TERMINAL CHARGES.
We come to another common complaint against railway companies,--the
one which, next to that relating to differential and import rates,
has lately been most heard of. From time to time during the last
30 years, and especially of late, the right of railway companies
to make charges for what are known as terminal services beyond the
remuneration for actual conveyance has been challenged. On the part
of the railway companies there has been no change of practice.
No new kind of charges has been imposed; those in dispute have
been made from the very beginning of railways in this country.
Introduced by the common carriers upon the railways, they were
continued by the railway companies. On the strength of the right to
receive these charges, companies took upon themselves the carrying
business, constructed large goods stations, with vast siding and
other accommodation, and in providing land, premises and appliances,
expended an enormous amount of capital, not necessary for earning
the statutory mileage rates. The legality of such charges has been,
after full argument on appeal, upheld by the Court of Queen’s Bench
(_Hall v. London Brighton and South Coast Railway Company_, L. R.
15 Q. B. D. 505): their equitable character is not less clear,
and the contention to the contrary is, in the words of the joint
judgment of Mr. Justice Wills and Mr. Justice Mathew, “singularly
unreasonable.”[40]
“We have already mentioned the anticipation, in the early days,
that the railway companies would merely furnish the railway and
charge tolls for the use of it by carriers and others, who would
employ private locomotives, carriages and wagons. The notion was
borrowed from the experience as to canals and highways; and it has
been well said that ”no proper understanding of a good deal of our
railway legislation, and pre-eminently of clauses relating to tolls
or charges, can be arrived at, unless it (the theory) is firmly
grasped and steadily kept in view.”[41] On railways, as on canals,
there were three states of circumstances which it was considered
must be provided for: First a railway company, like a canal company,
might simply provide a highway, looking to the tolls alone for the
use of that highway for a revenue upon their capital; secondly,
without themselves being carriers, the railway company might provide
trucks and locomotive power, as the canal companies provided boats
and haulage power on the canal; or, thirdly, both the canal company
and the railway company might be carriers upon the highway which
they themselves had provided, and find the wharves, stations, other
necessary premises, accommodation and appliances, and the capital
for that purpose.
[40] Mr. Justice Manisty delivered a separate Judgment. See note at
foot of page 99.
[41] Wills, J., in Hall v. London Brighton and South Coast Railway
Company, p. 536. See also Field J. in Brown v. Great Western Railway
Company, L. R. 9 Q. B. D., p. 751.
The owners of lands along the banks of canals were entitled to
construct, in connection with them, wharves, basins and warehouses;
and we find in the earlier railway Acts, and in the Railways
Clauses Consolidation Act 1845 (subject to which all railways since
that date have been, constructed), similar powers with respect to
railways conferred upon adjoining owners. They were authorised
to construct sidings and junctions for the purpose of making
communications between their own lands and the railway. It was
intended that a trader should load his wagons on his own premises,
carry them over the railway and take them off the railway again at
another siding or communication, paying the railway company a mere
toll for the use of the length of line over which the traffic was in
fact worked. Nor was this a mere theory. For many years upon some
of the railways in this country the work of carrying merchandise
was, to a considerable extent, actually performed by large firms
of carriers, such as Pickfords, and others, who provided their
own siding accommodation with the railways, and built or rented
their own stations and warehouses. During this period the railway
companies, so far as this part of their traffic was concerned,
merely provided the highways, the wagons and the engine power, and
hauled the traffic from its place of origin to its destination; and
they undertook no responsibility as common carriers in respect of
the goods. The carriers provided the station accommodation, loaded
and unloaded the goods, checked and weighed them, and handed over
the loaded or unloaded trucks to the railway company in a convenient
position for the engine to be attached to them. Of course, the
carriers, who undertook all liability as such, charged the public
not only the tolls which they paid to the railway company, but also
a considerable additional sum to cover the risk of their Common
Law liabilities, the cost of providing station and warehouse
accommodation, clerkage and invoicing of goods, and other services
beyond the haulage of the trucks.[42] Upon some lines the state
of things which we have described existed for many years. But
gradually the railway companies began to undertake the duties and
responsibilities of carriers. They purchased or built, often at
enormous expense, the necessary terminal accommodation which, under
the previous system, had been provided by private carriers; and
they made to the public charges similar to those which the carriers
themselves had before made for corresponding accommodation and
services. The companies raised the large sums required to furnish
this accommodation and for their working capital as carriers, upon
the faith that they were entitled to stand in all respects, in the
place of the carriers or forwarding agents, and to make reasonable
charges for accommodation and services not covered by, and obviously
having no relation to, the mileage rates for simple haulage from
point to point.
