Great Northern Ry. Co. v. Nagle

• Citation: 16 F. Supp. 532
• Decision Date: 01 October 1936
• Docket Number: No. 3010.,3010.
• Parties: GREAT NORTHERN RY. CO. v. NAGLE, Atty. Gen., et al.
• Court: U.S. District Court — District of Montana

16 F. Supp. 532

GREAT NORTHERN RY. CO. v. NAGLE, Atty. Gen., et al.

No. 3010.

District Court, D. Montana.

October 1, 1936.

Weir, Clift, Glover & Bennett, of Helena, Mont., for plaintiff.

A. H. Angstman, of Helena, Mont., C. E. Baker and J. E. McKenna, both of Lewistown, Mont., and H. O. Vralsted, of Stanford, Mont., for defendants.

Before HANEY, Circuit Judge, and WEBSTER and PRAY, District Judges.

PRAY, District Judge.

This is a suit to enjoin the Board of Railroad Commissioners of the State of Montana from enforcing its orders to continue the operation of certain trains of the plaintiff corporation in the aforesaid state. The hearing herein is on the application of plaintiff for an interlocutory injunction. The trains affected by the orders of said board are as follows: Passenger trains numbered 237 and 238 running between Great Falls and Butte, a distance of 170 miles; passenger trains numbered 239 and 240 between Great Falls and Lewistown, a distance of 111 miles; and passenger trains numbered 41 and 42 between Shelby and Sweet Grass, a distance of 39 miles. The plaintiff operates a line of railroad from St. Paul, Minn., to Seattle, Wash., through the states of North Dakota, Montana, and Idaho, and the foregoing passenger trains are operated on its branch lines in Montana.

That bus lines operate daily, each way, between the points above named, and parallel the railroad from Great Falls to Butte and nearly so from Great Falls to Lewistown and from Shelby to Sweet Grass. That between Great Falls and Butte two bus lines operate six schedules each way daily, and that between those points plaintiff operates two passenger trains each way daily; and that in addition to trains 239 and 240 between Great Falls and Lewistown, plaintiff operates a passenger train each way daily, and the Milwaukee Railroad operates one passenger train each way daily and one mixed train each way daily except Saturday. Plaintiff further calls attention to the fact that in addition to the transportation service furnished by the railroads, there are 149,240 motor vehicles registered in Montana, of which 35,492 are trucks and busses; that there are four truck lines operating on a daily schedule between Great Falls and Butte, an additional line between Butte and Helena, and forty-three other persons and corporations licensed to operate trucks on parts of the highway tributary to Great Falls, Helena, Boulder, and Butte; that there are two lines of common carrier trucks operating between Shelby and Sweet Grass, and ten other persons and corporations licensed to operate in the territory tributary to Shelby and Sweet Grass; that there are three lines of licensed commercial trucks operating between Great Falls and Lewistown, and twenty-four other persons and corporations licensed to operate trucks over that part of the highway tributary to Great Falls, Lewistown, Belt, and Hobson.

Plaintiff then shows that for a seven months' period beginning January 1, 1935, the average number of passengers carried on trains 237 and 238 was 44, or 22 per train. That the total revenue for the two trains for that period was $25,895, and that the actual cost of operating the two trains was $41,111.00, and that the indirect costs, if added, would disclose a loss of $57,050. That on account of the improved highways, the short-haul business in passenger transportation, express, and milk, has gone largely to private automobiles, commercial trucks, and busses. That on trains 41 and 42 for a five months' period ending October 31, 1935, the average number of passengers carried was nine, or four and one-half per train. That the total revenue for these two trains for that period was $2,806, and the actual cost of operation was $7,319, or an actual loss of $4,513, and that if indirect costs were added the loss would have been $11,792.

That for seven months ending July 31, 1935, the average number of passengers carried on trains numbered 239 and 240 was 29, or 14½ per train. That the total revenue for the two trains for this period was $10,305; the actual cost of operation was $20,411.00, or a loss of $10,106; and that if indirect costs were included the loss would have been $33,239.

