The History of the Standard Oil Company/Volume 2/Appendix/Number 45
NUMBER 45 (See page 72)
FINDINGS OF FACT
[Transcript of record, Supreme Court of the United States, October term, 1886. Number 1,290. The Lake Shore and Michigan Southern Railway Company, plaintiff in error, vs. Scofield, Shurmer and Teagle, in error to the Supreme Court of the state of Ohio, pages 14-21.]
This cause came on to be heard upon the pleadings, exhibits, and testimony, and was argued by counsel; in consideration whereof the plaintiffs, having moved for a reservation to the Supreme Court, the judges are unanimously of opinion that important and difficult questions exist in the case, making it proper that the same should be reserved to the Supreme Court for decision, which questions embrace the following propositions:
1st. Is this a case upon the face of the petition and under the laws of the state in which the court ought to interfere by injunction?
2nd. Whether such remedy by injunction will apply as well to the case of shipments over the defendants' road alone, as to cases of through shipments over such road and connecting roads?
3rd. What are the duties and obligations of common carriers at common law as distinguished from the statutory provisions of this and other states and countries?
4th. Are the defendants at common law obliged to carry freight at the same price for all parties or members of the public, without regard to quantity or circumstances connected with the transportation?
5th. May the defendant, as a common carrier and a corporation organised for that purpose, contract with a party controlling 90⁄100 or more of all the freight of a particular class, at a given city or point, to carry the same for less than general tariff rates, in consideration that it shall receive all the freight thus controlled by such party?
6th. May the defendant, as a common carrier, in consideration of receiving all the freight of such party, that the quantity shall not be diminished, and that terminal facilities as to loading, unloading, and delivering the freight shall be furnished different from regular or usual freight and with less expense and risk to the carrier, contract to carry such freight, with such convenience and benefits, for less than general tariff rates to the public?
7th. May the defendant, as common carrier, transport over its road large quantities of oil, amounting to many full car-loads per day, for a less price per car-load than it charges the public generally per barrel or for single car-loads or less, provided all persons are charged like prices for like quantities?
8th. May defendant, as common carrier, make any distinction in prices for carrying like freight on the ground of quantity and covenants to continue the same if thereby it can make a greater profit than to charge the same prices for quantities small and great? Is defendant, under all circumstances, obliged to charge the same prices per ton or other quantity, for the same distance, to all persons tendering freight of the same class, or may it, in good faith and without intention to injure other producers or patrons, contract to carry for one party at a less price than general rates if thereby it can secure a large and profitable business which would otherwise be diverted from it, in whole or part?
8½. Should decree be rendered for plaintiffs; and, if so, to what extent should it be enforced—only within the bounds of the state or to all parts of the country within or without the state, to all points reached by defendant and connecting lines?
9th. Was section 3373 of the Revised Statutes intended to apply to cases like the present, and under it is there any authority for the injunction relief prayed for in this action?
10th. Whether upon such shipments so made by the defendant's cars by the barrel, either in car-load lots or in less amounts, the plaintiffs are, either by common law or by the Ohio statutes on the subjects, entitled to have their said products carried at the same rate of charge between like points of shipment as are allowed to said Standard Oil Company or other shippers, either to points on its line or branches of said road beyond?
11th. Whether the defendant, as a common carrier, may exact from the plaintiffs upon such shipments in barrels any amount greater than the amount charged to said Standard Oil Company upon shipment of like amounts by such tank-cars so long as the plaintiffs offer to ship by their own tank-cars on substantially like terms?
12th. Whether, if such defendant can be required to give to said plaintiffs equal rates of freight upon its shipments with those allowed said Standard Oil Company to points upon its line and branches, it can be required to give as low a rate to terminal points as the rate it receives for its proportion of the service to such points, on shipments to points beyond, and on its connecting lines on a through rate fixed by it, and such connecting line or lines for the through shipment?
