279 U.S. 461 (2004), St. Louis & O'Fallon Railway Company

Citation:279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798
Party Name:St. Louis & O'Fallon Railway Company
Case Date:May 20, 1929
Court:United States Supreme Court
 
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Page 461

279 U.S. 461 (2004)

49 S.Ct. 384, 73 L.Ed. 798

St. Louis & O'Fallon Railway Company

United States Supreme Court

May 20, 1929

APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE EASTERN DISTRICT OF MISSOURI

Syllabus

1. Under Jud.Code § 238, as amended, this Court has jurisdiction to review directly the final decree of a district court of three judges in a suit to annul an order of the Interstate Commerce Commission directing a railway company to place in a reserve fund one-half of its excess net income, as determined under § 15a of the Interstate Commerce Act, and to pay the other one-half to the Commission. P. 481.

2. This Court accepts the conclusion of the Interstate Commerce Commission and the district court that the two carrier plaintiffs in this suit -- one operating a switching railroad in St. Louis, Missouri, and the other a coal-carrying railroad in Illinois, the two being separated by 12 miles and communicating only over the tracks and bridge of a terminal company -- were not proved to be under common control and management and operated as a single system within the meaning of par.(6), § 15a of the Interstate Commerce Act. P. 483.

3. Where a carrier resists by suit a recapture order made by the Commission under § 15a, denying, unsuccessfully but bona fide and

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under circumstances justifying the contest, that there was any excess income, no interest should be imposed for any time prior to the final order of the district court. P. 483.

4. Recapture of excess earnings of a carrier, under pars.(5) and (6) of § 15a of the Act, does not depend upon a prior fixing of a general level of rates intended to yield fair return upon the aggregate value of carrier property, either as a whole or in some prescribed rate or territorial group, under pars. (5) and (6). Id.

5. Under par.(4) of § 15a, which directs that, in determining values of railway property for purposes of recapture, the Commission

shall give due consideration to all the elements of value recognized by the law of the land for ratemaking purposes, and shall give to the property investment account of the carriers only that consideration which under such law it is entitled to in establishing values for ratemaking purposes,

it is the duty of the Commission to give consideration to present or reproduction costs in estimating the value of a carrier's property. P. 484.

6. It appearing from the report of the Commission in this case, and from opinions delivered by some of its members, that reproduction costs were not considered, the order is invalid because of failure to obey this mandate of the statute. P. 485.

7. The weight to be accorded to reproduction costs in valuing railroad property for recaption purposes is not a matter before the Court in this case. P. 487.

8. As the making of a recaption order without consideration of reproduction costs in valuing the property is beyond the power conferred on the Commission by the statute, an order so made cannot be sustained upon the ground that the income it permits the railroad to retain is sufficient to negative any suggestion of confiscation. Id.

22 F.2d 980 reversed.

Cross-appeals from a decree of the district court, three judges sitting, in a suit brought by the two railway companies to set aside a recaption order of the Interstate Commerce Commission. The decree annulled so much of the order as provided for payment of interest, but, in other respects, denied relief.

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MCREYNOLDS, J., lead opinion

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

These are cross-appeals from the final decree of the District Court, Eastern Missouri, three judges sitting, in a suit to annul an Interstate Commerce Commission order, dated February 15, 1927, which directed St. Louis & O'Fallon Railway Company to place in a reserve fund one-half of its determined excess income for the years 1920 (ten months), 1921, 1922, and 1923 (that is, half of the sum by which the net railway operating income for each of those years exceeded 6 percent of the ascertained value of property devoted to public service), and to pay to the Commission the remaining one-half, with 6 percent interest, beginning four months after termination of the year -- i.e., May 1, 1921, 1922, 1923, and 1924.

