Chesapeake & O. Ry. Co. v. United States

• Decision Date: 29 July 1935
• Docket Number: No. 3477.,3477.
• Citation: 11 F. Supp. 588
• Court: U.S. District Court — Southern District of West Virginia
• Parties: CHESAPEAKE & O. RY. CO. v. UNITED STATES.

11 F. Supp. 588

CHESAPEAKE & O. RY. CO. v. UNITED STATES.

No. 3477.

District Court, S. D. West Virginia.

July 29, 1935.

M. Carter Hall, of Richmond, Va. (Elmer L. Beach, of Richmond, Va., on the brief), for petitioner.

Robert E. Quirk, of Washington, D. C., for intervener Island Creek Coal Co.

Harry S. Elkins, of Washington, D. C., for intervener West Virginia Coal & Coke Co.

Elmer B. Collins, Sp. Asst. to Atty. Gen., for the United States.

C. R. Hillyer, of Chicago, Ill., for interveners Northeast Kentucky Coal Bureau and the Commonwealth of Kentucky.

David C. Walls, Asst. Atty. Gen. (Bailey P. Wootton, Atty. Gen., for the State of Kentucky, on the brief), for intervener State of Kentucky.

Nelson Thomas, Atty., Interstate Commerce Commission, of Washington, D. C. (Daniel W. Knowlton, Chief Counsel, Interstate Commerce Commission, of Washington, D. C., on the brief), for intervener Interstate Commerce Commission.

Before NORTHCOTT, Circuit Judge, and McCLINTIC and GLENN, District Judges.

NORTHCOTT, Circuit Judge.

This is a suit in equity brought in the District Court of the United States for the Southern District of West Virginia, at Charleston, seeking to enjoin, set aside, annul, and suspend a certain order of the Interstate Commerce Commission, hereinafter referred to as the commission.

Upon the bringing of the suit, the judge of the District Court convened a three judge court under section 266 of the Judicial Code, as amended (28 USCA § 380). Upon the convening of the court, the Island Creek Coal Company, a corporation, and the West Virginia Coal & Coke Corporation were permitted to intervene in support of the petition, and the commonwealth of Kentucky, the Northeast Kentucky Coal Bureau, and the Interstate Commerce Commission were permitted to intervene in opposition. It was stipulated between the parties that the hearing should be final.

The petitioner is a corporation organized under the laws of the state of Virginia and is a citizen and resident of the Eastern District of that state and owns and operates, or leases and operates, as a common carrier, lines of railroad in several states, among others, in the states of West Virginia and Kentucky. It is engaged in the interstate transportation of persons and property, including transportation of bituminous coal, in the Big Sandy districts in Kentucky, from what is known as the Northeast Kentucky field, to Catlettsburg, Ky., and from what is known as the Logan field in West Virginia to Huntington, W. Va.

In July, 1933, Northeast Kentucky Coal Bureau, as complainant, filed a complaint with the commission (Docket No. 26080) against the railway company, alleging that while the all rail rates from the Northeast Kentucky field in Kentucky and the Logan field in West Virginia are the same to interstate destinations, the railway company maintained a proportional rate of 50 cents per net ton on bituminous coal from points in the Logan field to Huntington, W. Va., when for transshipment by river to destinations beyond Huntington, that the railway did not maintain a proportional rate on bituminous coal from origin points on its line in the Northeast Kentucky field to Catlettsburg, Ky., when for transshipment by river to points beyond Catlettsburg, but maintained a rate of $1.17 per net ton for such coal. The complaint further alleged that the railway's failure to establish and apply rail rates of 50 cents per net ton for the haul to Catlettsburg from the Northeast Kentucky field for river transshipment was unreasonable and unjust and in violation of section 1 of the Interstate Commerce Act (49 USCA § 1), and unduly disadvantageous to complainants in violation of section 3 of said act (49 USCA § 3). Complainant prayed that the commission, by order, command the railway to cease and desist from said violations of said act and put in force a rate from points on its line in the Northeast Kentucky field to Catlettsburg, for transshipment by river, a rate not in excess of the 50 cents per ton charged by the railway for the transportation of bituminous coal from points in the Logan field to Huntington.

