Atchison Ry Co v. United States

• Decision Date: 04 January 1932
• Docket Number: No. 287,287
• Citation: 284 U.S. 248,76 L.Ed. 273,52 S.Ct. 146
• Parties: ATCHISON, T. & S. F. RY. CO. et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

284 U.S. 248

52 S.Ct. 146

76 L.Ed. 273

ATCHISON, T. & S. F. RY. CO. et al.

v UNITED STATES et al.

No. 287.

Argued Dec. 3, 4, 1931.

Decided Jan. 4, 1932.

Mr. Frederick H. Wood, of New York City, for appellants.

[Argument of Counsel from pages 249-250 intentionally omitted] Mr. Daniel W. Knowlton, of Washington, D. C., for appellees the United States and Interstate Commerce Commission.

[Argument of Counsel from pages 251-253 intentionally omitted] Mr. John E. Benton, of Washington, D. C., for appellees, intervening state commissions.

Mr. Hugh La Master, of Lincoln, Neb., for appellee Nebraska State Railway Commission.

Messrs. Charles W. Steiger, of Topeka, Kan., and Ralph Merriam, of Chicago Ill., for appellee Public Service Commission of the State of Kansas.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

These suits, which were consolidated, were brought by carriers by railroad in the Western District, and by certain shippers, to restrain the enforcement of an order of the Interstate Commerce Commission made July 1, 1930, as amended by a supplemental order of April 10, 1931. The order prescribed maximum rates for the transportation of grain and grain products on domestic shipments within the Western District¹ and for export, as described, and directed the carriers to desist from certain practices. 164 I. C. C. 619; 173 I. C. C. 511. Other carriers were permitted to intervene as parties petitioners, and state commissions and certain state organizations were admitted as intervening defendants. This appeal is from the order of the District Court, as specially constituted,² denying the applications of the petitioners for an interlocutory injunction. 51 F.(2d) 510.

Following the passage of the Joint Resolution of the Congress of January 30, 1925,³ known as the Hoch-Smith Resolution, the Interstate Commerce Commission insti- tuted a general investigation⁴ of the rate structures of common carriers to determine whether their rates, charges, regulations, and practices were unjust, unreasonable, unjustly discriminatory, or unduly preferential, or otherwise in violation of law. The investigation was divided into separate parts, and the proceeding in one of them (part VII) terminated in the order under review. In connection with this proceeding, there were a large number of formal complaints and suspension proceedings which, considered together, brought into issue all phases of the grain rate structure involved in the Commission's general investigation. Many state commissions, chambers of commerce, and trade and traffic associations participated in the proceeding. Hearings were held in many cities and extended over a year. The record was closed on September 22, 1928, and after protracted argument the matter was submitted, on July 1, 1929, to the Commission for its decision. The first report of the Commission, made on July 1, 1930, emphasized the magnitude of its task, in dealing with 'three score and more of major issues, affecting every part of a vast territorial domain,' and the thorough examination that had been made of the exceptionally voluminous record. The order of July 1, 1930, was to go into effect on October 1, 1930, but because of mechanical difficulties in the preparation and printing of the tariffs, containing the great number of the revised rates, the effective date was postponed from time to time.

In September, 1930, the carriers asked for a rehearing, which was denied in November, 1930. Prior to its denial, a statement was submitted to the Commission on behalf of the Western Association of Railway Executives, directing attention to the serious financial condition of the carriers. A further petition for rehearing was pre- sented to the Commission on February 18, 1931. This petition described in great detail the situation then existing. The carriers alleged that, since the closing of the record before the Commission in September, 1928, there had been material and important changes in the operating, traffic, and transportation conditions in the Western District which affected adversely the revenues of the carriers, and that, regardless of the question of the validity and propriety of the order when made, it would no longer be valid and proper in the light of the existing circumstances. The carriers alleged and offered to prove that, if the order became effective, it would reduce the gross and net operating revenues of the carriers in the Western District not less than $20,000,000 annually; that their aggregate revenues in the first eleven months of 1930 were 14.92 per cent. lower than in the corresponding period of 1929; that the complete figures in respect of the revenues for December, 1930, were not yet available, but that the volume of traffic then carried was substantially less than that of December, 1929; that the revenue freight car loadings in January, 1931, showed a substantial decline (14.06 per cent.) from those of 1930 and an even greater decline (20.98 per cent.) as compared with those of 1929; that the net operating income of these carriers for 1930 was over $100,000,000 less than their average annual net operating income for the five preceding years; that the changes in conditions since the record before the Commission was closed had been such as seriously to impair the credit of the carriers; that not only had the market price of their common and preferred stock declined to such a level that it would be impossible for them to secure additional capital through the sale of stock, but that their bond issues also in many instances securities of these carriers by both savings which they formerly enjoyed; that the decrease of railroad earnings had been such as to jeopardize the eligibility of these bonds for saving bank investments, and that there had been a large decline in the holdings of the secu rities of these carriers by both savings banks and life insurance companies; and that, if the order of the Commission should become effective, it would, under the conditions then present, threaten the maintenance of an adequate system of transportation. In support of their allegations as to changed conditions, the petitioners submitted many other facts and statistical tables of traffic and revenues.

The Commission denied the application for rehearing on March 3, 1931. On April 10, 1931, the Commission made its supplemental report and order, modifying and supplementing in certain particulars its original report and order, and provided that the order as thus modified should become effective on June 1, 1931. Thereupon, these suits were brought.

The petition in the carriers' suit challenged the order as having been made in disregard of the provisions of the Interstate Commerce Act (49 USCA § 1 et seq.). The original and supplemental reports of the Commission, and the above-mentioned petitions for rehearing, were annexed to the petition and made a part of it. Reference was made to the statement of the Commission, in its special report of January 21, 1931, to the Senate Committee on Interstate and Foreign Commerce, that the railroads had 'never been able, since 1920, to obtain the aggregate earnings contemplated by section 15a' (of the Interstate Commerce Act), 'and they are faced with continually increasing competition from other forms of transportation.' Reciting earlier orders of the Commission bearing upon rates for the transportation of grain and grain products,⁵ the carriers averred that the order of the Commission was a complete reversal of its previous action; that the Commission had found that the revenue of the carriers for the Western District from the carriage of grain and grain products amounted to 12.1 per cent. of their total revenues in 1924, that year being used in the report as representative, and that the effect of the order in question would be to reduce the general level of rates on this traffic approximately 13 per cent, causing a serious diminution (to the amount of $20,000,000 annually) in the gross and net operating income of these carriers. The petition set forth the passage of the Hoch-Smith Resolution and the order of the Commission in relation to the rates on deciduous fruits from California, which had been held by this Court to be invalid because based upon an erroneous construction of the Resolution,⁶ and the carriers charged that, in making the reports and order here in question, the Commission had proceeded upon a like misconception of its powers. Stating the substance of their petition (February, 1931) for rehearing, the carriers further charged that the denial of that petition, in view of changed conditions, was itself an abuse of administrative discretion, and, by depriving the carriers of the hearing to which they were entitled, constituted a denial of due process in violation of the Fifth...