Interstate Commerce Commission v. Jersey City

• Decision Date: 29 May 1944
• Docket Number: No. 767,767
• Parties: INTERSTATE COMMERCE COMMISSION et al. v. JERSEY CITY et al
• Court: U.S. Supreme Court

322 U.S. 503

64 S.Ct. 1129

88 L.Ed. 1420

INTERSTATE COMMERCE COMMISSION et al.

v JERSEY CITY et al.

No. 767.

Argued May 2, 3, 1944.

Decided May 29, 1944.

On Appeal from the District Court of the United States for the District of New Jersey.

Mr. Edward M. Reidy, of Washington, D.C., for appellant Interstate Commerce Commission.

Mr. John F. Finerty, of New York City, for appellant Hudson & Manhattan R. Co.

Mr. David F. Cavers, of Washington, D.C., for appellee O.P.A.

Mr. Charles Hershenstein, of Jersey City, N.J., for appellee City of Jersey City.

Mr. Justice JACKSON delivered the opinion of the Court.

This is a direct appeal by the Interstate Commerce Commission, whose orders the District Court of New Jersey has set aside, and by the Hudson & Manhattan Railroad Company, whose rates are subject to the enjoined orders. Respondents are the City of Jersey City and the Price Administrator, who intervened under powers duty delegated to him pursuant to the Emergency Price Control Act of 1942¹ and the Inflation Control or Stabilization Act of 1942.²

The Hudson & Manhattan Railroad Company owns about 8.5 miles of electric railway, of which all but .63 miles is underground. It has two double-track lines, one of which, known as the 'uptown line,' connects Hoboken, New Jersey, with Christopher Street, New York, by who parallel tunnels under the Hudson River, and runs uptown under Sixth Avenue from Christopher Street to a terminal at 33rd Street. The other line, known as the 'downtown line,' crosses under the river by two parallel tunnels between Exchange Place, Jersey City, and Hudson Terminal, New York. It also extends westwardly in Jersey City to Journal Square, where connection is made with the Pennsylvania Railroad. The uptown and downtown lines are connected on the New Jersey side by means of a line paralleling the Hudson River. In conjunction with the Pennsylvania Railroad the Hudson & Manhattan operates a joint rapid-transit service between Hudson Terminal and Newark. It carries only passengers.

The present controversy has its roots in a rate case precipitated by the Company's effort to establish a 10-cent fare on its downtown line in 1937.³ After full hear- ings the Interstate Commerce Commission fixed an 8-cent fare effective July 25, 1938.'⁴ The 10-cent fare was denied chiefly on the ground that, while the Company might be entitled to the revenue, such a fare would decrease its patronage, and the Commission believed that an 8-cent fare would produce more revenue. Commissioners Miller and Mahaffie dissented from denial of the 10-cent fare on such grounds, holding it had been 'amply justified' as 'reasonable and lawful for the services performed.' This Court held such grounds of denial to be sustained by evidence and to be within the Commission's discretion. Hudson & Manhattan Railway Co. v. United States, 313 U.S. 98, 61 S.Ct. 884, 85 L.Ed. 1212. The 8-cent fare remained in effect until the carrier on June 27, 1942 filed a petition in the same proceeding for further hearing, alleging changed conditions and increased costs in support of a 10-cent fare on the downtown line. Protests were filed by the City of Jersey City and the Hudson Bus Corporation. The Commission opened the proceeding and extensive hearings were held in September of 1942. Counsel for the Price Administrator appeared, stating that it was not his intention to offer evidence but that he reserved the right to make any motions and to file appropriate briefs. The hearings were concluded on September 19, 1942.

