Baltimore & OR Co. v. United States

• Citation: 15 F. Supp. 674
• Decision Date: 01 July 1936
• Docket Number: No. 2975.,2975.
• Parties: BALTIMORE & O. R. CO. et al. v. UNITED STATES.
• Court: U.S. District Court — Northern District of New York

15 F. Supp. 674

BALTIMORE & O. R. CO. et al. v. UNITED STATES.

No. 2975.

District Court, N. D. New York.

July 1, 1936.

Before L. HAND, Circuit Judge, and COOPER and BRYANT, District Judges.

Carleton W. Meyer, of New York City, for plaintiffs.

E. M. Reidy, of Washington, D. C., for Interstate Commerce Commission.

Elmer B. Collins, of Washington, D. C., for the United States.

L. HAND, Circuit Judge.

This is the usual suit in equity to review the action of the Interstate Commerce Commission which directed the plaintiff railroads to establish through rates in the circumstances set forth below. No other question is raised but that of the Commission's jurisdiction; if it is lawful to treat the two legs of the transportation in question as a single interstate route, the plaintiffs agree that they must lose; on the other hand the defendants agree that when both termini of either of those legs are points in the same state, an injunction must go, unless that route may be joined to a concededly interstate route. At the outset and by way of preliminary, it will be convenient to separate the transportation here at bar into four different kinds: (1.) from points outside New York to Cadosia, New York, thence to points outside New York; (2.) from points within New York to Cadosia, thence to points outside New York; (3.) from points outside New York to Cadosia, thence to points within New York; (4.) from points within New York to Cadosia, thence to points within New York. Only the second and third situations are before us; the first is conceded to be within the jurisdiction of the Commission; the fourth is conceded not to be; what we shall say is limited to the other two.

The industrial situation, as the Commission has found the facts, and as we must and do accept them, is as follows: The shippers on whose complaint the order was made, make wood alcohol by the process of "destructive distillation" out of which come charcoal and crude "methanol," which last is unsalable and useless in the arts; industrially speaking, it is an intermediate product. The shippers might refine it themselves by further distillation, and ship what the art wants in the condition that it wants it; but as this requires expensive plant, they delegate that phase of the production. There are in all about twenty of them, situated either in western New York or Pennsylvania; they have formed a company called the Wood Distillers Company, through which they deal with a refiner, the Keery Company, whose plant is in Cadosia, New York, a small village near the city of Binghampton. Thither the crude "methanol" is shipped in tank cars which are emptied from sidings into storage tanks. The Keery Company does not try to keep the crude "methanol" of each shipper separate; all is mixed together in a tank as it comes in, each owner being merely credited with the gallonage which he delivers. Refining is distilling, the crude "methanol" emerging in four end products: refined "methanol," methyl acetate, acetone and a fourth complicated substance, made up of various hydrocarbons. All these have some commercial use, as we understand it, though the Commission's findings speak only as to the first. When the crude product arrives at Cadosia its eventual destination is not yet known, and the refined substances are for the most part sold by the William S. Gray Company in its own name, as an undisclosed agent for the shippers, though the Keery Company does some selling, also in its own name. The record does not certainly disclose how the sales are allocated to the shares of the several shippers; it would appear to be as difficult to trace the identity of the contents of a given tank into the goods delivered in performance of a given contract, as it is to keep separate the contribution of any single shipper to the contents of a given tank. However, as we cannot see that that question has any bearing upon the result here, we shall assume that when the Gray Company sells any of the refined substances, it is possible to allocate the contract and the delivery to the proper seller. All but about five per cent. of the end products is shipped by rail; the rest is delivered within a radius of fifty miles by truck. The shippers insisted before the Commission that these facts made out a case for a through rate from the point of origin within or outside New York through Cadosia to the consumer within or outside New York, at least in the first, second and third classes mentioned above. By a divided vote a division of the Commission held that they were right, and the whole Commission confirmed that ruling, though again not unanimously. Thomas Keery Company v. New York, O. & W. R. Co., 206 I.C.C. 585; Id., 211 I.C.C. 451. The railroads then filed this bill under section 41 (28) of title 28, U.S.Code (28 U.S.C.A. § 41 (28). The evidence taken before the Commission has been received in evidence upon final hearing before a statutory court assembled under section 47 of title 28, U.S. Code (28 U.S.C.A. § 47) and the cause stands for decree.

The situation is of a familiar kind, so often passed upon by the Supreme Court that its decisions alone are of service, though it has never had the precise situation before it. Schechter Poultry Corp. v. U. S., 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947, its last declaration, does not help us; interstate commerce had there ended before federal regulation began, and the only question was whether the regulated activities reäcted upon that commerce directly enough to be within the scope of the power. Here transportation is directly enough regulated, but it must be itself interstate, for the situation is not one where it is essential to include intrastate rates as inextricably interwoven with interstate. In the second and third classes mentioned above one leg of the journey is in fact interstate, one terminus is in another state than Cadosia; therefore, as we have already said, the question is how closely it is bound to the other leg, which is wholly intrastate. Do the two coälesce for rate-making purposes? We may start by excluding extremes; on the one hand, pauses in transit, interpolated only for the more convenient prosecution of the journey, do not break the continuity of the transportation. Kelley v. Rhoads, 188 U.S. 1, 23 S.Ct. 259, 47 L.Ed. 359; Texas & N. O. R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442; Champlain Realty Co. v. Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195; Hughes Bros....