a subsequent act after it was delivered to Powell Company, as it was intended to be, at Sabine; and 'it took the intervention of a new and independent shipment, arrangement, or contract, to move it beyond that point.' Fortifying the contentions, it is said that the existence of the conditions expressed is made the test of foreign commerce by the interstate commerce law, its 1st section reading: 'That the provisions of this act shall apply . . . to the transportation. . . of property shipped from any place in the United States to a foreign country, and carried from such place to a port of transhipment, or shipped . . . from a port of entry either in the United States or an adjacent foreign country.' [24 Stat. at L. 379, chap. 104, U.S.C.omp. Stat. Supp. 1911, p. 1284.] Freight is never shipped, in the sense of the law, it is further contended, until it is launched upon its final continuous trip to a foreign country. These contentions would seem to be tantamount to saying that a local bill of lading determined the character of the commerce, but counsel especially exclude this conclusion. They admit 'that there may be some additional or outside arrangement for a continuous final movement to a destination beyond that named in the bill of lading, or the bill of lading may itself note a forward continuous movement beyond the destination named.' It appears, therefore, that continuity of movement is the chief insistence and test of the Sabine Company; not necessarily, it is explained, in point of time or free of delays, but 'an unbroken movement, proceeding under the original arrangement or shipment.'

The elements of the contentions are somewhat difficult to estimate. So far as they depend upon the character of a bill of lading, and that it had not provision for carriage beyond the local destination, they are answered by Southern P. Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498, 55 L. ed. 310, 31 Sup. Ct. Rep. 279, and Railroad Commission v. Worthington, 225 U.S. 101, 56 L. ed. 1004, 32 Sup. Ct. Rep. 653. They are also answered by the following Texas cases: State v. Southern Kansas R. Co. --Tex. Civ. App. --, 49 S. W. 252; State v. International & G. N. R. Co., 31 Tex. Civ. App. 219, 71 S. W. 994; Gulf, C. & S. F. R. Co. v. Fort Grain Co., --Tex. Civ. App. --, 72 S. W. 419; Gulf, C. & S. F. R. Co. v. Fort Grain Co. --Tex. Civ. App. --, 73 S. W. 845.

That there must be continuity of movement we may conceive, and to a foreign destination intended at the time of the shipment. Indeed, all of the elements of the contentions of the Sabine Company are well illustrated by Southern P. Terminal Co. v. Interstate Commerce Commission and Railroad Commission v. Worthington, supra.

In the former case we cited Coe v. Errol, and decided that its principle was not defeated by the fact that the shipments were not made on through bills of lading. The case is instructive as well in its facts as in its principle. The product involved was cotton seed cake and cotton seed meal accumulated at the wharves of the Terminal Company at Galveston, and the cake there manufactured into meal. The cake and meal were purchased in Texas and neighboring states, but chiefly in Texas, and shipped on bills of lading and waybills to the purchaser and manufacturer, showing the point of destination to be Galveston. The purchases were made for export, there being no consumption of the products at Galveston. The sales to foreign countries were sometimes for immediate and sometimes for future delivery, irrespective of whether the product was on hand at Galveston. At times it was on hand. At other times orders had to be filled from cake purchased in the interior and then in transit, which, upon reaching Galveston, had to be ground into meal and sacked, and for the meal thus ground and sacked or thus bought ships' bills of lading were made. It was contended that the transit of the cake and meal absolutely ended at Galveston, that point being their final point of concentration and manufacture, the cake being there manufactured and sacked for export. The contention was rejected by the application of the principle which we have expressed. The points of resemblance between that case and the one at bar are obvious. Are the points of difference essential? In both cases the article was intended for export, but had no definite foreign destination, nor had it been 'committed to a common carrier for its final continuous voyage to a foreign point.' In the Terminal Case the manufacturer and exporter of the products purchased them at interior points and had them shipped to himself at Galveston. In the present case the Sabine Company was the manufacturer and shipped them to the Powell Company, the purchaser, who paid the freight charges for the Sabine Company. Upon the arrival of the lumber at Sabine it was carried without delay beyond and unloaded into the water in reach of ship's tackle. The continuity of the shipment was not as much broken as in the cited case. There there was a delay for manufacturing; here there was only such delay as was incident to transhipment from rail carriage to water carriage, and to the nature of the traffic. It is said, however, that the Sabine Company had no connection with the lumber after its arrival at Sabine, and had no concern with its destination after it came into the hands of Powell Company, and had no particular knowledge thereof. Like circumstances undoubtedly existed in Southern P. Terminal Co. v. Interstate Commerce Commission. It did not prevail there and cannot prevail here. The determining circumstance is that the shipment of the lumber to Sabine was but a step in its transportation to its real and ultimate destination in foreign countries. In other words, the essential character of the commerce, not its mere accidents, should determine. It was to supply the demand of foreign countries that the lumber was purchased, manufactured, and shipped, and to give it a various character by the steps in its transportation would be extremely artificial. Once admit the principle, and means will be afforded of evading the national control of foreign commerce from points in the interior of a state. There must be transhipment at the seaboard; and if that may be made the point of ultimate destination by the device of separate bills of lading, the commerce will be given local character, though it be essentially foreign.

