Atchison, T. & SF Ry. Co. v. United States

• Decision Date: 08 July 1931
• Docket Number: No. 10479.,10479.
• Citation: 51 F.2d 510
• Parties: ATCHISON, T. & S. F. RY. CO. et al. v. UNITED STATES et al.
• Court: U.S. District Court — Northern District of Illinois

51 F.2d 510 (1931)

ATCHISON, T. & S. F. RY. CO. et al. v. UNITED STATES et al.

No. 10479.

District Court, N. D. Illinois, E. D.

July 8, 1931.

Frederick H. Wood, of New York City, Walter McFarland and P. F. Gault, both of Chicago, Ill., Douglas F. Smith, of Omaha, Neb., H. H. Larimore, of St. Louis, Mo., J. N. Davis, of Chicago, Ill., A. B. Mason, of San Francisco, Cal., R. J. Hagman and M. L. Countryman, Jr., both of St. Paul, Minn., R. S. Outlaw and Leslie Craven, both of Chicago, Ill., Wm. D. Whitney, of New York City, and A. B. Enoch, of Chicago, Ill. (W. F. Dickinson, O. W. Dynes, R. V. Fletcher, E. E. McInnis, and Bruce Scott, all of Chicago, Ill., of counsel), for petitioners.

Dick Dixon and Frank A. Leffingwell, both of Dallas, Tex., for petitioners Terminal Grain Co., Morten Milling Co., Stanard-Tilton Milling Co., and Universal Mills.

James Stillwell, of Pittsburgh, Pa., Theodore Schmidt, of Chicago, Ill., M. B. Pierce, of New York City, H. S. Harr, of Cincinnati, Ohio, W. J. Stevenson, of Cleveland, Ohio, J. R. Connell, of Mt. Carroll, Ill., and D. P. Connell, of Chicago, Ill., for intervening petitioners carriers in Eastern District.

Elmer B. Collins, Sp. Asst. to Atty. Gen., John Lord O'Brian, Asst. to Atty. Gen., and George E. Q. Johnson, U. S. Atty., of Chicago, Ill., for the United States.

Edward M. Reidy and H. L. Underwood, both of Washington, D. C. (Daniel W. Knowlton, of Washington, D. C., of counsel), for defendant Interstate Commerce Commission.

E. H. Hatcher, of Topeka, Kan., and C. W. Steiger, of Eldorado, Kan., for intervening defendant Public Service Commission for State of Kansas.

C. A. Sorensen and Hugh La Master, both of Lincoln, Neb., for intervening defendant Nebraska State Railway Commission.

Harrison A. Bronson, of Grand Forks, N. D., for intervening defendant State of North Dakota.

Ralph Merriam, of Chicago, Ill., for intervening defendant Board of Trade of Kansas City, Mo.

D. D. McDonald, of Jefferson City, Mo., Francis Silver, of Helena, Mont., James Morris, of Bismarck, N. D., Paul A. Walker, of Oklahoma City, Okl., Herman L. Bode, of Pierre, S. D., and Clyde S. Bailey and John E. Benton, both of Washington, D. C., for intervening defendants Corporation Commission of Arizona, Public Utilities Commission of State of Colorado, Public Utilities Commission of State of Idaho, Public Service Commission of Missouri, Board of Railroad Commissioners of State of Montana, Public Service Commission of Nevada, New Mexico State Corporation Commission, Board of Railroad Commissioners of North Dakota, Corporation Commission of Oklahoma, Public Utility Commissioner of Oregon, Board of Railroad Commissioners of State of South Dakota, Public Service Commission of State of Wyoming, and Arkansas Railroad Commission.

George E. Q. Johnson, of Chicago, Ill., for the United States.

Before SPARKS, Circuit Judge, and LINDLEY and WOODWARD, District Judges.

LINDLEY, District Judge.

Plaintiffs, carriers in the Western district, seek to enjoin, pending final hearing of this cause, an order of the Interstate Commerce Commission entered July 1, 1930, and one of supplemental character entered April 10, 1931, in a proceeding, instituted by the Commission of its own motion, involving an investigation of the rate structure relating to grain and grain products within said district and for export. The proceedings were part of a general inquiry into and examination of the rate structure of all carriers subject to the Interstate Commerce Act (49 USCA § 1 et seq.), instituted in 1925 pursuant to the direction of Congress in the Hoch-Smith Resolution (43 Stat. 801). In the investigation there were consolidated with the branch here concerned various complaints and other proceedings involving related subjects.