[42] Mr. William Pierssene, Manager to Messrs. Pickford & Co.,
stated in his evidence before the Railway Commissioners in the case
of Kempson v. The G. W. R. (4 N & M 426), that in addition to the
amount of the railway companies’ tolls, a sum varying from twelve to
_eighteen shillings_ a ton was paid by the customer for the services
which now form the subject of terminal and cartage charges.
This view has been sanctioned by the Legislature in almost all
Railway Acts passed since 1845. The charges which a company are
authorised to make are of three kinds--first, tolls for the use of
the railway as a highway; secondly, charges, in addition to the
tolls, for the use of carriages, wagons, and for locomotive power
where such of them are provided by the company--in other words, for
conveyance along the railway. A third class of charges becomes due
when the company not merely convey the goods, as they would for the
carriers who had their own station accommodation and staff, but
are themselves the carriers; cases where, in addition to providing
the highway, vehicles, and locomotive power, they perform “such
services as are incidental to the duty or business of a carrier.”
These services include the providing of stations, warehouses and
sheds, where goods are received, sorted, loaded, covered, checked,
weighed, and labelled, and trucks marshalled for convenient removal
to their various places of destination, and the maintenance of a
large staff of clerks, book-keepers, porters, workmen, engines and
horses necessary for these operations. In this last case the company
are entitled to make, in addition to the charges proper to highway,
rolling stock, and locomotive power, a reasonable charge for the
services, often costly and onerous, rendered in their totally
different capacity of carriers.
It is undisputed that if the railway companies were not carriers
and acted as toll takers only, they would be entitled to claim
their full tolls. But what would be the result if they put in force
such a right? The carriers or forwarding agents who would replace
them, naturally would, as they formerly did, levy such payments as
would cover the cost of station accommodation, and all the services
performed in respect of the carriage of goods beyond the mere
conveyance along the railway. Can it have been in the contemplation
of the Legislature that railway companies were not to be entitled to
make the same charges?
Suppose a Bill were before Parliament for the construction of a
railway, and a clause requiring that the mileage rates should cover
the cost of terminal accommodation were inserted, and the promoters
accepted the Bill with such a restriction. The construction of a
station at the terminus of the railway in a large town is very
costly, and it would be to the interest of the company to make the
station outside the town where land and works would be cheap. They
would thus save capital upon which they would obtain no return,
and, at the same time, they would be entitled to charge the public
the full cost of cartage, whatever the amount might be. The Great
Western Company, for instance, might have constructed their terminus
at Wormwood Scrubs--from which place the cost of cartage to the City
would probably be 7s. 6d. per ton, which the public would have to
pay. With the view of affording better accommodation and of reducing
the expense of cartage, they have erected a station under Smithfield
Market, at a cost, in interest on outlay, maintenance, and other
terminal expenses of an average of 3s. 8d. per ton. According to the
opponents of terminal charges the Great Western Company are only
entitled to be paid a mileage rate proportional to the distance from
Wormwood Scrubs to Smithfield, that is, as for seven miles, to cover
the use of the railway and the station. To take other illustrations,
could it be supposed that the London and North Western Railway
Company would have spent several millions of capital in providing
expensive station accommodation in the immediate vicinity of the
Docks in Liverpool, instead of receiving and delivering the traffic
at Edge Hill, or that companies would have constructed vast stations
in London, Manchester, Leeds, and many other important places,
unless the cost was to be covered by payments in addition to the
mileage rates? So inequitable and opposed to the real interests of
traders is this contention that it is difficult to understand how it
could ever be put forward.
