Interstate Commerce Commission v. Piedmont & N. Ry. Co.

• Decision Date: 23 May 1931
• Docket Number: No. 253.,253.
• Parties: INTERSTATE COMMERCE COMMISSION et al. v. PIEDMONT & N. RY. CO.
• Court: U.S. District Court — District of South Carolina

51 F.2d 766 (1931)

INTERSTATE COMMERCE COMMISSION et al. v. PIEDMONT & N. RY. CO.

No. 253.

District Court, W. D. South Carolina.

May 23, 1931.

Daniel W. Knowlton and Nelson Thomas, both of Washington, D. C., for Interstate Commerce Commission.

W. S. O'B. Robinson, Jr., and R. S. Hutchison, both of Charlotte, N. C., and H. J. Haynsworth, of Greenville, S. C., for Piedmont & N. Ry. Co.

L. E. Jeffries and S. S. Alderman, both of Washington, D. C., and Blythe & Bonham, of Greenville, S. C., for Southern Ry. Co. and others.

Carl H. Davis and F. B. Grier, both of Wilmington, N. C., for Charleston & W. C. Ry. Co. and for Atlantic Coast Line R. Co.

William C. Burger, of Louisville, Ky., for Louisville & N. R. Co.

James J. McLaughlin, of Johnson City, Tenn., for Carolina, C. & O. Ry., for Carolina, C. & O. Ry. of South Carolina, and for Clinchfield Northern Ry. of Kentucky.

GLENN, District Judge.

This bill in equity presents in a new form a controversy which has already been before the courts. Piedmont & N. R. Co. v. U. S. (D. C.) 30 F.(2d) 421. It grows out of the proposed extension of the lines of the Piedmont & Northern Railway. It involves one major question, although the range of investigation and consequent testimony is very wide. This question may be summed up in a few words, viz.: Does the Interstate Commerce Commission have jurisdiction over this particular railroad for the purpose of granting or refusing certificates of public convenience and necessity for proposed extensions of line? The question may be stated another way with reference to the particular statute involved, viz.: Does this particular railroad, Piedmont & Northern, come within the special exemptions which paragraph 22 of section 1 of Interstate Commerce Act as added by section 402 of Transportation Act 1920, 49 USCA § 1 (22), makes from the general powers of the Interstate Commerce Commission over abandonments and extensions of the lines of existing railroads?

Paragraphs 18 to 21 of section 1, title 49, United States Code Annotated, govern the Commission's authority and the procedure thereunder with reference to proposed constructions and proposed abandonments. Paragraph 22 sets out limitations on the authority of the Interstate Commerce Commission. It provides: "The authority of the commission conferred by paragraphs (18) to (21), both inclusive, shall not extend to the construction or abandonment of spur, industrial, team, switching, or side tracks, located or to be located wholly within one State, or of street, suburban, or interurban electric railways, which are not operated as a part or parts of a general steam railroad system of transportation."

As was pointed out in the opinion of the three-judge court which heard this controversy in another proceeding (D. C.) 30 F. (2d) 421, the question is, whether or not this particular Piedmont & Northern Railroad comes within the second group excluded from the control and authority of the Interstate Commerce Commission. That is, does it come within the phrase "interurban electric railways which are not operated as a part or parts of a general steam railroad system of transportation?" As was pointed out in the opinion of the three-judge court, a minor question of statutory construction is presented, which, in our opinion, may be very easily answered. This minor question arises under the terms of paragraph 18, which provides that the certificates of public convenience and necessity are not necessary where the particular extension was "undertaken" before the dead-line of May 28, 1920.

