Chicago, Milwaukee St Paul and Pacific Railroad Company v. United States Benson v. United States

• Decision Date: 05 June 1961
• Docket Number: Nos. 306 and 307,s. 306 and 307
• Citation: 6 L.Ed.2d 772,366 U.S. 745,81 S.Ct. 1630
• Parties: CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, Appellant, v. UNITED STATES et al. Ezra Taft BENSON, Secretary of Agriculture of the United States, Appellant, v. UNITED STATES et al
• Court: U.S. Supreme Court

366 U.S. 745

81 S.Ct. 1630

6 L.Ed.2d 772

CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, Appellant,

v UNITED STATES et al.

Ezra Taft BENSON, Secretary of Agriculture of the

United States, Appellant,

v. UNITED STATES et al.

Nos. 306 and 307.

Argued May 2, 1961.

Decided June 5, 1961.

Mr. Raymond K. Merrill, Chicago, Ill., for appellant in both cases.

Mr. Robert W. Ginnane, Washington, D.C., for appellees, The United States and I.C.C. Mr. Fletcher Rockwood, Portland, Or., for appellee, R.R. Companies, in both cases.

Mr. Justice CLARK delivered the opinionn of the Court.

These are direct appeals from an order of a three-judge District Court dismissing appellants' complaint seeking to set aside an Interstate Commerce Commission decision which refused to prescribe through routes and joint rates for traffic moving between appellant railroad and the Spokane, Portland and Seattle Railway (the 'S.P. & S.') system¹ via Spokane, Washington. The Commission found, contrary to appellants' contention, that, with limited exceptions, no through routes existed for the movement of freight by the S.P. & S. system and appellant railroad (the 'Milwaukee') via Spokane. It also held that the short-haul protection provided in § 15(4) of the Interstate Commerce Act² applied because the S.P. & S. was operated in conjunction with and under common management of its parents, the Great Northern Railway Co. and the Northern Pacific Railway Co. (the 'Northern Lines'), each of which owned 50% of the S.P. & S. Finally, it entered a finding that the refusal of the S.P. & S. system to grant the through routes³ and joint rates⁴ requested did not result in discrimination against the Milwaukee or in undue preference or prejudice between shippers and localities and further found that they were not 'needed in order to provide adequate and more efficient or more economic transportation.' 300 I.C.C. 453. The District Court held that the findings of the Commission were supported by substantial evidence and affirmed its ruling as to the application of § 15(4). 182 F.Supp. 81. We noted probable jurisdiction. 364 U.S. 860, 81 S.Ct. 106, 5 L.Ed.2d 84. We affirm the judgment.

The factual situation is described in detail in the Commission's report and we will, therefore, set it out only briefly. It appears that the S.P. & S. was built by the Northern Lines for the purpose of relieving congestion, avoiding double mountain trackage, and obtaining low grade road facilities to the West Coast. Its lines—approximately 950 miles in length—run along the Snake and Columbia Rivers westward between Spokane, Washington, and the Pacific Coast via Portland, Oregon. The lines of its parents, the Northern Lines, operate between Minneapolis-St. Paul, Minnesota, and the head of the Great Lakes on the east and Portland, Oregon, and coastal points in Washington on the west. They serve the larger cities in northern Idaho, Montana, North and South Dakota and Minnesota. The Milwaukee operates some 10,600 miles of line from Chicago, Illinois, and Westport, Indiana, on the east and Longview, Washington, on the west. While it serves many of the same cities in Idaho, Montana, the Dakotas and Minnesota from which the Northern Lines receive traffic, appellant railroad serves no point in Oregon directly. If it could establish through routes and joint rates with the S.P. & S. system, the Milwaukee might secure, on interchange at Spokane, much of the Traffic that originates or terminates on the S.P. & S. system. On the other hand, the Northern Lines seek to obtain as much of this haul as possible and have published joint rates on all important commodities interchanged between the S.P. & S. system and the Northern Lines at Spokane. These rates are lower than the combination of the local rates of the S.P. & S. and the appellant railroad now applicable to traffic which could be interchanged at the same point, Spokane, between these carriers. It appears that the S.P. & S. system and the Northern Lines are not opposed to the publication of joint rates by the S.P. & S. system and the Milwaukee for traffic to or from points served only by the latter (local points) but refuse to establish through routes and joint rates via appellant's line to points which are also served by the Northern Lines.