That because of business losses, as above indicated, plaintiff's total income from all sources during the years 1932, 1933, and 1934 so diminished that it was unable to meet its expenses, including interest and fixed charges by $13,405,000 in 1932, $3,186,000 in 1933, and $1,074,000 in 1934, and that for the first nine months of 1935 it had available for dividends approximately $1,425,000. That plaintiff has 2,500,000 shares of stock issued of a par value of $250,000,000. That in the years 1932 to 1934, with rigid economy, it has failed to earn a reasonable or fair return upon the value of its property used for railroad purposes. As determined by the Interstate Commerce Commission the return in those years was as follows: 1932, 0.22 per cent.; 1933, 1.96 per cent.; 1934, 2.34 per cent. That plaintiff's total system revenue from passenger fares in 1925 was $13,955,000; that a steady decrease is shown each year down to 1934 of $4,220,000, or decrease of 70 per cent. That the total revenue from passenger fares in Montana has decreased $3,272,000 in 1925 to $1,202,000 in 1934, or 63 per cent., and that includes both intra-state and interstate business. That the total revenue passengers on plaintiff's system has decreased from 3,642,749 in 1925 to 1,244,819 in 1934, or 65 per cent.; and the decrease in Montana has been from 760,886 in 1925 to 340,149 in 1934, or 55 per cent. That on plaintiff's system there has been a decrease in total revenue of passenger trains from 1925 to 1934, of 60 per cent., and a like decrease in Montana of 53 per cent. That in 1934 the loss from operation of its passenger trains on the entire system was $4,336,000, and the loss in Montana for that year was $908,000, and a substantially similar loss for 1935 at time of filing complaint.

Plaintiff claims that to continue the operation of these trains will result in great loss in the maintenance of a service the public does not use, and that such loss is an unreasonable burden on interstate commerce. The discontinuance of these train services under Montana law requires an order of the Board of Railroad Commissioners. That plaintiff's petition for a discontinuance of said six trains was heard by said board and denied. The foregoing statement appears to be a fair synopsis of the affidavits submitted in support of plaintiff's complaint and application for interlocutory injunction. No counter affidavits were filed by defendants, and the claims made in their briefs rest upon the allegations of their answer which was verified. Counsel for defendants suggested the use of the transcript of the evidence taken at the hearing before the board, but counsel for plaintiff did not deem it necessary. It was intimated by the court that such a course might be adopted providing counsel for the respective parties could agree on the correctness of the transcript. No further steps have been taken in that direction. With this source of information at hand, it seems probable that defendants readily could have procured counter affidavits for the further information of the court.

As to the question of jurisdiction it does not appear that a serious issue has been raised. Undoubtedly the court is exercising a judicial function in reviewing the action of the board under section 3809 of the Montana Codes. It seems to be the settled rule that, if the review of the order is judicial in character, federal courts may have jurisdiction. Section 380, U.S.C. A., title 28; also, Johnson Act, section 41, 28 U.S.C.A., which the court holds has no application to this case.

At the outset of our deliberations we are confronted with the query whether we have before us sufficient evidence to pass upon the application for injunctive relief which comprehends the principal issues involved in the case. The evidence before us is found in the affidavits of plaintiff and admissions in the answer of certain pertinent allegations of the complaint, such as losses in branch line service through nonuse by the public; extent of bus service and train service; increasing loss, over a long period of time, of patronage and its transfer to busses, paralleling the lines of railroad; board's allowance of six busses daily each way between Butte and Great Falls, on its finding presumably that public necessity and convenience required it. As to service between Great Falls and Lewistown and Shelby and Sweet Grass, the busses also parallel the railroads, except that certain small towns served by the railroads are not served by the busses, and that on the Shelby-Sweet Grass line the discontinuance of the train would leave no passenger train service between those points. That the public generally does not use these trains seems to be conceded. Aside from that, the court probably should take notice that the bulk of branch line passenger train patronage, including the entire system as well, has gone from the railroads to the highways; with constantly increasing travel by air; and that is generally understood to apply to other railroads. However, in view of the evidence on that point it is not necessary to take judicial notice of that fact in this case.

On the other hand, the defendants claim that the present service is necessary; that during the winter months and bad weather generally the bus service is not always dependable; and that the railroads serve other communities than those served by the bus lines. The principal question seems to be: Does the public interest demand the continuance of these trains? Another question raised is whether the court can pass on the issue of loss on the branch lines without taking into account the loss or gain over the entire system. Certain cases cited appear to hold that other questions are equally necessary as determining factors, such for...