Atlantic Coast Line R. Co. v. Public Service Commission, Civ. No. 1879.

CourtUnited States District Courts. 4th Circuit. United States District Court of South Carolina
Citation77 F. Supp. 675
Decision Date10 May 1948
Docket NumberCiv. No. 1879.


Thomas W. Davis, of Wilmington, N. C., M. G. McDonald, of Greenwood, S. C., Douglas McKay, of Columbia, S. C., Edgar A. Brown, of Barnwell, S. C., and Woods & Woods, of Marion, S. C., for plaintiff.

John M. Daniel, Atty. Gen., State of South Carolina, and Irvine F. Belser, of Columbia, S. C., for defendants.

Before SOPER, Circuit Judge, and WYCHE and TIMMERMAN, District Judges.

WYCHE, District Judge.

This is an action brought by Atlantic Coast Line Railroad Company, a Virginia Corporation, against the Members of The Public Service Commission of South Carolina and the Governor and the Attorney General of South Carolina to enjoin them from enforcing an order of the Commission requiring the continued operation of two passenger trains between Columbia, South Carolina, and Sumter, South Carolina. An interlocutory injunction was sought, and a court of three judges was constituted pursuant to Section 266 of the Judicial Code, 28 U.S.C.A. § 380. A hearing was held at Columbia, South Carolina, on March 31, 1948, at the conclusion of which it was agreed by counsel for both sides that the case be submitted for final decree.

The basis of jurisdiction of this court is that the plaintiff is suffering large and continuous losses on account of the operation of the trains in question; that should it discontinue such operation it would be faced with numerous and onerous penalties as provided by various statutes of the State of South Carolina; that its administrative remedies have been exhausted; and that the controversy having reached the judicial stage, the protection of this court is needed on the ground that the order of the Commission is confiscatory of its property and constitutes an undue burden upon interstate commerce, in violation of the provisions of the United States Constitution.

Plaintiff operates a branch line, forty-two miles in length, between the cities of Columbia, South Carolina, and Sumter, South Carolina. Over this line it operates, in addition to a number of freight trains, four passenger trains daily, two each way between the said points. On May 26, 1947, pursuant to Section 8250, Code of Laws of South Carolina 1942, plaintiff field an application with the Commission to discontinue the operation of two of such passenger trains, numbers 59 and 64. Section 8250, supra, provides, in effect, that it shall be unlawful for any railroad company operating a rail line in South Carolina to discontinue the operation of any passenger train without first making application to and securing approval of the Commission. Pursuant to notice, the matter came on for hearing before the Commission on August 7, 1947, and on November 26, 1947, the Commission issued its order denying such application.

Defendants set up certain defenses in this court which should be considered and disposed of before discussing the merits of the controversy. The first is that this court has no jurisdiction because this action is, in effect, one against the State, presumably, though not so stated, on the ground that it violates the Eleventh Amendment to the United States Constitution, which forbids a suit against a State by a citizen of another State. Similar objections have been raised many times and held to be without merit. Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Prout v. Starr, et al., 188 U.S. 537, 23 S.Ct. 398, 47 L.Ed. 584; McNeill v. Southern Ry. Co., 202 U.S. 543, 26 S.Ct. 722, 50 L.Ed. 1142; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A.,N.S., 932, 14 Ann.Cas. 764; Western Union Telegraph Co. v. Andrews et al., 216 U.S. 165, 30 S.Ct. 286, 54 L.Ed. 430; Herndon v. Chicago, R. I. & Pac. Ry. Co., 218 U.S. 135, 30 S.Ct. 633, 54 L.Ed. 970; Harrison v. St. Louis & S. F. R. Co., 232 U.S. 318, 34 S.Ct. 333, 58 L.Ed. 621, L.R.A. 1915F, 1187; Looney v. Crane Co., 245 U.S. 178, 38 S.Ct. 85, 62 L.Ed. 230; Public Service Company v. Corboy, 250 U.S. 153, 39 S.Ct. 440, 63 L.Ed. 905.