We find, as did the District Court, that substantial evidence does support the factual findings of the Commission. We shall, therefore, forego a discussion of the appellants' contentions based on the findings. We are left with only the principal issue, namely, whether the protection of § 15(4) of the Act extends to two railroads owning a third in the relationship existing here.

The Northern Lines compete with each other but own in equal shares all of the bonds and stock of the S.P. & S. Their presidents alternate yearly as president and vice president of, and personally pass upon the executive problems of, the S.P. & S., which, however, has an operating vice president of its own. As to equipment, the Northern Lines furnish a substantial amount of the car supply of the S.P. & S. system. The traffic policies of the latter are directed and controlled jointly by the traffic departments of the Northern Lines. Transcontinental traffic matters are handled by representatives of the Northern Lines but local traffic problems—under the general policies aforementioned are left to the S.P. & S. officials. In short, except when the Northern Lines disagree between themselves, they entirely control the operation of the S.P. & S.

Sectio 1(4) of the Interstate Commerce Act requires railroads 'to establish reasonable through routes' with each other. Where such routes are not established voluntarily, the Commission has the power, under § 15(3) of the Act, to prescribe them 'whenever deemed by it to be necessary or desirable in the public interest.' This authority is restricted against short hauling, however, by § 15(4) which provides that the Commission 'shall not * * * require any carrier by railroad * * * to embrace in such route substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith, which lies between the termini of such proposed through route * * *.' Appellants contend that since the eastern terminus of the S.P. & S. is Spokane, the establishment of the through routes via that point would not short haul the S.P. & S. If, however, the S.P. & S. is under the 'common management or control' of the Northern Lines and the short-haul protection of § 15(4) is available to them, the through routes sought would, if granted, result in the latter being short hauled in contravention of this section.

The findings of the Commission, approved by the District Court, indicate clearly that neither of the Northern Lines individually controls the S.P. & S. However, it is equally clear that jointly they do manage and control it as effectively as if it were part of their own lines. This is particularly true of its traffic policy, which is the heart of the problem here. However, appellants contend that, regardless of the factual circumstances, as a matter of law only a single railroad can operate or control another line within the meaning of the short-haul protection of § 15(4).

The short-haul exception of § 15(4) originated in the Mann-Elkins Act of 1910. 36 Stat. 539, 552. The crucial words 'common management or control' were not defined and the subsequent legislative history of the provision is of little assistance to our inquiry. However, the overriding purpose of the Congress seems to have been the protection of the traffic of the controlling line. As Senator Elkins, a coauthor of the measure, stated to the Senate, the exception 'is one which has always been recognized in the transportation business of the country. The road that initiates the freight and starts it on its movement in interstate commerce should not be required * * * to transfer its business from its own road to that of a competitor * * * when the commerce initiated by it can be as promptly and safely transported * * * by its road as by the line of its competitor.' 45 Cong.Rec. 3475—3476. The same reasoning would equally apply here. Moreover, the Senate Report on the provision emphasizes the same purpose.⁵

While the language of the section is framed in the singular, it appears to us that the reason for this exception is as valid and necessary in the case of two railroads owning a third as it is when only a single railroad and its subsidiary are involved. See Lousiville & N.R. Co. v. United States, 1916, 242 U.S. 60, at page 73, 37 S.Ct. 61, at page 63, 61 L.Ed. 152, where this Court, in construing the discrimination provisions of the predecessor of § 3(4) of the Act, stated, '(t)herefore, if either carrier owned and used this terminal alone it could not be found to discriminate against the Tennessee Central by merely refusing to switch for it * * *.' We conceive that what is true of one owner would be equally true of two joint owners * * *.'

Appellants rely heavily on the fc t that the Congress, in enacting the Transportation Act of 1940, broadened the definition of the term 'control' in many of the sections of the Interstate Commerce Act⁶ but did not do so in § 15(4), thereby indicating an intention to restrict the scope of the exception. This definition, however, was enacted as the result of this Court's holding in Rochester Telephone Corp. v. United States, 1939, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, which gave a broad construction to 'control' as used in § 2(b) of the Communications Act. 47 U.S.C. § 152(b), 47 U.S.C.A. § 152(b). It appears that the Congress decided to extend this broad definition to certain sections of the Interstate Commerce Act to insure Commission jurisdiction over persons in indirect control of carriers. See H.R.Rep. No. 2016, 76th Cong., 3d Sess. 58. If, however, that definition were applied to § 15(4), the...