United States v. Los Angeles Co 1927

Decision Date21 February 1927
Docket NumberNo. 414,414
PartiesUNITED STATES et al. v. LOS ANGELES & S. L. R. CO. Argued Jan. 3-4, 1927
CourtU.S. Supreme Court

The Attorney General and Mr. Blackburn Esterline, of Washington, D. C., for the United States.

[Argument of Counsel from pages 300-301 intentionally omitted] Messrs. Charles E. Hughes, of New York City, Henry A. Scandrett, of Omaha, Neb., and Henry W. Clark, of New York City, for appellee.

[Argument of Counsel from pages 302-307 intentionally omitted] Mr. P. J. Farrell, of Washington, D. C., for Interstate Commerce commission.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This suit was brought in the federal court for southern California by the Los Angeles & Salt Lake Railroad Company to enjoin and annul an order of the Interstate Commerce Commission, purporting to determine the 'final value' of its property, under what is now section 19a of the Act to Regulate Commerce of February 4, 1887, c. 104, 24 Stat. 379, as amended by Valuation Act March 1, 1913, c. 92, 37 Stat. 701, by Act Feb. 28, 1920, c. 91, § 433, 41 Stat. 456, 474, 493, and by Act June 7, 1922, c. 210, 42 Stat. 624 (Comp. St. § 8591). San Pedro, Los Angeles & Salt Lake Railroad Co., 75 Interst. Com. Com'n R. 463; Id., 97 Interst. Com. Com'n R. 737; Id., 103 Interst. Com. Com'n R. 398. The bill asserts that the order fixing the final value is invalid, because it is in excess of the powers conferred upon the Commission, is contrary to the provisions of the Valuation Act, and violates the Fifth Amendment. It asserts also that irreparable injury is threatened.

Reasons why the final valuation is invalid are set forth specifically in 21 paragraphs and 35 subparagraphs of the bill. It charges that the Commission adopted rules for the valuation which are unsound and unwarranted in law; that in the determination of values it ignored facts and factors of major importance; that it refused to report an analysis of the methods employed by it, although required so to do by the Valuation Act; and that it refused to comply with the requirement that all values and elements of value be separately reported. It charges that the valuation was made as of June 30, 1914, whereas it should have been made as of June 7, 1923; that the value found is that for rate-making purposes, whereas the finding should have been a general one of value for all purposes; that properties enumerated were erroneously excluded from the valuation; that in making the finding of value the Commission erroneously failed to consider 9 specified elements of value; that in making the finding of investment in road and equipment it ignored 6 items; that in making the finding of cost of reproduction new it ignored 11 items; that in making the finding of cost of reproduction new less depreciation it made 13 errors; that in valuing the lands 11 errors were made; and that in making the finding as to working capital a large sum was arbitrarily deducted. It alleges that for these and other reasons the findings made are incomplete, erroneous in law, and misleading in point of fact.

The jurisdiction of the District Court was invoked under the Urgent Deficiencies Act of October 22, 1913, c. 32, 38 Stat. 208, 219, and also under its general equity powers. The United States was named as defendant, and the Commission became such by intervention. Both defendants answered; but by appropriate pleadings the United States objected that the adoption by the Commission of the final valuation does not constitute an order within the meaning of the Urgent Deficiencies Act, challenged also the jurisdiction of the court to enjoin or annul the order under its general equity powers, and moved that the bill be dismissed. The motion was overruled, the case was heard on the pleadings and evidence, and, after proceedings which it is not necessary to detail, a decree was entered which annulled the final valuation and enjoined its use for any purpose. Los Angeles & Salt Lake Railroad v. United States (D. C.) 4 F. (2d) 736; Id. (D. C.) 8 F. (2d) 747. Whether all or any of the claims and charges made in the bill are well founded, we have no occasion to consider; for we are of opinion that the District Court should have sustained the motion to dismiss the bill.

