265 U.S. 274 (1924), 456, United States v. Abilene & Southern Railway Company

Docket Nº:No. 456
Citation:265 U.S. 274, 44 S.Ct. 565, 68 L.Ed. 1016
Party Name:United States v. Abilene & Southern Railway Company
Case Date:May 26, 1924
Court:United States Supreme Court

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265 U.S. 274 (1924)

44 S.Ct. 565, 68 L.Ed. 1016

United States


Abilene & Southern Railway Company

No. 456

United States Supreme Court

May 26, 1924

Argued March 4, 1924




1. An order made by a division of the Interstate Commerce Commission being operative, unless stayed by the division or the full Commission pending a rehearing by the latter (amended Act to Regulate Commerce, §§ 16a, 17 [4]), a suit to enjoin enforcement of such an order is within the jurisdiction of the district court, and whether relief should be denied until the plaintiff, through application for rehearing, shall have exhausted the administrative remedy is a matter of judicial discretion. P. 280.

2. In a proceeding under § 15(6) of the amended Interstate Commerce Act in which the Commission readjusted the divisions of joint rates as between a carrier and its several immediate connections,

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the other carriers participating in the joint rates, whose shares were left unchanged, were not necessary parties. P. 282.

3. In determining just divisions, the Commission must consider relative cost of service; whether a particular carrier is an originating, intermediate or delivering line; the efficiency of operation of each carrier; the revenue it requires for operation expenses, taxes and a fair return; public importance of the transportation services involved, and any other facts which would ordinarily, without regard to mile haul, entitle one carrier to a greater or less proportion than another. P. 284.

4. The financial needs of a weaker road may also be taken into consideration in determining divisions of joint rates. Id.

5. The mere fact that increased divisions allowed a carrier were measured by percentages of the revenues of the several connecting carriers from the joint traffic does not establish that the division is unjust or guided solely by relative financial ability. P. 285.

6. An order increasing the divisions of a carrier is not arbitrary merely because the corresponding decreases are confined to the carriers immediately connecting with it, these having the right to apply for further readjustment as between themselves and remoter carriers. P. 286.

7. An order of the Commission is not invalidated by the mere admission as evidence of matter which in judicial proceedings would be incompetent. P. 288.

8. But a finding without evidence is beyond the power of the Commission. Id.

9. Reports of carriers on the Commission's files cannot be treated as evidence when not introduced as such, in a proceeding which, though initiated by the Commission primarily to protect the public interest, may result in an order in favor of one carrier as against another. Id.

10. Rule XIII of the Commission does not purport to relieve the Commission from introducing, by specific reference, such parts of the reports of carriers, properly on file, as it wishes to treat a evidence. P. 289.

11. The right of carriers to insist that consideration by the Commission of matter not in evidence invalidates its order is not lost by their submission of the case without argument or their consent to omission of a tentative report by the examiner. Id.

12. A general notice given at the hearing by an examiner that the Commission would rely upon voluminous annual reports previously

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filed with the Commission by plaintiff carrier pursuant to law, held tantamount to no notice whatever of evidence used against them. P. 289.

13. The divisions of joint rates may be determined on the basis of individual rates and divisions, shown by tariffs and division sheets and found sufficiently typical in character and ample in quantity to justify findings as to each division of each rate of every carrier involved (New England Divisions Case, 261 U.S. 184), but it cannot be inferred, because the joint rates and divisions between particular carriers work injustice in the aggregate, that each particular division of each rate is unjust and in like proportion. P. 290.

288 F. 102 affirmed.

Appeal from a decree of the district court perpetually enjoining the enforcement of an order of the Interstate Commerce Commission.

