Piedmont & N. Ry. Co. v. United States

• Citation: 30 F.2d 421
• Decision Date: 15 January 1929
• Docket Number: No. 208.,208.
• Court: U.S. District Court — District of South Carolina
• Parties: PIEDMONT & N. RY. CO. v. UNITED STATES.

30 F.2d 421 (1929)

PIEDMONT & N. RY. CO. v. UNITED STATES.

No. 208.

District Court, W. D. South Carolina.

January 15, 1929.

Charles E. Hughes, of New York City, Cameron Morrison, Norman A. Cocke, R. S. Hutchison and W. S. O'B. Robinson, Jr., all of Charlotte, N. C., and H. J. Haynsworth, all of Greenville, S. C., for Piedmont & N. Ry. Co.

The Attorney General and Blackburn Esterline, of Washington, D. C., and Joseph A. Tolbert, of Greenville, S. C., for the United States.

Daniel W. Knowlton, of Washington, D. C., for Interstate Commerce Commission.

W. N. McGehee, of Washington, D. C., S. S. Alderman, of Greenboro, N. C., Blythe & Bonham, of Greenville, S. C., and S. R. Prince and L. E. Jeffries, both of Washington, D. C., for Southern Ry. Co.

James F. Wright, of Norfolk, Va., for Seaboard Air Line R. Co.

F. B. Grier, of Greenwood, S. C., for Charleston & W. C. Ry. Co.

Carl H. Davis, of Wilmington, N. C., for Atlantic Coast Line R. Co.

Wm. C. Burger, of Louisville, Ky., for Louisville & N. R. Co.

James J. McLaughlin, of Johnson City, Tenn., for Carolina, C. & O. Ry., Carolina, C. & O. Ry. of South Carolina, and Clinchfield & N. Ry. of Kentucky.

Before WADDILL and NORTHCOTT, Circuit Judges, and SOPER, District Judge.

SOPER, District Judge.

Piedmont & Northern Railway Company, a South Carolina corporation, filed a petition against the United States, under the provisions of the Act of October 22, 1913, c. 32, 38 Stat. 219, U. S. C. Title 28 (28 USCA) ß 41, subd. (28), and sections 43 to 48, to enjoin, set aside, and annul an order of the Interstate Commerce Commission. A court of three judges was accordingly organized. The order complained of denied to the petitioner a certificate that the present or future public convenience and necessity requires or will require certain extensions of its railroad lines which it desires to build.

The corporation owns and operates a line of electric railway in South Carolina, extending from Greenwood to Spartanburg, a distance of 89.9 miles, with a branch from Belton to Anderson of 11.3 miles; and also a line of electric railway in North Carolina extending from Gastonia to Charlotte, a distance of 23.5 miles, with a branch to Belmont of 3.2 miles; and uses these lines 127.9 miles in all, in the transportation of persons and property, as a common carrier, in interstate commerce. In the latter part of 1926, the corporation determined to build extensions of its road, 128 miles in length, consisting of a line of about 53 miles in length, running from Spartanburg, S. C., to Gastonia, N. C., and also a line 75 miles in length from Charlotte to Winston-Salem in the latter state. This project came to the attention of the Commission, and it notified the railway company by letter of March 8, 1927, that it would be expected to file an application for authority to do the work under paragraphs 18 to 21 of section 1 of the Interstate Commerce Act as amended by Transportation Act 1920, 41 Stat. 456, 474, 477, 478, 49 USCA ß 1 (18-21). The Commission said that in its opinion the railroad was not an interurban electric railway excepted from its jurisdiction by paragraph 22 of section 1 of the act, 41 Stat. 478, 49 USCA ß 1 (22). Accordingly, on March 26, 1927, the railway company filed an application for a certificate of public convenience and necessity, without prejudice, however, to its right to assert that in this respect it is not subject to the authority of the Commission. Various parties, including the states of North and South Carolina, the utilities commissioners thereof, cities and counties along the line of the proposed routes, trade organizations, and the National Association of Railroad and Utilities Commissioners, were allowed to intervene on behalf of the petitioner. The Georgia & Florida Railroad, which had theretofore been granted authority to extend its line from Augusta, Ga., to Greenwood, S. C., also intervened on the petitioner's behalf. On the other hand, the Southern Railway Company, the Atlantic Coast Line Railway Company, the Seaboard Air Line Railway Company, the Carolina, Clinchfield & Ohio Railway of South Carolina, and the Clinchfield Northern Railway of Kentucky, the Louisville & Nashville Railway Company, and the Charleston & Western Carolina Railway Company, were allowed to intervene in opposition to the application. After extensive hearings, the Commission, on April 3, 1928, issued its report in which it reasserted its jurisdiction over the petitioner and determined that the public convenience and necessity did not require the new lines. It showed that both the existing and proposed lines of the petitioner very closely paralleled the lines of the Southern Railway Company, and that the territory involved is now adequately served by that and other railroads. The application of the petitioner was therefore denied.