The final report on value, like the tentative report, is called an order. But there are many orders of the Commission which are not judicially reviewable under the provision now incorporated in the Urgent Deficiencies Act. See Proctor & Gamble Co. v. United States, 225 U. S. 282, 32 S. Ct. 761, 56 L. Ed. 1091; Hooker v. Knapp, 225 U. S. 302, 32 S. Ct. 769, 56 L. Ed. 1099; Lehigh Valley R. Co. v. United States, 243 U. S. 412, 37 S. Ct. 397, 61 L. Ed. 819; United States v. Illinois Central R. R. Co., 244 U. S. 82, 89, 37 S. Ct. 584, 61 L. Ed. 1007; Delaware & Hudson Co. v. United States, 266 U. S. 438, 45 S. Ct. 153, 69 L. Ed. 369. For the first 19 years of the Commission's existence no order was so reviewable. The statutory jurisdiction to enjoin and set aside an order was granted in 1906, because then, for the first time, the rate-making power was conferred upon the Commission, and then disobedience of its orders was first made punishable. Hepburn Act June 29, 1906, c. 3591, §§ 2-7, 34 Stat. 584, 586-595. The first suit to set aside an order was brought soon after. Stickney v. Interstate Commerce Commission (C. C.) 164 F. 638; Id., 215 U. S. 98, 30 S. Ct. 66, 54 L. Ed. 112. The jurisdiction conferred by the Hepburn Act was transferred, substantially unchanged, to the Commerce Court, by the Act of June 18, 1910, c. 309, § 1, 36 Stat. 539, and, when that court was abolished, to the District Courts, by the Urgent Deficiencies Act. The so-called order here assailed differs essentially from all those held by this court to be subject to judicial review under any of those acts. Each of the orders so reviewed was an exercise either of the quasi judicial function of determining controversies or of the delegated legislative function of rate making and rule making.

The so-called order here complained of is one which does not command the carrier to do, or to refrain from doing, anything; which does not grant or withhold any authority, privilege, or license; which does not extend or abridge any power or facility; which does not subject the carrier to any liability, civil or criminal; which does not change the carrier's existing or future status or condition; which does not determine any right or obligation. This so-called order is merely the formal record of conclusions reached after a study of data collected in the course of extensive research conducted by the Commission, through its employees. It is the exercise solely of the function of investigation. Compare Smith v. Interstate Commerce Commission, 245 U. S. 33, 38 S. Ct. 30, 62 L. Ed. 135. Moreover, the investigation made was not a step in a pending proceeding, in which an order of the character of those held to be judicially reviewable could be entered later. It was merely preparation for possible action in some proceeding which may be instituted in the future-preparation deemed by Congress necessary to enable the Commission to perform adequately its duties, if and when occasion for action shall arise. The final report may, of course, become a basis for action by the Commission, as it may become a basis for action by Congress or by the Legislature or an administrative board of a state. But so may any report of an investigation, whether made by a committee of Congress or by the Commission pursuant to a resolution of Congress or of either branch thereof.

The Valuation Act requires that the investigation and study be made of the properties of each of the rail carriers. There are about 1,800. 40 Annual Report Interstate Commerce Commission, 13. In directing the Commission to investigate the value of the property of the several carriers, Congress prescribed in detail the subjects on which findings should be made, and constituted the 'final valuations' and 'the classification thereof' prima facie evidence, in controversies under the Act to Regulate Commerce. Every party in interest is, therefore, entitled to have and to use this evidence; and the carrier, being a party in interest, has the remedy by mandamus to compel the Commission to make a finding on each of the subjects specifically prescribed. Kansas City Southern Ry. Co. v. Interstate Commerce Commission, 252 U. S. 178, 40 S. Ct. 187, 64 L. Ed. 517. But Congress did not confer upon the courts power, either to direct what this 'tribunal appointed by law and informed by experience' (Illinois Central Ry. Co. v. Interstate Commerce Commission, 206 U. S. 441, 454, 27 S. Ct. 700, 704, 51 L. Ed. 1128), shall find, or to annul the report, because of errors committed in making it. Moreover, errors may be made in the final valuation of the property of each of the nearly 1,800 carriers. And it is at least possible that no proceeding will ever be instituted, either before the Commission or a court, in which the matters now complained of will be involved, or in which the errors alleged will be of legal significance.

The mere fact that Congress has, in terms, made 'all final valuations * * * and the classification thereof * * * prima facie evidence of the value of the property in all proceedings under the Act to Regulate Commerce * * * in all judicial proceedings for the enforcement of the act * * * and in all judicial...

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