That it is the nature of the traffic, and not its accidents, which determines its character, is illustrated by Railroad Commission v. Worthington, supra. A rate of 70 cents a ton was imposed by the Commission on what was called 'Lake-cargo coal' from a coal field in eastern Ohio to the ports of Huron and Cleveland, Ohio, on Lake Erie, for carriage thence by lake vessels. The shipper transported the coal ordinarily upon bills of lading to himself, or to another for himself, at Huron, and it appeared that the coal might be accumulated in large quantities at Huron, and only taken out of the accumulated lots from time to time for the purpose of shipment out of the state. The rate of 70 cents, however, covered not only the transportation of the coal to Huron, but placing it on the vessels and trimming it for its interstate journey. It was held that its transportation to Huron was an interstate carriage.

Much stress was laid in the argument upon the fact that the coal was billed only to Huron. Replying to the contention the court said that the billing of the coal was not necessarily determinative, citing Southern P. Terminal Co. v. Interstate Commerce Commission, supra.

Gulf, C. & S. F. R. Co. v. Texas, 204 U.S. 403, 51 L. ed. 540, 27 Sup. Ct. Rep. 360, is urged as sustaining all of the contentions of the Sabine Company, and the case was considered so apposite and controlling that the supreme court of the state rested its decision entirely upon it. It demands, therefore, a careful review. Its facts were as follows: The Hardin Grain Company, doing business in Kansas City, Missouri, having made a contract with parties at Goldthwaite, Texas, for the delivery of two carloads of corn at that place, in order to comply with their undertaking, contracted to purchase of the Harroun Commission Company, who were also doing business at Kansas City, Missouri, and had an agent at texarkana, Texas, the same quantity of corn, to be delivered at the latter point. The corn with which the Harroun Commission Company proposed to fulfil their contract was shipped from South Dakota to Texarkana, Texas, through Kansas City, Missouri. It was delivered at Texarkana, Texas, in accordance with the agreement, to the Hardin Grain Company, who thereupon shipped it in the same cars, without breaking bulk, over the Texas & Pacific Railway and its connecting lines to Goldthwaite, Texas. Commenting on these facts the supreme court of the state, when the case was before it, said: 'Since the contract of the Hardin Grain Company with the initial carrier at Texarkana was a contract for transportation wholly within this state, the question resolves itself into the inquiry whether the facts just stated change the character of the transportation and make the carriage from Texarkana to Goldthwaite a part of an interstate shipment.' The court decided that the carriage from Texarkana to Goldthwaite 'should be deemed independent of and wholly disconnected from its transportation to Texas from South Dakota, or Kansas City.' [97 Tex. 284, 285, 78 S. W. 495.] In other words, the court divided the commerce into two parts: one, the carriage from South Dakota and Kansas City to Texarkana, terminating by the delivery of the corn there to the Hardin Grain Company; and, one, which the court regarded as independent of and disconnected from the other, from Texarkana to Goldthwaite upon a bill of lading by which the railway company acknowledged the receipt from the Hardin Grain Company at Texakana with orders to deliver to Saylor & Burnett at Galveston, Texas. This carriage, being wholly within the state, was pronounced to be a local shipment.