The Inflation Control Act of 1942, passed on October 2d, contained a proviso that 'no common carrier or other public utility shall make any general increase in its rates or charges which were in effect on September 15, 1942, unless it first gives thirty days notice to the President, or such agency as he may designate, and consents to the timely intervention by such agency before the Federal, State, or municipal authority having jurisdiction to consider such increase.' § 1. Thereafter the Price Admin- istrator⁵ asked permission to and did file a brief opposing any increase in the rates. On January 25, 1943, the hearing examiner recommended that the Commission find the rate of 10 cents on the downtown lines to be just and reasonable. Exceptions were filed by Jersey City and the Price Administrator and argued by counsel for each, and on June 8, 1943 the Commission made its decision.⁶ It reviewed the increases in operating costs since the 8-cent rate had been fixed and the need of the railroad for additional revenue 'in order to meet increased operating expenses and the interest on its bonds.' It increased the downtown fare from 8 cents to 9 cents, effective for duration of the war and six months thereafter, with permission to any of the parties to bring to the attention of the Commission additional facts if the revenue results should prove materially different from the Commission's estimate. The Commission's opinion considered the arguments of the Price Administrator against any increase, but said, 'It seems to us that an increase of 1 cent in respondent's downtown fare is unlikely to have any inflationary effect, and that the effect thereof upon the cost of living, while a factor to be given consideration, will be so slight, a maximum of about 12 cents a week and 52 cents a month per passenger, as to be negligible. We believe, therefore, that the increased fare herein approved will not be in conflict with the Emergency Price Control Act of 1942, as amended.' Three Commissioners dissented, holding that the Company had established its right to a 10-cent fare.

A month later the railroad filed a petition for reconsideration. Among other things, it alleged that it could not avail itself of the 9-cent rate because its fare collection boxes could not handle the volume of coins necessitated by the 9-cent rate and under war conditions could not be replaced. It asked to charge a 10-cent fare until it could secure tokens. Jersey City answered, asking that the petition be denied and the 9-cent fare suspended. The Price Administrator also answered. He advocated what he called a feasible scheme to collect the 9-cent fare through the use of paper tickets. The Price Administrator also asked that the fares go back to 8 cents in view of alleged increased earnings and asked that in any event before the fares were increased on the basis suggested by the Company a further hearing be held. On August 3, 1943, the Commission issued a report and order.⁷ It found that it would be impossible to collect a 9-cent cash fare, and it authorized an alternative basis of eleven tokens for $1.00 or a cash fare of 10 cents, provided the same alternative basis be put into effect on the uptown line. This resulted, of course, in a rate of 9 1/11 cents to token purchasers on both lines.

Thereupon Jersey City filed a complaint in the District Court, asking that the Commission's order be enjoined 'in so far as such order permits the establishment of any local interstate fare in excess of nine cents for transportation on the downtown line.' It alleged that in authorizing downtown fares 'in excess of the nine cent fare' fixed in the order of June 8, the Commission had deprived Jersey City of its full day in court by refusing it opportunity to cross-examine witnesses and present counter-evidence.

The Commission then reopened the proceeding on its own motion, but only 'to permit any party hereto to present evidence directed solely to the propriety and lawfulness of the modification made by the Commission in its report of August 3, 1943, on further consideration of its prior findings and orders of July 11, 1938 and June 8 1943' and to afford the right to cross-examine adverse witnesses. The Commission in its later report of November 2, 1943 referred to this reopening as being 'out of an abundance of caution.' At the reopened proceeding the Company offered testimony about the impracticability of collecting a 9 cent fare, and as to the earnings that would be derived from the proposed token and cash combination fares upon the assumption, supported by testimony, that 90 per cent of the passengers probably would purchase tokens. The examiner ruled that the basis of the 9-cent fare fixed by the order of June 8, 1943 was not in issue and confined evidence to the issues specified in the Commission's order. The Price Administrator offered a condensed income statement for the Hudson & Manhattan for the first seven months of 1943. The examiner declined to receive it, because it went only to the Company's need for revenue, an inquiry which was not reopened. The Price Administrator previously had submitted to the Commission a similar statement for five months of 1943, as part of its reply to the railroad's petition for modification of the 9-cent fare. The Commission in its report of August 3d rejected this statement as being without probative value. Neither of the statements showed the income of appellant from its railroad operations, but included income of the corporation from all operations, including the Hudson Terminal buildings in New York City and other real estate owned by it. The Price Administrator also petitioned the Commission for modification of the reopening order 'in order that the said record be brought up to date.' The purpose of this was stated to be to show that as a result of the war the earnings of the Company at an 8-cent fare for the full year 1943 would exceed the amount the Commission found adequate and reasonable in its 1938 order or in the order of June 8, 1943.

On November 2, 1943 the Commission issued its report and order, allowing a 10-cent cash fare or eleven tokens for $1.00 as the rate on both the downtown and uptown lines. The Commission considered in its opinion the request of Jersey City and the Price Administrator that the limitations on the hearings should be removed and the whole rate case thrown open again. It pointed out that the complaint of ...