Chicago, B. & QR Co. v. United States

Decision Date21 May 1945
Docket NumberNo. 353.,353.
Citation60 F. Supp. 580
PartiesCHICAGO, B. & Q. R. CO. et al. v. UNITED STATES et al.
CourtU.S. District Court — Eastern District of Kentucky

Richard C. Stoll and Wallace Muir, both of Lexington, Ky., Eldon Martin, C. A. Conway, Larry H. Dugan, and Charles W. Stadell, all of Chicago, Ill., Howard W. Vesey, of Washington, D. C., Richard F. Wood, of St. Louis, Mo., and E. B. Wilkinson and J. A. Moran, both of Chicago, Ill., for plaintiffs and intervenors on behalf of plaintiffs.

Edward Dumbauld and David O. Mathews, Sp.Assts. to the Atty. Gen., Daniel W. Knowlton and Nelson Thomas, Interstate Commerce Commission, both of Washington, D. C., Claude P. Stephens, U. S. Atty., of Lexington, Ky., Elden S. Dummit, Atty. Gen. of Kentucky, and M. B. Holifield, Asst. Atty. Gen. of Kentucky, J. E. Marks and C. S. Landrum, both of Lexington, Ky., and W. A. Northcutt, of Louisville, Ky., for defendants and intervenors on behalf of defendants.

Before HAMILTON, Circuit Judge, and FORD and MILLER, District Judges.

FORD, District Judge.

The plaintiffs and numerous interested parties who have been permitted to intervene as plaintiffs seek a decree declaring null and void an order of the Interstate Commerce Commission entered December 11, 1944, and a permanent injunction restraining, enjoining and suspending the execution and enforcement thereof. 38 Stat. 208, 219, 220, 28 U.S.C.A. §§ 41(8), 41(28), 43 and 48.

The relief sought by the plaintiffs is opposed by the defendant, United States, and by the intervening defendants, Interstate Commerce Commission, Railroad Commission of Kentucky, Kentucky Coal Agency and Louisville & Nashville Railroad Company.

The provisions of the challenged order, as subsequently amended in respect to its effective date, require that the plaintiffs cease and desist, on or before June 30, 1945, and thereafter, from publishing, demanding or collecting for the transportation of bituminous coal, in car loads, from points in what is known and referred to in the record as the "western Kentucky field", to Chicago, Illinois, and intermediate destinations in Illinois and Indiana taking the same rates, a rate exceeding $2.30 per net ton and requiring that, on or before that date, upon not less than ten days' notice to the Commission and the general public, they establish and thereafter maintain and apply to such traffic a rate which shall not exceed $2.30 per net ton.

In compliance with chapter 32 of the Act of October 22, 1913, 38 Stat. 220, 28 U.S.C.A. § 47, a District Court of three judges was duly convened for the final hearing of the case. The plaintiffs introduced in evidence a certified copy of the testimony and other proceedings before the Commission. The case is now submitted for judgment upon that record.

The order here involved was made by the Commission in a proceeding originated by a complaint filed by the Commonwealth of Kentucky and the Railroad Commission of Kentucky on March 10, 1941, in which it was alleged that the rate then in effect on bituminous coal in car loads from the Western Kentucky field to Chicago and intermediate points taking the same rates was $2.40 per ton, and the rate in effect on bituminous coal in car loads from the Southern Illinois coal field to the same destination was $2.05 per ton; that such rate from the Western Kentucky field to the destinations named was unjust and unreasonable and in violation of section 1 of the Interstate Commerce Act, 49 U.S.C.A. § 1, and was unduly prejudicial to the producers in Western Kentucky and unduly preferential of the producers in Southern Illinois "to the extent that the rates from Western Kentucky exceed those from Southern Illinois by more than 25 cents per net ton", in violation of sections 3 and 13 of the Act, 49 U.S.C.A. §§ 3, 13. The complainants sought an order of the Commission requiring the railroads participating in the transportation to establish, in lieu of the prevailing rates, such other rates as the Commission might deem to be just and reasonable, and non-prejudicial to the operators in Western Kentucky and non-preferential to the operators in Southern Illinois. The plaintiffs and their associate intervenors were parties to the proceedings before the Commission and vigorously opposed the action.

A proceeding by the Illinois Coal Traffic Bureau attacking certain existing rates from Southern Illinois to destinations in the Northwest as unduly prejudicial to Southern Illinois and unduly preferential of Western Kentucky was filed with the Commission on July 2, 1941, and was consolidated with the Kentucky case for hearing and disposition but, since the action of the Commission in dismissing the complaint of the Illinois Coal Traffic Bureau is not involved in this case, no further reference need be made to it.