13th. Whether the fact of the existence of such arrangement, and the fact of the said Standard Oil Company being a shipper in amounts larger than the plaintiffs, is any justification for the making of such charges to the plaintiffs in excess of such charges made to said Standard Oil Company? And in order that the same may be legally presented to said Supreme Court, the District Court do find the facts as follows:
1st. The court find the plaintiffs are, and since 1875 have been, partners, carrying on, in a large way, at Cleveland, Ohio, where this refinery is situated, the business of refining petroleum and selling the refined product mainly throughout the territory west and northwest of Cleveland, and extending throughout the Western and Northwestern states, this business being one in which they have invested a large amount of capital, and in which they have established a large and profitable trade throughout such territory, which constitutes the natural market for the sale of such products manufactured at Cleveland, the cost of plaintiffs' refining being about $70,000, with a refining capacity of about 150,000 barrels per year.
2nd. That the defendant is a consolidated railroad company, owning and operating a railroad extending from Buffalo, in the state of New York, to Chicago, in the state of Illinois, and passing through parts of the states of New York, Pennsylvania, Ohio, Indiana, Michigan, and Illinois, and also owning and operating branches from Toledo, in the state of Ohio, to Detroit, in the state of Michigan, and also from White Pigeon, in the state of Michigan, to Grand Rapids, in the state of Michigan.
3rd. That said railroad, so far as the same is constructed and operated in the state of Ohio, extends from the Easterly line of Ashtabula County to the Westerly line of Williams County; that it is a corporation engaged as common carrier in the business of transporting persons and property for hire and reward over its said line of road and branches.
4th. That it crosses and connects with other lines of railroads at Toledo, Coldwater, and Chicago, over which it can and does forward passengers and freight to their destination and consignment points as requested and directed; that it holds itself out as ready to make and does make the rates to points reached by connecting roads; that defendant, as such common carrier, has been accustomed to receive for transportation property over its line and branches to points beyond the termini of the same by delivering the same at such termini to connecting roads for carriage to the points of consignment.
5th. That the rates for such through freights are fixed by agreement between the different companies owning the lines over which such freights are carried, and not by the defendant alone, and are charged by like agreement, from time to time.
6th. That what are termed local rates, being for property received and delivered at points on the line of defendant's road, are fixed exclusively by the defendant.
7th. That some of the towns and cities on the main line and branches of the defendant's road can only be reached by shippers from Cleveland over its said road and branches; and all of them, as well as the towns on most of its connecting branches, can be most directly reached by means of its line from Cleveland.
8th. That the defendant is sufficiently supplied with cars and engines and appliances for transportation necessary to enable it, in the ordinary course of its business, to receive and carry for the plaintiffs such products from Cleveland to such markets.
9th. That for a period of time extending back beyond the time when plaintiffs commenced the manufacture of oil in the City of Cleveland, the defendant has published for the benefit of the public, tariff rates for local and through freights, which have been frequently changed, and including rates for the carriage of oil in barrels.
10th. The plaintiffs commenced and established their present business in Cleveland in the spring or summer of 1875, and subsequently, in July, 1876, became engaged in the same by arrangement with the Standard Oil Company to the partial extent of their own manufacturing establishment.
10½. That during the time in the petition named the Standard Oil Company, the plaintiffs' principal competitor in business, has also been and still is engaged in a like business with them, it having at Cleveland a large refinery from which it sells like products in the same markets; that the refineries of both are situate on the line of railroads other than that of the defendant, but having like connection with it; that each has switch tracks extending to their refineries from the main lines of its roads on which they are situate, by means of which shipments from them are made, the course of business in making shipments by defendant's road by the car-load (which is the manner in which nearly all the business is done) being for the defendant, on request of either, to furnish its cars, which are switched from its connecting track by the road on which the refineries are situate to the refineries, then loaded by the shippers, and by said road drawn out and placed on the defendant's tracks for shipment by its road. By some traffic arrangement between the roads a switching charge per car for such service is charged by the local road against the defendant, which is by it at its discretion charged against the shippers with its general freight charge. Upon shipments in less than car-load lots delivery is made to the defendant's freight depot.
11th. That the Standard Oil Company was then, and ever since has been, engaged in the same business at Cleveland and elsewhere, and did then and ever since has manufactured and shipped more than ninety one-hundredths of all the illuminating oil and products cf petroleum manufactured and shipped at and from the City of Cleveland.