Section 15a, added to the Interstate Commerce Act by Transportation Act 1920, contains nineteen paragraphs. Of those specially important here, 1, 2, 3, 5, 7, and 8 are copied in the margin; * 4 and 6 follow:

(4). . . For the purposes of this §, such aggregate value of the property of the [49 S.Ct. 386] carriers shall be determined

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by the Commission from time to time and as often as may be necessary. The Commission may utilize the results of its investigation under § 19a of this Act, insofar as deemed by it available, and shall give due consideration to all the elements of value recognized by the law of the

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land for ratemaking purposes, and shall give to the property investment account of the carriers only that consideration which under such law it is entitled to in establishing values for ratemaking purposes. Whenever, pursuant to § 19a of this Act, the value of the railway property of any carrier held for and used in the service of transportation has been finally ascertained, the value so ascertained shall be deemed by the Commission to be the value thereof for the purpose of determining such aggregate value.

(6) . . . If, under the provisions of this section, any carrier receives for any year a net railway operating income in excess of 6 percentum of the value of the railway property held for and used by it in the service of transportation, one-half of such excess shall be placed in a reserve fund established and maintained by such carrier, and the remaining one-half thereof shall, within the first four months following the close of the period for which such computation is made, be recoverable by and paid to the Commission for the purpose of establishing and maintaining a general railroad contingent fund as hereinafter described.

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For the purposes of this paragraph, the value of the railroad property and the net railway operating income of a group of carriers which the Commission finds are under common control and management and are operated as a single system shall be computed for the system as a whole, irrespective of the separate ownership and accounting returns of the various parts of such system. In the case of any carrier which has accepted the provisions of § 209 of this amendatory Act the provisions of this paragraph shall not be applicable to the income for any period prior to September 1, 1920. The value of such railway property shall be determined by the Commission in the manner provided in paragraph (4).

After an investigation instituted under § 15a, May 14, 1924, for the purpose of determining incomes received by St. Louis & O'Fallon Railway Company (the O'Fallon) and Manufacturers' Railway Company (the Manufacturers'), asserted to be parts of one system, for the years 1920-1923, the Commission found: (1) Although the stock of both corporations was mostly owned by the Adolph Busch estate, and their principal officers were the same, they were not carriers operated under common control and management as a single system within paragraph 6. (2) The Manufacturers' had received no excess operating income. (3) The value of the O'Fallon's property devoted to public service in 1920 (ten months) was $856,065; in 1921, $875,360; in 1922, $978,874; in 1923, $997,236, and during each of those years, it received net operative income exceeding 6 percent upon the stated valuation.

The above-described recapture order followed.

The cause is properly here under the Judicial Code, as amended by Act of February 13, 1925 (U.S.C., Title 28, § 345):

Sec. 238. A direct review by the Supreme Court of an interlocutory or final judgment or decree of a district

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court may be had where it is so provided in the following Acts or parts of Acts, and not otherwise:

* * * *

(4) So much of "An Act making appropriations to supply urgent deficiencies in appropriations for the fiscal year 1913, and for other purposes," approved October 22, 1913, as relates to review of interlocutory and final judgments and decrees in suits to enforce, suspend, or set aside orders of the Interstate Commerce Commission other than for the payment of money. . . .

The Act of October 22, 1913 (38 Stat. 219, 220), transferred to district courts the jurisdiction granted to the Commerce Court by Act of June 18, 1920 (36 Stat. 539), and provided for review by this Court of causes embraced therein. The jurisdiction for the Commerce Court included:

[49 S.Ct. 387]

First. All cases for the enforcement, otherwise than by adjudication and collection of a forfeiture or penalty or by infliction of criminal punishment, of any order of the Interstate Commerce Commission other than for the payment of money.

Second. Cases brought to enjoin, set aside, annul, or suspend in whole or in part any order of the Interstate Commerce Commission. . . .

Paragraph (4), § 238, applies to all those causes formerly cognizable by the Commerce Court and reviewable here. The words "other than for the payment of money" were taken from clause first, Act of 1910, above quoted, and, as there, they delimit the trial court's jurisdiction. They do not inhibit review here of any cause formerly cognizable by the Commerce Court. Moreover, the order under consideration was not merely for payment of money, and the proceeding below was to set aside, not to enforce it.

Wisconsin Railroad Commission v. Chicago, Burlington & Quincy R. Co., 257 U.S. 563, and Dayton-Goose

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Creek Railway Co. v. United...

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