A second objection is that plaintiff has failed to exhaust its administrative remedy in that it did not apply to the Commission for a rehearing. Admittedly there is no statutory provision in South Carolina requiring a railroad company to apply to the Commission for a rehearing as a condition of seeking judicial relief, as is the case with certain other public utilities. See Section 8555-6, Code of Laws of South Carolina 1942. Reliance is based upon a Commission regulation permitting such application, but even if this regulation relates to railroads, which is doubtful, it is far from being mandatory. It is well settled that in the absence of a statutory requirement making such application a condition precedent to the right of judicial review no such application need be made. Prendergast v. New York Telephone Co., 262 U.S. 43, 43 S.Ct. 466, 67 L.Ed. 853; Banton v. Belt Line Corp., 268 U.S. 413, 45 S.Ct. 534, 69 L.Ed. 1020.

Defendants rely strongly upon the case of Natural Gas Pipeline Co. v. Slattery, 302 U.S. 300, 58 S.Ct. 199, 82 L.Ed. 276. In this case there was a proceeding before the Illinois Commerce Commission to fix rates charged for gas sold in Illinois by the Chicago District Pipeline Company. The Commission issued an order requiring Natural Gas Pipeline Company to make available for examination by the Commission its books and records relating to transactions between it and the District Company. It further ordered the Natural Gas Company to submit a report showing other data in relation to its business, including the cost of its property and a statement of income and expenses in connection with supplying gas to the District Company. This order was issued pursuant to authority contained in the Illinois Public Utilities Act, which also provided that any party affected by such an order was authorized to make application to the Commission for a hearing to ascertain whether the order was improper, unreasonable or contrary to law, and that the Commission was authorized upon proper notice and hearing to rescind, alter or amend any order or decision made by it.

The Natural Gas Pipeline Company was not a party to the proceedings before the Commission. Hence, of course, the Commission could make no order affecting its own rates or its contract with the District Company, and the court so held. Without applying to the Commission to be relieved in any respect from any requirement of the order the Natural Gas Pipeline Company went into the Federal Court and asked for an injunction against the enforcement of the Commission's order. The District Court denied the application for an interlocutory injunction, and the Supreme Court affirmed the action of the District Court on the ground that the plaintiff had not exhausted its administrative remedies before the Commission. This case is readily distinguished from the case with which we are concerned.

The Legislature of Illinois in effect had provided that the Natural Gas Pipeline Company and others in like situation were required to obey such orders, unless upon application to the Commission they were relieved of the necessity of so doing. The Pipeline Company made no application to the Commission whatever but went straight to the Court.

In this case by Section 8250, Code of Laws of South Carolina 1942, the plaintiff is required to continue to run trains 59 and 64, unless upon application to the Commission it is authorized to discontinue the trains. In this case the plaintiff applied to the Commission to be relieved of the requirements of Section 8250, and exhausted the remedy provided by the statute before going into Court, but in the Natural Gas Pipeline case the plaintiff went into Court without making any application to the Commission for relief.

Somewhat akin to the defense that the plaintiff railroad has not exhausted its administrative remedies, is the contention of the defendants that the present suit should be dismissed and that the railroad should be required to make a new application to the Commission and to present to it evidence of the earnings of the railroad system as a whole. It is suggested that evidence on this point was not offered at the hearing before the Commission, and that until it is taken into consideration by the Commission in reaching its conclusion, the administrative process is not complete. It is true that at the hearing before the Commission the railroad confined itself to evidence relating to the branch line upon which it desired to abandon the two trains, and its witnesses were not prepared on cross examination to testify as to the earnings of the system as a whole. The matter, however, was broached and the Commission was reminded that the reports of the Railroad Company on file with it contained full information on the subject and the Railroad Company offered to furnish the information if the Commission desired it. Furthermore, the Chairman of the Commission in a colloquy with one of the counsel for the protestants expressed the willingness of the Commission to take judicial notice of the reports if it was so desired. The reports showing the system's earnings were therefore available to the Commission.

These reports are required to be filed by all railroad companies operating in South Carolina by Section 8292-20, Code of Laws of South Carolina 1942. In addition, Rule 18 of the Commission, See Volume IV, Code of Laws of South Carolina 1942, p. 778 provides "Each company shall file in the office of the Commission, on or before the last day of each month, a report, duly sworn to, showing fully and in detail the earnings and expenses of such company during the month preceding." (Emphasis added)

The Commission had the benefit of the assistance and advice of Mr. C....

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