The Northeast Kentucky field referred to in the complaint before the commission, and in the petition herein, is served by one of petitioner's branch lines running northward to Catlettsburg, a point on the Ohio river near the mouth of the Big Sandy river, in the extreme northeastern section of Kentucky, a short distance west of Huntington, W. Va., and a junction with petitioner's east and west main line. Across the Big Sandy river in West Virginia is located the Logan field, which is likewise served by a branch line of petitioner herein running northward to join the east and west main line at Barboursville, W. Va., a point east of Huntington, W. Va., also on the Ohio river.

Coal traffic for transshipment by water beyond Catlettsburg was, at the time of the filing of the complaint, entirely prospective, no transshipment facilities being in existence for transferring coal at Catlettsburg. Complainant asserted its intention to build and operate such transshipment facilities upon the establishment and maintenance of the 50-cent rate sought.

After the filing of the complaint, before the commission, hearings were held, briefs were filed, and the case was orally argued. On May 22, 1934, the commission, by division 2, one commissioner dissenting, issued its report and order dismissing the complaint and finding that the rates from the Northeast Kentucky coal field to Catlettsburg were not unreasonable or unduly prejudicial.

In July, 1934, complainant filed a petition for reargument and reconsideration by the entire commission; in September, 1934, the proceeding was reopened and reargument was had before the entire commission.

On February 7, 1935, the commission, the chairman and one commissioner dissenting, issued its report and order reversing the finding of division 2, and entered the following order:

"It appearing, That on May 22, 1934, division 2 made and filed its report and entered its order in the above-entitled proceeding, and on September 28, 1934, the Commission, by appropriate order, reopened said proceeding for reargument and reconsideration;

"It further appearing, That such reargument and reconsideration has been had, and that the Commission has, on the date hereof, made and filed a report on reargument and reconsideration, containing its further findings of fact and conclusions thereon, which said report and the aforesaid report of May 22, 1934, are hereby referred to and made parts hereof:

"It is ordered, That the above-named defendant be, and it is hereby, notified and required to cease and desist, on or before May 24, 1935, and thereafter to abstain, from publishing, demanding, or collecting for the transportation of bituminous coal, in carloads, from and to the points designated in the next succeeding paragraph hereof, rates which exceed those prescribed in said paragraph.

"It is further ordered, That said defendant be, and it is hereby, notified and required to establish, on or before May 24, 1935, upon notice to this Commission and to the general public by not less than 30 days' filing and posting in the manner prescribed in section 6 of the Interstate Commerce Act, and thereafter to maintain and apply for the transportation of bituminous coal, in carloads, from mines in northeastern Kentucky, as described in the aforesaid reports, to Catlettsburg, Ky., for interstate movement beyond by river, or for interstate rail movement in connection with such river traffic, rates which shall not exceed the corresponding concurrent rates maintained by it on bituminous coal, in carloads, from mines in the Logan, W. Va., coal field, as described in said reports, to the same destinations.

"And it is further ordered, That this order shall continue in force until the further order of the Commission." (The effective date of this order was afterwards extended to July 24, 1935.)

The petitioner herein thereupon brought this suit seeking to enjoin and set aside the order made by the commission. The interveners, the Island Creek Coal Company and the West Virginia Coal and Coke Corporation, are producers of coal in the Logan field, shipping under the rate given by the railway to Huntington for transshipment by river, and intervene in the instant proceeding for the purpose of supporting the petition for the injunction. Interveners Interstate Commerce Commission, Northeast Kentucky Coal Bureau, and the commonwealth of Kentucky, intervene in this proceeding for the purpose of sustaining the order of the commission. When the cause came on to be heard, the proceedings had before the Interstate Commerce Commission were introduced in evidence and it was shown by stipulation that the railway company had, since the entry, by the commission, of the order complained of, put into effect a new schedule of rates covering the transportation of coal from the Logan field and from the Northeast Kentucky field. Under this new schedule the rate on coal from the Logan field to Huntington by rail and from the Northeast Kentucky field to Catlettsburg by rail was fixed at 87 cents per ton, and the rate from the Logan field to Huntington for transshipment by water was fixed at 75 cents per ton. After oral argument, briefs were filed and the cause submitted.

Three grounds were alleged by the railway company in attacking the validity of the order entered by the commission; first, that, under the pleadings, the evidence and the commission's report on the complaint of the Northeast Kentucky Coal Bureau, the order made by it was beyond the issues involved and constituted an invalid attempt to exercise authority under section 3 of the Interstate Commerce Act; second, that there was no substantial evidence to support the commission's finding and conclusion that the assailed rates to Catlettsburg, Ky., were unduly prejudicial in violation of said section 3; third, that the commission's order...