One of the allegations before the Railway Rates Committee in 1881-2,
was, that the companies carried some traffic at too low rates,
and, to compensate themselves, imposed higher rates than otherwise
would be necessary on other traffic. Now, if railway companies were
not allowed to charge for terminal accommodation and services, one
effect would be that in consequence of the cost of the construction
and the expenses of stations, short distance traffic would be
actually carried at a loss.
In recent years terminal charges have been recognised in every Act
for the construction of new railways, by the introduction of a
clause of which the following is a copy:--
“No station shall be considered a terminal station in regard
to any goods conveyed on the Railway, unless such goods have
been received thereat direct from the consignor, or are
directed to be delivered thereat to the consignee.”
If the railway companies were not entitled to charge terminals for
the use of the stations, the insertion of such a clause in Acts
of Parliament would be meaningless; the intention of the clause
evidently was that the companies may not charge terminals in respect
of any intermediate station or junction, and the fair inference is
that they may do so at the sending or receiving station.[43]
[43] Hall v. L. B. & S. C. Railway. Manisty, J., L. R., 15 Q. B. D.
p. 544.
The equitable mature of the claim of the railway companies to make
terminal charges has been admitted on several occasions by some, if
not by all, of the railway commissioners. Their refusal to consider
terminal charges as legally justifiable has arisen only from the
doubt which existed in their minds as to the strict construction of
the words of the clauses; and that question has now been decided by
the Queen’s Bench Division in “_Hall_ v. _The London Brighton and
South Coast Railway Company_.” Some portions of the judgment of the
Court in that case deal only with the construction of the sections
of the particular Private Acts of the defendant company; but the
remarks of the Judges upon the general principles which govern
the railway companies, claim to make terminal charges, explain so
clearly their natural equity as well as their legality, that they
may not improperly be quoted:--
“This notion of the railway being a highway for the common use of the
public, in the same sense that an ordinary highway is so, was the
starting point of English railway legislation. It is deeply engrained
in it. In the early days of railways it was acted upon at least
occasionally, and in respect of goods traffic, and although it enters
but slightly into modern railway practice, _no proper understanding
of a good deal of our railway legislation, and pre-eminently of
clauses relating to tolls or charges, can be arrived at, unless it
is firmly grasped and steadily kept in view_. Those states of things
were from this point of view to be expected and to be provided for
by legislation. The company might be merely the owners of a highway
and toll takers for the use of it by other people with their own
carriages and locomotives. That state of things would be worked out
by the railway company possessing the mere line of railway from
end to end, and by the persons making use of it, buying or renting
contiguous land whereon to keep their rolling stock, and have their
offices, availing themselves of the powers of Section 76 of the Act
of 1845, and getting on to the railway by means of sidings connected
with the railway.
“A second state of things, as we know from the evidence in this case
to which by the consent of the parties we are at liberty to refer,
prevailed extensively for many years after the railway system was in
full operation, and for some years at least after the passing of the
Act of 1845. The railway company provided the line and provided the
engines and trucks, but they were not carriers. The large warehouses
and sheds wherein goods were received, sorted, loaded, covered,
checked, weighed and labelled, and trucks or carriages marshalled
and prepared for convenient removal to their various places of
destination--a corresponding work was done in respect of goods
arriving from a distance--the staff of clerks, book-keepers, porters,
workmen, and horses necessary for these operations were all provided
and maintained at the expense of the carrier, and no portion of them
fell upon the company. The company, on the other hand, as owners
of the rolling stock, for the use of which, as well as of their
railways, they received payment, provided whatever accommodation they
needed in order to keep in convenient proximity to the places where
the carrier had his depôts the necessary supply of rolling stock.
“The third state of things which might exist simultaneously with the
second, or might be the one prevailing exclusively on a particular
line, existed when the company were themselves the carriers of the
goods, and when as carriers they provided the accommodation and
performed the services above described.
