United States v. Chesapeake and Ohio Railway Co.

• Decision Date: 16 August 1960
• Docket Number: No. 8013.,8013.
• Parties: UNITED STATES of America, Appellant, v. CHESAPEAKE AND OHIO RAILWAY COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

281 F.2d 698 (1960)

UNITED STATES of America, Appellant, v. CHESAPEAKE AND OHIO RAILWAY COMPANY, Appellee.

No. 8013.

United States Court of Appeals Fourth Circuit.

Argued April 18, 1960.

Decided August 16, 1960.

Kathryn H. Baldwin, Atty., Dept. of Justice, Washington, D. C. (George Cochran Doub, Asst. Atty. Gen., Joseph S. Bambacus, U. S. Atty., Richmond, Va., and Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., on brief), for appellant.

Strother Hynes, Richmond, Va. (Meade T. Spicer, Jr., Hewitt Biaett and John W. Hanifin, Richmond, Va., on brief), for appellee.

Before HAMLEY,^* HAYNSWORTH and BOREMAN, Circuit Judges.

BOREMAN, Circuit Judge.

The United States appeals from a judgment rendered by the United States District Court for the Eastern District of Virginia, Richmond Division, on August 31, 1959, against it and in favor of The Chesapeake and Ohio Railway Company, hereinafter called C & O, in the amount of $9,571.36 for freight transportation charges.

Action was first commenced by the C & O on March 10, 1952, to recover amounts deducted by the United States from charges made by C & O for transportation of equipment intended by the United States for export. Due to world conditions, the shipments were not exported but were reshipped to inland storage points. For early case background, see United States v. Chesapeake & Ohio Ry. Co., 4 Cir., 1955, 224 F.2d 443, and United States v. Chesapeake & Ohio Ry. Co., 4 Cir., 1954, 215 F.2d 213. The dispute involved the claim of the C & O of the right to collect domestic transportation rates, the United States contending that the lower export rates were applicable.

In the District Court, the United States moved for stay and reference to the Interstate Commerce Commission on the question of the reasonableness of the rates. The District Court denied the motion and entered judgment in favor of C & O. On appeal by the Government, this court affirmed, 224 F.2d 443. The Supreme Court reversed and remanded the case to this court for consideration and determination on a full record, 1956, 352 U.S. 77, 77 S.Ct. 172, 1 L.Ed.2d 140.

On April 1, 1957, this court vacated the District Court's judgment and remanded the cause with directions to "stay proceedings in the case to enable the parties to begin a proceeding before the Interstate Commerce Commission for the determination of the question as to the application of tariffs involved herein." 4 Cir., 242 F.2d 732, 733.

The District Court, by referral order dated May 2, 1957, stayed its proceedings pending a determination by the Commission of the applicability and reasonableness of the rates. The Government filed its petition with the Commission on July 10, 1957. The Commission issued its report on March 24, 1959, determined that the domestic rates charged were applicable and were not unjust or unreasonable and entered its order discontinuing the proceeding. The Government moved for reconsideration, which motion was denied by the Commission on August 11, 1959.

On August 27, 1959, C & O gave notice to the Government that on August 31, 1959, it would apply to the District Court for the Eastern District of Virginia for an order of final judgment agreeable with the ICC order. On August 31, 1959, that being District Judge Hutcheson's last day before entering upon retired status, counsel for both parties appeared before him. The District Court concluded that it was "fitting and proper that the final judgment order entered in this cause on February 10, 1955, and subsequently vacated, * * * be now fully restored and reinstated as a final judgment order of this court." The judgment order shows on its face an endorsement by Government counsel as follows: "I have seen and object to this."

The United States then appealed to this court charging that the District Court erred in failing to stay proceedings while the Government sought independent review of the ICC order in the United States District Court for the District of Columbia, and subsequently moved this court to stay proceedings on appeal asserting that the question as to the right to such independent review was then before the Supreme Court on petition for certiorari in a case styled Pennsylvania R. R. Co. v. United States. On November 27, 1959, the motion for stay was granted. On December 14, 1959, C & O filed a motion to set aside the stay order and on January 22, 1960, the motion was granted and the stay vacated.

Certiorari was granted in Pennsylvania R. R. Co. v. United States on December 14, 1959, 361 U.S. 992, 80 S.Ct. 291, 4 L.Ed.2d 239, and the Supreme Court's decision was handed down on June 13, 1960, 363 U.S. 202, 80 S.Ct. 1131, 4 L.Ed. 2d 1165. In that case, the Pennsylvania Railroad had instituted its action in the Court of Claims to recover amounts claimed to be due from the Government on shipments originally intended for export but converted into domestic shipments. The dispute was as to whether the higher domestic rates or the lower export rates were applicable. The Court of Claims suspended proceedings so that the ICC could pass upon the applicability and reasonableness of the rates. The ICC found and reported that the domestic rates were unjust and unreasonable as to sixty-two shipments but as to thirteen shipments the rates were just and reasonable. The Pennsylvania Railroad then invoked jurisdiction of the United States District Court in Pennsylvania under 28 U.S.C. §§ 1336, 1398 and 49 U.S.C.A. § 17 (9) to enjoin and set aside the order, and moved that the Court of Claims stay its proceedings until the District Court could determine the validity of the order. The Court of Claims refused the stay and entered judgment based upon the ICC order. The Supreme Court held:

(1) The ICC order was not a mere advisory opinion and "legal consequences" are obvious, foreclosing the Railroad\'s right to collect its domestic rates on those shipments;

(2) The Railroad is entitled to have the ICC order judicially reviewed (3) The jurisdiction to review is vested exclusively in the District Courts (with no jurisdiction in the Court of Claims);

(4) The order is reviewable by a one-judge rather than a three-judge District Court;

(5) It was the duty of the Court of Claims to stay its proceedings pending review.

It follows from the Supreme Court's decision in Pennsylvania R. R. Co. v. United States, supra, that in the case at bar the Government is entitled to review of the ICC order which provides that the higher domestic rates were reasonably applied and "are not shown to have been unjust or unreasonable." But a further question is presented — whether, at the time the lower court reinstated its earlier order and entered final...