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BRANDEIS, J., lead opinion

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

This is an appeal by the United States and the Interstate Commerce Commission from a decree of the Federal

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Court for Kansas which perpetually enjoined the enforcement of an order made by the Commission, on August 9, 1922, under § 15(6) of the Interstate Commerce Act as amended by Transportation Act 1920, c. 91, § 418, 41 Stat. 456, 486. The order relates to the divisions of interstate joint rates on traffic interchanged, within the United States, by the Kansas City, Mexico & Orient system with 13 carriers whose lines make direct connection with it. The order provides that, on all such interchanged traffic, the existing divisions of these carriers shall be reduced by a fixed percent, and that the Orient shall receive the amount so taken from its connections.1 The order also directed the Orient and the connecting carriers to make, at stated intervals, reports of the financial results of the divisions ordered, permitted any carrier to except itself from the order, in whole or in part, by proper showing, and retained jurisdiction in the Commission "to adjust on the basis of such reports the divisions herein prescribed or stated, if such adjustment shall to us seem proper." Kansas City, Mexico & Orient Divisions, 73 I.C.C. 319, 329.

The order was entered after an investigation into the financial needs of the Orient system undertaken by the

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Commission in April, 1922, pursuant to an application of the receiver of the Kansas City, Mexico & Orient Railroad Co. and an affiliated Texas corporation. It appeared (and was not denied) that the public interest demanded continued operation of the railroad; that the revenues were insufficient to pay operating expenses; that the operation was being efficiently conducted, and that, unless relief were afforded by increasing the Orient's division of joint rates and/or otherwise, operation would have to be suspended and the railroad abandoned.2 The 13 carriers who brought this suit participated in the investigation undertaken by the Commission, and supplied certain statistical information requested of them. But they introduced no evidence before the Commission, and the case was submitted there without argument. None of the connecting carriers made application to be excepted from the order. Nor did any of them apply for a rehearing. Before the effective date of the order, this suit was begun. On application for a temporary injunction, it was heard by three judges, pursuant to the Act of October 22, 1913, c. 32, [44 S.Ct. 567] 38 Stat. 208, 220, and a temporary injunction was granted. Upon final hearing, motions of the defendants to dismiss the bill were denied, the injunction was made permanent, and a rehearing was refused. 288 F. 102.

First. The Commission moved, in the district court, to dismiss the bill on the ground that the suit was premature. The contention is that, under the rule of Prentis v. Atlantic Coast Line, 211 U.S. 210, orderly procedure required that, before invoking judicial review, the

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carriers should have exhausted the administrative remedy afforded by a petition for rehearing before the full Commission. The investigation and order were made not by the whole Commission, but by division 4.3 The order of a division has "the same force and effect . . . as if made . . . by the Commission, subject to rehearing by the Commission." Interstate Commerce Act as amended, § 17(4). Any party may apply for such rehearing of any order or matter determined. § 16a. Meanwhile the order may be suspended either by the division or by the Commission. In this case, the order, by its terms, was not to become effective until 37 days after its entry. There was consequently ample time within which to apply for a rehearing and a stay before the plaintiffs could have been injured by the order.

Division 4 consists of four members. There are eleven members on the full Commission. Under these circumstances, what is here called a rehearing resembles an appeal to another administrative tribunal. An application for a rehearing before the Commission would have been clearly appropriate.4 The objections to the validity of the order now urged are in part procedural. They include

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questions of joinder of parties, of the admissibility of evidence, and of failure to introduce formal evidence. Most of the objections do not appear to have been raised before the division. If they had been, alleged errors might have been corrected by action of that body or by the full Commission. The order involved also a far-reaching question of administrative power and policy which, so far as appears, had never been passed upon by the full Commission, and was not discussed by these plaintiffs before the division. In view of these facts, the trial court would have been justified in denying equitable relief until an application had been made to the full Commission, and redress had been denied by it. But, in the absence of a stay, the order of a division is operative, and the filing of an application for a rehearing does not relieve the carrier from the duty of observing an order.5 Despite the failure to apply for a rehearing, the court had jurisdiction to entertain this suit. Prendergast v. New York Telephone Co., 262 U.S. 43, 48-49. Compare Chicago Rys. Co. v. Illinois Commerce Commission, 277 F. 970, 974. Whether it should have denied relief until all possible administrative remedies had been exhausted was a matter which called for the exercise of its judicial discretion. We cannot say that, in denying the motion to dismiss, the discretion was abused.

Second. The plaintiffs contend...

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