“The company might thus be: 1, toll-takers and neither conveyers
nor carriers; 2, conveyers but not carriers; 3, carriers. It would
naturally be expected that in the first case they would have powers
to take tolls, and tolls only, and that in the second, they would
have power to make charges, which should include tolls and charges
for the use of rolling stock, and it would seem reasonable enough
that (inasmuch as they would probably have much greater facilities
for keeping and using their rolling stock to advantage and with
economy than any other person could have) where they provided both
trucks and locomotives as well as took tolls, the maximum charge
should be lower than the aggregate of the three separate charges
which they might make for, 1, use of railways; 2, use of carriages;
3, locomotive power.
“It would seem natural also to expect that where the company were
carriers, inasmuch as they performed the identical services which
they perform under the second head, and others besides, they should
be allowed to charge the same sums as they might charge when falling
under the second category, _plus_ those which are appropriate to
the extra services and liabilities which fall upon them when they
undertake the duties and business of a carrier.
“The contention of the applicants appears to us singularly
unreasonable. It was proved before the Railway Commissioners,
and is not disputed, that the actual cost to the company of the
accommodation and services, which, for many years after the railway
system was very largely developed, and all the principal lines in the
kingdom were at work, were on some of the most important railways
in England provided by independent carriers, and did not fall upon
the railway company, amounted to 1s. 5d. per ton; and it is admitted
that, even with the help of the six-mile clause, the company, if
the contention of the applicants is correct, would, in the case of
traffic carried not more than six miles, have to carry goods coming
under class 5, at a dead loss, which may be approximately stated as
8d. per ton for station services alone, besides getting nothing for
the use of railway and trucks and for providing power.
“The charges of and incidental to ‘conveyance,’ as we have explained
that phrase, are properly measured by the mile of distance travelled
over. The terminal services of station accommodation, loading,
watching, checking, and the like, have no common measure with the
distance run, and are the same, whether that distance be two or two
hundred miles....
“Our answer, therefore, is that the providing of station
accommodation, and work of the general nature indicated to us by the
Railway Commissioners, appear to us to be capable of falling under
the definition of ‘services incidental to the duty or business of a
carrier,’ and _prima facie_ to do so. Whether in any particular case
they do so, or to what extent they do so, must be a question of fact
for the Commissioners, the line we should draw being, that whatever
is necessary for ‘conveyance’ in the sense in which we have defined
it--being all capable of being measured by reference to the distance
travelled--is covered by the mileage rate. Whatever is properly
incidental, not to conveyance, but to the performance of the duty and
business of a carrier ... that is to say, is actually performed and
is done at a terminal station, may be made the subject of a separate
reasonable charge.
“How could the Legislature ever provide for every single station on
this line, for every terminal station, what was a proper charge? It
could only be done by limiting it, as it has done, by ‘a reasonable
sum,’ and it is for the Railway Commissioners to say what is a
reasonable sum, under the circumstances at each terminal station. ‘No
station is to be considered as a terminal station in regard to any
goods conveyed on the railways of the company unless such goods have
been received thereat direct from the consignor of such traffic, or
are directed to be delivered thereat.’ Therefore terminal stations
are recognised, and terminal charges are recognised distinctly.”
Sir Bernhard Samuelson observes that terminal charges are a
necessary corollary of the Foreign mileage rates,[44] the scientific
basis of which he so much approves; the equity of, and right to make
terminal charges is equally a corollary to the system upon which
the rates in this country have been fixed. The maximum charges for
the user of the road, the user of the truck, and the provision of
the engine are capable of being fairly measured by reference to the
distance travelled. They are, therefore, properly the subject of a
mileage rate. But the providing of station accommodation, and work
which the Railway Companies perform as carriers--as distinguished
from mere conveyance--have no relation to mileage. They must
reasonably be--as it has been held in the case of “_Hall_ v. _The
London Brighton and South Coast Railway Company_,” they legally
are--the subject of an additional charge.
We may here correct a common error. The opponents of terminal
charges are in the habit of speaking and writing of them as if the
companies claimed that they might at their own discretion demand
such payments as they thought fit.[45] The railway companies have
never contended that they were entitled to make arbitrary terminal
charges. Indeed, such a contention would be a legal absurdity.
