Brooklyn Eastern District Terminal v. United States

• Decision Date: 07 August 1969
• Docket Number: No. 68 C 239.,68 C 239.
• Citation: 302 F. Supp. 1095
• Parties: BROOKLYN EASTERN DISTRICT TERMINAL, Plaintiff, v. The UNITED STATES of America, Defendant, and Interstate Commerce Commission, R. & F. Trucking Co., Inc., M. J. Kelly Company, Inc. and North 4th Street Realty Corp., Intervening Defendants.
• Court: U.S. District Court — Eastern District of New York

302 F. Supp. 1095

BROOKLYN EASTERN DISTRICT TERMINAL, Plaintiff, v. The UNITED STATES of America, Defendant and Interstate Commerce Commission, R. & F. Trucking Co., Inc., M. J. Kelly Company, Inc. and North 4th Street Realty Corp., Intervening Defendants.

No. 68 C 239.

United States District Court E. D. New York.

August 7, 1969.

COPYRIGHT MATERIAL OMITTED

Louis H. Shereff, and Harry Shereff, New York City, for plaintiff.

Jerome E. Sharfman (Edwin M. Zimmerman, Asst. Atty. Gen., John H. D. Wigger, Atty., Dept. of Justice, and Joseph P. Hoey, Brooklyn, N. Y., of counsel, for the United States, and Robert W. Ginnane, Washington, D. C., of counsel, for intervening defendant I. C. C.), for the United States and the I. C. C.

Arthur J. Piken, Jamaica, N. Y., for intervening defendants R. & F. Trucking Co., Inc., M. J. Kelly Company, Inc., and North 4th Street Realty Corp.

Before MOORE, Circuit Judge, and DOOLING and JUDD, District Judges.

MEMORANDUM and ORDER

DOOLING, District Judge.

Plaintiff's action is brought to enjoin and annul 1967 Orders of the Interstate Commerce Commission 28 U.S.C. § 1336 (a), (c) which denied plaintiff the right to abandon certain track which it operated in Block 2349 of its Kent Avenue terminal on the East River waterfront in the Williamsburgh section of Brooklyn 28 U.S.C. §§ 2284, 2321-2325; 49 U.S.C. § 17(9). It is concluded that the relief sought must be denied.

Plaintiff has operated since 1940 as a common carrier subject to the Interstate Commerce Act. Plaintiff picks up freight cars on car floats in Jersey City and Weehawken from trunk line railroads (including the Pennsylvania¹, New York Central¹, Baltimore & Ohio, etc.), and tows the cars to three float bridges and connecting track at plaintiff's Kent Avenue station on the waterfront in Williamsburgh. There plaintiff classifies the cars and distributes them to a complex of team tracks and industrial sidings located on a grid of regular-sized city blocks cut out and bounded by the regular city streets. Plaintiff has about 8.01 miles of track in its Kent Avenue station; the station extends from south of North 4th Street to North 11th Street, and from the river across Kent and Wythe Avenues to Berry Street; some of plaintiff's track traverses the city streets under city-granted franchises.

In March 1966 plaintiff applied to the Interstate Commerce Commission under Section 1(18) and (20) of the Interstate Commerce Act 49 U.S.C. § 1(18), (20) for a certificate of public convenience and necessity permitting it to abandon the portion of its line of railroad consisting of 0.28 miles of its track in Blocks 2349 and 2350. Plaintiff was then still serving three shippers in Block 2349, R. & F. Trucking Co., Inc., M. J. Kelly Co., Inc., and Bridge Lumber Co.; it had served, but it was no longer serving Greenberg Brothers in Block 2350. The R. & F. freight was furniture, the Kelly freight, firebrick and cements, and the Bridge Lumber Company freight, lumber. Plaintiff averred that to continue to operate the track was uneconomical and would burden Interstate Commerce since total revenue from the shippers in the two blocks was far less than the cost of operating and maintaining the tracks therein, and, upon abandonment, the land could be sold and the money used either to reduce the mortgage on the property, saving interest, or to improve the balance of railroad operation, leaving the users of the track in Block 2349 to get their deliveries at the team tracks located in the nearby Blocks 2332, 2333 and 2334. The abandonment, plaintiff argued, would avert increasing economic hardship and financial loss that would otherwise jeopardize future service to the shipping public served by the applicant.

The Commission denied leave to abandon track in Block 2349, but, there being no opposition, granted leave to abandon the track in Block 2350.