In its report the Commission stated that the question presented is whether, "under present conditions, the rates on grain and grain products throughout the western district are reasonable and just and are properly related to each other and to the rates on other traffic. The answer must take into account not only comparisons of distance, transportation conditions, and ton-mile and car-mile earnings on grain and other commodities, but also whether the general level of rates on all traffic as a whole is sufficiently high to accord to the carriers the rate of return contemplated by law, including section 15a of the interstate commerce act, which we construe to permit, but not to guarantee, the carriers to earn 5.75 per cent on the fair value of the property devoted to the transportation service," and that the "record requires a general survey of the rates on grain and grain products throughout the western district from the standpoint not only of cost, but of general transportation conditions as well. The relation of rates, as well as the general level, is within the scope of the investigation."

The Commission found that the existing rates were unreasonable and in many respects preferential or prejudicial and that certain practices on the part of the carriers were improper and resulted in undue injury to the railroads and to other interested parties. Consequently it directed that the carriers desist from an enforcement of rates upon grain in excess of those therewith prescribed and from certain practices not in accord with the report and that they establish the prescribed rates on or before October 1, 1930, a date extended by the second order to June 1, 1931. Petitions for rehearing were denied. The present suit to set aside the orders followed, and we have presented now the motion for temporary injunction made therein.

We are not concerned with the wisdom or expediency of the order; nor may we substitute our judgment for that of the Commission. The latter is charged with the administrative duty of determining whether rates and practices are reasonable, prejudicial, or preferential, and its orders entered in such capacity are conclusive unless there is lack of substantial evidence to support them or unless they are beyond the scope of the Commission's power or invalid because of other error of law. Central R. R. Co. v. U. S., 257 U. S. 247, 42 S. Ct. 80, 66 L. Ed. 217; I. C. C. v. I. C. R. R., 215 U. S. 452, 30 S. Ct. 155, 54 L. Ed. 280; Skinner, etc., Corp. v. U. S., 249 U. S. 557, 39 S. Ct. 375, 63 L. Ed. 772; Assigned Car Cases, 274 U. S. 564, 47 S. Ct. 727, 71 L. Ed. 1204; U. S. v. New River Co., 265 U. S. 533, 44 S. Ct. 610, 68 L. Ed. 1165. In view of the absence of the evidence heard by the Commission, therefore, there is presented no question as to the sufficiency thereof to support the findings. Spiller v. A., T. & S. F. Ry. Co., 253 U. S. 117, 40 S. Ct. 466, 64 L. Ed. 810; La. & P. B. Ry. Co. v. U. S., 257 U. S. 114, 42 S. Ct. 25, 66 L. Ed. 156. There is left to our consideration only such legal questions as arise upon the face of the report, the order, and the pleadings herein.

Sections 1 (5) and 3 (1) of the Interstate Commerce Act, 49 USCA §§ 1(5), 3(1) direct that all transportation charges shall be reasonable and just, and forbid unjust, unreasonable, discriminatory, preferential, and prejudicial rates and practices and denominates them as unlawful. Section 15 (1), 49 USCA § 15(1) grants to the Commission power to determine whether any rates are unlawful in the sense of that word as used in sections 1 (5) and 3 (1); to determine what charges, classification, and practices will be fair, just, and reasonable; to order that carriers shall desist from unlawful charges; and to establish and enforce those found to be in accordance with the act.

Section 15a (2) and (3), 49 USCA § 15a (2, 3) provides that rates shall be such that the returns therefrom, under honest, efficient, and economical management and maintenance, will be "as nearly as may be" a fair return upon the aggregate value of the property used in the service; that the Commission shall have reasonable latitude to modify any particular unjust or unreasonable rate; that it shall publish the percentage considered by it to furnish the aforesaid fair return; and that in such determination it shall give consideration, "among other things," to the transportation needs of the country and the necessity of enlarging carrier facilities to provide an adequate transportation. The percentage heretofore found to furnish the desired return is 5¾.

The Hoch-Smith Resolution (43 Stat. 801) directed the Commission to make a thorough investigation of the carriers' rate structure in order to determine whether then existing rates and practices were unlawful; to make, "in accordance with law," such changes and redistributions as found necessary to correct defects found to exist; to consider, in its proceedings, the comparative commodity market levels and the maintenance of an adequate system; from time to time as expeditiously as possible to make such decisions as it found appropriate upon the record then made and to effect "with the least practicable delay" such lawful charges as will promote the freedom of movement of farm products.

The Commission devoted 261 days to the hearing of the part of the general investigation here involved, considering testimony covering 53,000 pages and 2,100 exhibits. No part of that evidence is before the court. The Commission found that the average "present rates" on grain and grain products differ "not only in general territories but in different localities in the same general territory"; that such particular rates vary between a range of 57 to 149 per cent. of an accepted standard; that many rates are too low, others too high, and relative rates not in entire accord with transportation conditions; that horizontal treatment of existing rates would perpetuate these inconsistencies; and that some rates should be reduced, some increased, and some left unchanged.

The Commission found that the rates on grain and its products are unreasonable, unduly preferential, and prejudicial to the extent that they differ from...