After extensive hearings, the Commission made its report on December 22, 1942, finding that the rate of $2.40 from Western Kentucky was and for the future would be unreasonable to the extent that it exceeded $2.30 per net ton, and an order was entered accordingly. Thereafter, upon petitions filed by plaintiffs (then defendants) the case was reopened for rehearing, reargument and reconsideration and a rehearing was held in November and December 1943 which resulted in the Commission filing a second report on December 11, 1944, affirming the original finding. Pursuant thereto the Commission entered the order now in issue.

Bearing in mind that we may not disturb the finding of the Commission upon the factual issue of reasonableness, except upon a showing that it was made without a hearing, is unsupported by evidence, is without rational basis, exceeds constitutional limits, rests on an erroneous construction of the statute or, for some other reason, amounts to an abuse of power, Manufacturers' Ry. Co. v. United States, 246 U.S. 457, 481, 38 S.Ct. 383, 62 L.Ed. 831; Virginian Ry. Co. v. United States, 272 U. S. 658, 665, 47 S.Ct. 222, 71 L.Ed. 463, we proceed to the consideration of the questions presented, without reviewing the prolonged controversy which has prevailed for many years over the same rates except to say that the history of the controversy is another of many demonstrations of the wisdom of the narrow scope within which Congress has confined judicial participation in the rate making process for, "The process of rate making is essentially empiric. The stuff of the process is fluid and changing—the resultant of factors that must be valued as well as weighed. Congress has therefore delegated the enforcement of transportation policy to a permanent expert body and has charged it with the duty of being responsive to the dynamic character of transportation problems." Board of Trade v. United States, 314 U.S. 534, 546, 62 S.Ct. 366, 372, 86 L.Ed. 432.

Section 14(1) of the Interstate Commerce Act, 49 U.S.C.A. § 14(1), provides "Whenever an investigation shall be made by said commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclusions of the commission, together with its decision, order, or requirement in the premises; * * *." Section 17(1), (3), of the Act, 49 U.S.C.A. § 17(1), (3), makes it clear that "a majority of the commission shall constitute a quorum for the transaction of business" with power and authority by a majority thereof to exercise all the jurisdiction and powers conferred by law upon the Commission.

It appears from the record that the hearings in this proceeding in 1942 and in 1944 were held before nine of the eleven members of the Commission. The reports of 1942 and 1944 were made by four of the nine members who heard the case and in each instance one member "concurred in the result" of the report and four members dissented. The question is raised as to whether a report by four of nine members of the Commission sitting at a hearing, with a fifth member concurring in the result, constitutes a "report by the Commission" within the meaning of the Statute. We interpret the statement by the fifth Commissioner that he "concurs in the result" of both reports filed in this case to mean that, while he does not assent to all the comments or observations made therein, he is, nevertheless, sufficiently in accord with the rationale of them to enable him to agree that Western Kentucky's rate to Chicago and intermediate destinations taking the same rates is unreasonable to the extent stated and that an order for the future should be entered accordingly. In our opinion, as will be later pointed out, this is the only finding indispensable to the validity of the Commission's order and concurrence in both reports as to this essential finding by five of the nine participating members of the Commission is sufficient to constitute them "reports by the Commission" within the meaning of the Statute.

Attacks upon the order of the Commission upon the ground that it indirectly reverses prior orders of the Commission and also that it constitutes determination of an issue not tried in the case and not tendered by the pleadings, are without merit.

The issue as to whether the rate from Western Kentucky was unreasonable was squarely made by the pleadings. It is well settled that orders of the Commission are not res adjudicata for "no extensive rate structure can be made perfect nor can any rate structure be made permanent in any real sense in a changing world", Board of Trade v. United States, 314 U.S. 534, 544, 62 S.Ct. 366, 371, 86 L.Ed. 432 and therefore "this court has no concern * * * with the alleged inconsistency with findings made in other proceedings * * *." Virginian Ry. Co. v. United States, 272 U.S. 658, 665, 47 S.Ct. 222, 225, 71 L.Ed. 463.

Following the first report of the Commission in 1942, holding the rate of $2.40 per ton unreasonable, the plaintiffs and intervenors (then defendants) sought a rehearing upon the ground, among others, that "the Western Kentucky complainants abandoned the allegation contained in their complaint that the rate of...

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