The gist of plaintiff's contention has been that it has lost money over the years on its entire operation, that, specifically, it loses money in Block 2349, and, still more specifically, that it handles the R. & F. furniture traffic in Block 2349 at a heavy loss. In addition plaintiff argues that over and above the improvement in its Net Revenue from Railway Operations that would flow from eliminating the Block 2349 revenue derived from R. & F. and Kelly and the related excess of railway operating expenses over the revenues eliminated, there would be secondary savings achieved in this way: If the abandonment is approved, plaintiff will sell to Bridge Lumber Company the balance of the real estate, including that underlying the abandoned track, owned by plaintiff in Block 2349, and will use the proceeds of sale to pay down the mortgage on the property, thus eliminating substantial interest and tax expense.

The hearing examiner, rendering his report and order on a record made before another examiner who had meanwhile retired 5 U.S.C. § 554(d), found that plaintiff had sustained overall losses for some years, but that it was not clear either that the abandonment would rectify the situation, or — in view of an apparent year by year increase in net current assets — that plaintiff was in financial jeopardy. Noting plaintiff's use of working capital to build a new flour terminal, and its use of the proceeds of realty sales to improve its working capital and retire $250,000 of bonds, thus diminishing its fixed charges, the Examiner asserted that railway operating revenues substantially exceeded operating expenses in the most recent five year period, and that the plaintiff as a carrier "had a favorable operating ratio." On plaintiff's contention that abandoning a part of its line in Block 2349 would help it improve its railway economics (even though it could not lay off any railroad men), the Examiner observed that although the abandonment would clear the way to sell property to Bridge Lumber Company, it would also eliminate the R. & F. and Kelly revenue without demonstrably eliminating railway operating expenses in excess of the lost revenues, and would only in a conjectural and unsubstantiated degree gain increased traffic with Bridge Lumber Company. Noting further that the only assured savings would be mortgage interest of $3,456, taxes of $1,985.22 and city franchise charges of $108. per year resulting from the land sale to Bridge, the Examiner commented that R. & F. and Kelly had testified that to lose the siding service would reduce the value of the property they occupied by an amount per square foot exceeding the square foot price at which plaintiff was to sell its 20,000 square feet of land to Bridge. The Examiner concluded, on the general issues, that plaintiff had not borne the burden of proving with acceptable evidence that the present and future public convenience and necessity permitted the abandonment proposed. With particular reference to plaintiff's emphasis on is losses on the R. & F. traffic, and the contention that it was transported for an inadequate compensation, the Examiner pointed out that since 1922 plaintiff had made no effort to renegotiate with the interchange carrier the division it received on furniture.

Review Board No. 5 concluded that the case did not require the issuance of a report by the Review Board discussing the evidence in the light of the pleadings since it appeared that the Findings and Conclusions of the Examiner on the matters of fact and law were in material respects proper and correct and that the exceptions of plaintiff raised no new or material matters of fact and law not adequately considered and properly disposed of by the Examiner in his report cf. 5 U.S.C. § 557(c). Review Board No. 5 accordingly made a completely general finding that the evidence, in the light of the exceptions and replies thereto, did not warrant a result differing from that reached by the Examiner, and that the statements of facts and the conclusions and findings of the Hearing Examiner, being proper and correct in all material respects, were affirmed and adopted. The Examiner's order denying the abandonment was adopted as the order of Review Board No. 5 without further hearing and argument. (Later Division 3 of the Commission, acting as an Appellate Division, modified the earlier decision to the extent of permitting abandonment of the Track in Block 2350 on the ground, essentially, that there had been no objection to it.)

In this Court plaintiff repeats its basic substantive contention that denial of the application to abandon was confiscatory in light of plaintiff's long continued overall losses and the specific loss incurred on the Block 2349 traffic with R. & F. particularly. Plaintiff challenges the validity of the Examiner's conclusion that the generality and conclusory nature of plaintiff's evidence resulted in a failure of proof, and it argues that the Commission should have granted its application to re-open the proceeding to present more specific evidence if it was indeed required. Plaintiff argues that the Commission should not have permitted a substitute Examiner to make findings on a record made before another Examiner 5 U.S.C. § 554(d) and, that the Commission itself failed to act correctly in passing on the exceptions presented to the Examiner's decision in giving a single generalized ruling rather than "the ruling on each * * * exception" required by 5 U.S.C. § 557(c). Finally, and for the first time in the present proceeding, plaintiff contends that the track which it sought to abandon was "spur, industrial, * * * or side tracks, located * * * wholly within one State," and, hence, that the Commission had no jurisdiction to entertain the proceeding at all 49 U.S.C. § 1(22).

1. Plaintiff's confiscation argument fails because the data of record are insufficient to support the claim. The confiscation contention breaks naturally into an argument first about the overall figures for the plaintiff as a company. The evidence on this consists essentially of Exhibits 1 and 2...