On the contrary, they have always submitted that, while their
right to make those charges was undoubted, the amount must not
only be reasonable, but also be subject to review by the Railway
Commissioners under the 15th Section of the Regulation of Railways
Act, 1873. Sir Bernhard Samuelson is inaccurate in stating that
the railway companies proposed by their Bills of last Session to
make those charges subject only to their own discretion. While
strongly relying both upon their legal right and the justice of
their claim, the railway companies were willing to submit proposals
to the consideration of Parliament for a re-settlement of their
powers in this respect. But they expressly provided that the
Railway Commissioners should have power to hear and determine any
question or dispute which might arise with respect to the amount
or reasonableness of any terminal charge made by the company, and
that any decision of the Commissioners as to terminal charges should
be binding and conclusive on all Courts and in all proceedings
whatsoever;” words borrowed from s. 15 of the Regulation of Railways
Act, 1873.
[44] Report to Associated Chambers of Commerce.
[45] “The claim of railways to charge terminals would have to
be considered if mileage rates are adopted in principle. That
charge could in no wise be left to the discretion of the railways
themselves, as was proposed in the Bills of last Session.”--Sir B.
SAMUELSON.
A few details as to the law and practice on this subject in
Continental countries may be useful. And, first, as to Germany. When
the question of the introduction of a new tariff for the German
railways was under consideration, it was agreed that in previously
fixing the railway rates, sufficient consideration had not been
given to the expense incurred at the sending and receiving stations,
irrespective of the distance the traffic was carried. The result
of the calculations which were made was that those expenses should
be estimated at 12 marks per truck load of ten tons. This was
accordingly adopted as the standard figure for all goods carried
in wagon loads, while for small consignments the charge was fixed
at 20 marks. The addition of those normal allowances to the rates
on traffic to be carried short distances would have considerably
increased the charges previously made. It was accordingly agreed,
as a compromise, to graduate the terminal charges for short
distances; the graduation being simply the means of avoiding what
might have been considered a large increase in the railway rates,
in consequence of the adoption of the “reform tariff system.” These
terminals represent the working expenses at the forwarding and
receiving stations, the labour of receiving the goods from sender,
marshalling or shunting the trucks to the sidings set apart for the
delivery of the goods, and also the expense incurred by railway
companies for stationery and clerkage; but they do not include the
expense of loading and unloading, except in the case of _Grande
Vitesse_ and “_Piece Goods_,” They vary from 10d. per ton in full
truck loads of 10 tons, to 2s. per ton of general goods, and in the
special tariff classes, which include minerals, from 7¼d. in full
trucks of 10 tons to 1s. 2½d. per ton.
In Belgium there is a fixed charge of 1 fr. per ton of 1,000
kilogrammes for the use of station and for clerkage; but it does
not include loading and unloading, or booking, counting, or advice
of arrival of goods, for all of which services extra charges are
authorised and, in fact, made. This is practically a terminal charge.
In Holland the terminal charges vary from 1s. 2d. to 1s. 6d. per
ton in the truck load classes, and 2s. 6d. per ton in respect of
ordinary or “_piece_” goods in quantities of less than 5 tons. In
the latter case the cost of loading and unloading is included in the
terminal charge, but not in the truck load classes. In neither case
are weighing, counting, stamping freight note, labelling or advice
of arrival included. For all of these services extra charges are
made.
In France only small charges varying from 20 cents. per ton for
goods in full truck loads, to 35 cents. per ton for goods in less
quantities, are made for the use of stations, though there are
various charges for loading and unloading, booking, advice of
arrival, and other services. Either, therefore, the traffic for
short distances is carried at a loss, or no adequate return to cover
the use of station and conveyance is obtained--a course, which,
assuming the outlay upon a railway is entitled to a fair return, is
opposed to sound commercial principles.[46]
[46] NOTE.--The terminals authorised and charged in these countries
will be found fully set out in a tabular form in the Appendix III.