12th. The court further find that prior to 1875 it was a question whether the Standard Oil Company would remain in Cleveland or remove its works to the oil-producing country, and such question depended mainly upon rates of transportation from Cleveland to market; that prior thereto said Standard Company did ship large quantities of its products by water to Chicago and other lake points, and from thence distributed the same by rail to inland markets; that it then represented to defendant the probability of such removal; that water transportation was very low during the season of navigation; that unless some arrangement was made for rates at which it could ship the year round as an inducement, it would ship by water and store for winter distribution; that it owned its tank-cars and had tank-stations and switches or would have at Chicago, Toledo, Detroit, and Grand Rapids, on and into which the cars and oil in bulk could be delivered and unloaded without expense and annoyance to defendant; that it had switches at Cleveland leading to its works at which to load cars, and would load and unload all cars; that the quantity of oil to be shipped by the company was very large, and amounted to 90 per cent. or more of all the oil manufactured or shipped from Cleveland, and that if satisfactory rates could be agreed upon it would ship over defendant's road all its oil products for territory and markets west and northwest of Cleveland, and agree that the quantity for each year should be equal to the amount shipped the preceding year; that upon the faith of these representations the defendant did enter into the contract and arrangement substantially as set forth in defendant's answer; that the rates were not fixed rates, but depended upon the general card tariff rates as charged from time to time, but substantially to be carried from time to time for about ten cents per barrel less than tariff rates, and, in consideration of such reduced rates as to bulk oil, the Standard Company agreed to furnish its own cars and tanks, load them on switches at distributing points, and unload them into distributing tanks, and was also to load and unload oil shipped in barrels, and without expense to defendant, and with, by reason thereof, less risk to defendant, which entered into the consideration, and was also to ship all its freight to points west and northwest of Cleveland, except small quantities, to lake ports not reached by rail, and to so manage the shipments, as to cars and times, as would be most favourable to defendant; that defendant then agreed to said terms; that said agreement so made in 1875 has remained in force ever since.
13th. That at a cost exceeding $100,000 said Standard Company had and constructed the terminal facilities promised and herein found; that, in fact, the risk of danger from fire to defendant, the expense of handling, in loading and unloading, and in the use of the standard tank-cars is less (but how much the testimony does not show) than upon oil shipped without the use of such or similar terminal facilities; that said Standard Company commenced by shipping about 450,000 barrels a year over defendant's road, which increased from year to year until, in 1882, the year before the filing the petition in this action, the quantity so shipped on defendant's road amounted to 742,000 barrels, equal to 2,000 barrels or one full train-load per day.
14th. That said arrangement was not exclusive, but was at all times open to others shipping a like quantity and furnishing like service and facilities; that it was not made or continued with any intention on the part of the defendant to injure the plaintiffs in any manner; that plaintiffs knew of an arrangement between defendant and Standard Oil Company years before January 1, 1880, and on or about July 20, 1876, contracted with the Standard Company to give it the control of the shipments of plaintiffs' oil and the plaintiffs the benefit, if any, of any arrangements then existing or that might thereafter exist with the Standard Oil Company upon shipment of oil, and which plaintiffs received until about January 1, 1880, when they ceased operating with the Standard Oil Company, and thereafter were charged and paid the regular tariff rates published by defendant and by it charged and collected from all the public except the Standard Oil Company under the arrangement aforesaid.
15th. That the testimony on behalf of the plaintiffs fails to show the quantity manufactured or shipped by them, and how much they could or would ship by defendant's road the Standard Company were charged tariff rates, does not appear in the testimony, although the testimony does show that plaintiffs shipped many car-loads, but the court find that the Standard Company have shipped and do ship over defendant's road more than 90⁄100 of all the oil manufactured at and shipped from Cleveland.
16th. The court further find that at the time of filing the petition, and at all times after November 29, 1882, the prices charged the Standard Company from Cleveland to Chicago was fifty cents per barrel on oil in barrels, and forty dollars for each tank-car; that at the time of filing the petition, and from and after May 19, 1883, the tariff rate between the points aforesaid was sixty cents per barrel, while from November 20, 1882, to May 19, 1883, the tariff was seventy cents per barrel; that prior to the dates aforesaid the tariff rates and rates to the Standard frequently changed, and the difference was frequently greater than after said dates; that sixty-one barrels constitute a car-load and eighty barrels are estimated to the tank, but that some tanks hold one hundred and some one hundred and twenty barrels, and that at no time were tariff rates made or published for tank-cars carried by defendant with refined oil except when furnished by said Standard Company.
