W. P. Brown & Sons Lumber Company and other shippers brought in the Interstate Commerce Commission a complaint under section 16 of the Interstate Commerce Act (49 U.S.C.A. § 16), seeking reparation for alleged overcharges on shipments of lumber and other forest products taking lumber rates. They were awarded damages in the proceedings known as Wausau Southern Lumber Co. v. Alabama Great Southern R.R. Co., 142 I.C.C. 521; Id., 182 I.C.C. 731. The Louisville & Nashville Railroad and some other carriers refused to comply with the order. Then this suit was brought in the federal court for Western Kentucky to recover the amounts awarded against them. The case was heard on demurrers to the amended petition and to certain paragraphs of the amended answer. The demurrer to the petition was sustained, and that to the answer overruled, on the ground that the award was founded upon an erroneous construction of the so-called 'Jones' or 'Combination Rule' in the tariffs. The parties declining to plead further, judgment was entered dismissing the petition (D.C.) 7 F.Supp. 593. That judgment was affirmed by the Circuit Court of Appeals 82 F.(2d) 94. We granted certiorari (299 U.S. 524, 57 S.Ct. 14, 81 L.Ed. --) because of conflict with the decision of the Court of Appeals of the District of Columbia in Baltimore & Ohio R.R. Co. v. Domestic Hardwoods, Inc., 62 App.D.C. 142, 65 F.(2d) 488.
The shipments involved were from points in the South and Southwest to points North. For such shipments, there have long been commonly available over connecting lines more than one, and often many, through routes from each point of origin to destination. The Interstate Commerce Act does not require that the rates on all routes shall be the same. Nor does it require that there be on each route a joint through rate. Sometimes, none of the tariffs for the several available routes specifies a joint through rate. Where no joint rate is specified, the tariffs for the through routes commonly provide that the through rate shall be the sum of the local rates of the several carriers contributing to the movement. In 1918, the Director General of Railroads made, by General Order No. 28, a percentage increase of lumber rates in southern territory, limited to 5 cents per 100 pounds. Thus, a joint through rate could not be increased more than 5 cents. But when the lumber moved on a combination through rate, the 5-cent limit was applied to each factor in the combination. The result was that on combination through routes the increase was often doubled, or tripled. To avoid such a result, the so-called 'Jones' or 'Combination Rule' was devised in February, 1919. Ever since, it has been commonly incorporated in tariffs.
The question for decision is whether the 'Combination Rule' applies to the shipments here involved. If it does not, there is no cause of action. If it does, the award was correct. The rule provides:
'Where no published through rates are in effect from point of origin to destination on Lumber * * *, carloads, and two or more commodity rate factors * * * are used in arriving at the through rate for a continuous rail shipment thereof, such through rate will be arrived at in the following manner. * * *' (Then follows a formula.)
When applied to the combination rate specified in the tariff, the formula effects a reduction thereof. While the combination rate itself is ordinarily, if not always, higher than the joint through rate, the effect of applying to it the Combination Rule would not necessarily produce equality in rates on the several routes. It might make the combination through rate lower than the published joint through rate. This is true as to many of the shipments here involved. The amended answer gave an example: Laurel, Miss., is a typical lumber shipping point; and Columbus, Ohio, a typical destination. The published through joint rate from Laurel to Columbus, applying via each of the several originating carriers at that point, was 43 cents per 100 pounds. A combination rate for the movement over other routes, unaffected by the Combination Rule, was 43 1/2 cents. If the combination rate were subjected to the Combination Rule, the rate over the combination route would be 40 1/2 cents. Thus the combination rate would be much less than the published joint through rate.