This court affirmed the judgment, and decided that the contract between the Hardin Grain Company and the Harroun Commission Company was completed in accordance with its terms when the corn was delivered to the Hardin Company at Texarkana. 'Then, and not till then,' it was said, 'did the Hardin Company have full title to and control of the corn, and that was after the first contract of transportation had been completed.' Then, and not till then, we may say, did the Hardin Company acquire the means of fulfilling its contract with Saylor & Burnett; and then, and not till then, did it start to fulfil its contract with Saylor & Burnett. This was the determining circumstance both in the supreme court of Texas and in this court. It caused the supreme court of Texas to decide that the carriage of the corn from Texarkana to Goldthwaite should be deemed independent of and wholly disconnected from its transportation to Texas from South Dakota, or Kansas City. It caused this court, in effect, to adopt that ruling and to consider the corn not at any time to be that of Saylor & Burnett until it was started from Texarkana to Goldthwaite. It appeared that the corn remained five days in Texarkana, and, considering the bearing of this fact and the other facts, it was said: 'The Hardin Company was under no obligation to ship it further. It could in any other way it saw fit have provided corn for delivery to Saylor & Burnett, and unloaded and used that car of corn in Texarkana. It must be remembered that the corn was not paid for by the Hardin Grain Company until its receipt in Texarkana. It was paid for on receipt and delivery to the Hardin Grain Company. Then, and not till then, did the Hardin Grain Company have full title to and control of the corn, and that was after the first contract of transportation had been completed.'

It is manifest that these facts were the determining ones, and the history of the corn prior to its arrival at Texarkana was put aside as irrelevant, and the controlling fact decided to be that corn belonging to the Hardin Grain Company was shipped from Texarkana to Goldthwaite, a strictly local shipment. This was the view taken of the case in Railroad Commission v. Worthington, 225 U.S. 101, 56 L. ed. 1004, 32 Sup. Ct. Rep. 653. It was there urged to sustain the contention that the manner of billing was controlling of the character of the commerce. The contention was rejected, and, distinguishing the case and speaking of its facts, the court said: 'The facts showed that the corn was carried upon a bill of lading from Hudson [South Dakota] to Texarkana, and that afterwards, some five days later, it was shipped from Texarkana to Goldthwaite, both points in the state of Texas. This was held to be an intrastate shipment, unaffected by the fact that the shipper intended to reship the corn from Texarkana to Goldthwaite, for, as this court held, the corn had been carried to Texarkana upon a contract for interstate shipment, and the reshipment five days later upon a new contract was an independent intrastate shipment.' Distinguishing the case, it was said: 'It is evident from this statement of facts that the case is quite different from the one under consideration. There a new and independent contract for intrastate shipment was made, the interstate transportation having been completely performed.'

The facts in the case at bar are different. The lumber was ordered, manufactured, and shipped for export. And we say 'shipped,' for we regard it of no consequence that the Sabine Company had no concern or connection with it after it reached Sabine. Its relation to the shipment was a perfectly natural one, and did not change the relation of the Powell Company to it, and make the lumber other than lumber purchased at Ruliff, and started from there in transportation to a foreign destination. The findings are explicit and circumstantial as to this. And the shipment was not an isolated one, but typical of many others, which constituted a commerce amounting in the year 1905 to 14,667,670 feet of lumber, and in the year 1906, 39,554,000 feet. Nor was there a break, in the sense of the interstate commerce law and the cited cases, in the continuity of the transportation of the lumber to foreign countries by the delay and its transhipment at Sabine. Swift & Co. v. United States, 196 U.S. 375, 49 L. ed. 518, 25 Sup. Ct. Rep. 276. Nor, as we have seen, did the absence of a definite foreign destination alter the character of the shipments.

Judgment reversed and case remanded for further proceedings not inconsistent with this opinion.

Notes