17th. That after said May 19th, 1883, about the same difference often cents per barrel existed between tariff rates and the prices charged to the Standard Oil Company to the different points along the line and consignment points beyond the termini of defendant's road; that five barrels of oil make a ton, and that the prices charged the Standard after November, 1882, from Cleveland to Chicago, amounted to 70⁄100 of one cent per ton, per mile, and tariff rates to 83⁄100 of one cent per ton per mile; that the contract of arrangement made with defendant has been largely profitable to defendant; that during the season of water navigation the Standard Company could have shipped to said distributing points on vessels by the lakes and river barreled oil for a less sum than the rates charged to it by defendant—to plaintiffs and the public were reasonable rates in themselves.
18th. That the defendant from time to time published and still does publish and hold forth to the public a certain printed tariff of rates of charge for the shipment and delivery of all classes of freight, including the products of the plaintiffs' refinery, between Cleveland aforesaid and the various towns and cities upon its said line, branches, and connecting lines, and has refused and still does refuse to ship such products for the plaintiffs to any of such points named in its tariff or schedule except for the prices therein named; and that such schedule fixes the prices for oil shipment at so much per barrel to the public, irrespective of their being shipped in barrels by ordinary freight cars or in bulk by means of tank-cars.
19th. That the plaintiffs have since December, 1879, frequently applied to the defendant both for reduced rates upon such tariff rates and for like rates with those made to such Standard Oil Company, both upon their general shipments by the ordinary freight cars of the defendant and also upon shipments to be by them made in bulk by means of tank-cars owned by them, they proposing to load and unload the same at terminal points, and to assume all risks by fire or leakage; but that the defendant has and still does refuse to allow them by either course of shipment rates less than such tariff rates, the tariff charged and demanded upon such shipments in bulk being on the basis of eighty barrels allowed to be shipped by each tank-car.
20th. The defendant has received ever since the first day of December, 1879, and still does receive from said Standard Oil Company at Cleveland and ship for him, like products to those of the plaintiffs at rates much less than such schedule rates, and receives and ships for said Standard Oil Company oil for shipment in bulk to such points by means of tank-cars of said Standard Company at rates much less than said schedule rates and much less than the rates allowed to said company for the shipment of oil by barrels in ordinary freight cars, and that such reduced rates to said Standard Oil Company by means of such tank-cars are allowed both by the making to it a lower rate upon its shipments by the defendant's cars in barrels, and also by means of its being allowed to ship by means of its said tank-cars to their full capacity, running from 80 to 120 barrels each, and averaging over 100 barrels each, and the reduced rate being charged on a basis of 80 barrels per car. The defendant charged the plaintiffs the switching charge, and omitted to charge the same to the Standard Oil Company; that it was a further part of such understanding, that should the defendant give to other shippers like rates, said Standard Oil Company would as far as possible withdraw from it its shipments; and that for the purpose of effectually securing at least the greater part of said trade, the defendant, on the completion of the New York, Cleveland and St. Louis Railway, a competing line from Cleveland to the West, in the year 1883 entered into a traffic arrangement with it, giving to it a portion of the shipments of said Standard Oil Company west, on a condition of its uniting with it in the carrying out of such understanding as to reduced rates to said Standard Company, which arrangements still exist.
21st. That upon the shipment made by the defendant for said Standard Oil Company of such products the rates paid for shipment to points of delivery upon the defendant's connecting lines and beyond its line have been and are less for the ratable amount of carriage charged for the distance transported over its own line, than said schedule rates or than the lower rates charged to said Standard Oil Company for shipments to the terminal points at which said shipments went from said road to its connecting line; how much less the defendant has refused to state.
22nd. That the reduced rates charged to said Standard Oil Company upon its shipments are arrived at by charging upon such shipments full tariff rates, and afterward, in accordance with some prearranged method agreed on with said Standard Oil Company, refunding to it a portion of the freight so charged and collected, the amount refunded bang known as a "drawback" or "rebate."
23rd. That the evidence does not establish the fact whether or not all the various advantages claimed as secured to defendant by its contract with the Standard Oil Company are the equivalent for the discrimination made to it in freights.