In the case at bar, the National Association of Railroad and Utilities Commissioners has been allowed to intervene on the petitioner's behalf, while the Interstate Commerce Commission and the same railroads which opposed the application before the Commission have been allowed to intervene in support of the Commission's authority and its denial of the petitioner's application.

The case was submitted to the court upon the voluminous record made in the proceeding before the Commission, which, for convenience, has been reduced by counsel to narrative form. The evidence tends to show a very considerable demand for the lines of railroad which the petitioner wishes to build arising in the locality to be served; and it is indicated that local service would be improved and the industrial development of the region would be stimulated and enlarged. But, on the other hand, there is abundant proof that the present railway facilities are in all substantial particulars adequate and satisfactory, and that the increased business which it is confidently predicted that the Piedmont & Northern, if extended, would enjoy, would be taken in large measure from the steam railroads of the locality. Indeed, it is conceded that there is substantial evidence to support the Commission's finding of fact, and that it is binding if the Commission had jurisdiction of the controversy. The rule is clearly stated by Judge Parker, speaking for a similar statutory court in Anchor Coal Co. v. U. S. (D. C.) 25 F.(2d) 462, 471. He said: "Much has been said as to the binding effect of the order entered by the Commission, but the law with regard thereto is well settled. If the determination of the Commission finds substantial support in the evidence, the courts will not weigh the evidence, nor consider the wisdom of the Commission's action, which, within the scope of its jurisdiction, is conclusive, unless there be some irregularity in the proceeding or some error in the application of rules of law. Chicago R. I. & Pac. Ry. v. U. S., 274 U. S. 29, 33, 47 S. Ct. 486, 71 L. Ed. 911; Virginian Ry. Co. v. U. S., 272 U. S. 658, 47 S. Ct. 222, 71 L. Ed. 463; Western Paper Makers' Chem. Co. v. U. S., 271 U. S. 268, 46 S. Ct. 500, 70 L. Ed. 941. If, however, in making the order complained of, the Commission has exceeded its powers, or has proceeded upon an erroneous theory of law, or if its action is so manifestly arbitrary and unreasonable as virtually to transcend the authority conferred upon it, the courts are not bound by its action. Southern Pacific Co. v. I. C. C., 219 U. S. 433, 31 S. Ct. 288, 55 L. Ed. 283; I. C. C. v. Union Pacific Co., 222 U. S. 541, 32 S. Ct. 108, 56 L. Ed. 308; U. S. v. N. Y. C. R. R., 263 U. S. 603, 44 S. Ct. 212, 68 L. Ed. 470; U. S. v. New River Co., 265 U. S. 533, 540, 44 S. Ct. 610, 68 L. Ed. 1165."

Consequently, the case turns on whether the petitioner was excluded from the authority conferred on the Commission by paragraph 18 of section 1 of the act by the express terms of paragraph 22. They provide:

"18. After ninety days after this paragraph takes effect, no carrier by railroad subject to this Act shall undertake the extension of its line of railroad, or the construction of a new line of railroad, * * * unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or will require the construction, * * * of such additional or extended line of railroad. * * *"

"22. The authority of the Commission so conferred * * * shall not extend to the construction * * * of street, suburban, or interurban electric railways, which are not operated as a part or parts of a general steam railroad system of transportation."

Two substantial questions arise:

(1) Did the petitioner, within the meaning of paragraph 18, undertake the proposed extension of its lines before the expiration of 90 days after February 28, 1920, when the Transportation Act went into effect?

(2) Is the petitioner, within the meaning of paragraph 21, an interurban electric railway which is not operated as a part of a general steam system of transportation?

The evidence relating to the first question shows clearly that the plan for a continuous line of electric railway through the Piedmont section of North and South Carolina, from Greenwood and Anderson on the south, to Durham or Winston-Salem on the north, was conceived long before the year 1920. As early as 1910, a group of men, headed by the late James B. Duke and William S. Lee, now president of the Piedmont & Northern, having realized the possibility of a great industrial development in this section in connection with the use of hydroelectric power, formulated a project to build a high-speed electric railroad to connect with the street railway system in the cities en route. The plan was announced to the public in 1910, and various steps were taken to carry it into effect. Thus the Piedmont Traction Company was incorporated on January 6, 1910, under the general laws of North Carolina, to operate street railways by electricity or other power,...