The history of the application for a proper certificate and the action of the commission thereon is fully set forth in the opinion of the three-judge court, which heard the former bill dealing with this controversy. While it is true that due application was made by the Piedmont & Northern Railway Company for such certificate of public convenience and necessity, this application was made with the distinct understanding that the Piedmont & Northern was not waiving its position, that it was not subject to the jurisdiction of the Interstate Commerce Commission with reference to the proposed extension. The Commission refused to grant the certificate and the matter was taken before the three-judge court as referred to above. In a very able and accurate opinion, Judge Soper, sitting as a member of the court, points out the problem of statutory construction and reviews the evidence. The decision of the three-judge court was that the Commission did have jurisdiction over the Piedmont & Northern Railway Company. This decision was founded on the principle that while the Piedmont & Northern might at first view come within the terms of the exclusion paragraph, yet when all of the facts were considered in the light of the spirit of the whole Transportation Act (41 Stat. 456), it was clear that Congress intended to give the Interstate Commerce Commission jurisdiction over a railroad of the nature, character, and history of the Piedmont & Northern. Appeal was taken to the United States Supreme Court from the decision of the three-judge court. The United States Supreme Court, in an opinion by Mr. Justice Brandeis, decided that the three-judge court had no jurisdiction over the bill before them. This opinion is reported in 280 U. S. at page 473, 50 S. Ct. 192, 194, 74 L. Ed. 551. There it is pointed out that the action of the Commission in refusing to give the desired certificate was a negative order, and one which was not subject to review by the three-judge court. The closing paragraphs of the opinion are:

"Since plaintiff's bill was dismissed on the merits when it should have been dismissed for want of jurisdiction, the decree must be reversed with directions to dismiss the bill for want of jurisdiction. Smallwood v. Gallardo, 275 U. S. 56, 62, 48 S. Ct. 23, 72 L. Ed. 152; Shawnee Sewerage & Drainage Co. v. Stearns, 220 U. S. 462, 471, 31 S. Ct. 452, 55 L. Ed. 544; Blacklock v. Small, 127 U. S. 96, 105, 8 S. Ct. 1096, 32 L. Ed. 70. Compare United States v. Anchor Coal Co., 279 U. S. 812, 49 S. Ct. 262, 73 L. Ed. 971; Gnerich v. Rutter, 265 U. S. 388, 393, 44 S. Ct. 532, 68 L. Ed. 1068; Brownlow v. Schwartz, 261 U. S. 216, 218, 43 S. Ct. 263, 67 L. Ed. 620.

"Reversed with direction to dismiss the bill for want of jurisdiction."

In the light of the opinion of the United States Supreme Court, the Piedmont & Northern concluded that it could ascertain its legal position with reference to paragraph 22 of section 1 of the Interstate Commerce Act as added by section 402 of the Transportation Act by actually starting construction. Accordingly, a meeting of the board of directors was held, and the minutes of this meeting are recorded in the following terms:

"Resolutions Adopted at Special Meeting of Board of Directors of Piedmont and Northern Railway Company, Held at Greenville, South Carolina, on March 10, 1930.

"Mr. W. S. Lee, the President of the Company, stated that the meeting had been called for the purpose of discussing with the Directors the opinion the United States Supreme Court delivered February 24, 1930, in the case of Piedmont & Northern Railway Co. v. United States, Interstate Commerce Commission, Southern Railway Company, and others, involving the Company's right to complete its lines, and of advising with the Directors about the steps to be taken in view of the decision and opinion of the court. He laid before the Board a copy of the opinion, and stated that he was advised by counsel of the company that the decision of the court does not determine the Company's right to proceed with the completion of its lines, but leaves this question for future determination in the event the right to complete the lines should be further denied and contested. He called attention to the statement in the opinion that the right of the Company to proceed with the proposed construction is not affected or controlled by the ruling of the Interstate Commerce Commission in its report of April 3, 1928, and read to the Board the following language from the Opinion: `Neither the assumption of jurisdiction by the Commission nor its denial of the application can operate as res judicata of the railway's claim of immunity. If, as is contended, the Commission was without jurisdiction, the railway is as free to proceed with the construction as if the application had not been made and the Commission had not acted. Nothing done by the Commission can prejudice the railway's claim to immunity in any other proceeding.'

"The matter was thereupon thoroughly discussed in detail by all of the Directors present.

"Upon motion of Capt. E. A. Smyth, duly seconded by Mr. A. F. McKissick, the following resolution was unanimously adopted: `Be it resolved, That the completion of the lines of the company as the same were originally projected and planned to extend through the Piedmont section of North and South Carolina from Greenwood and Anderson on the South, to Durham and Winston-Salem on the North, not be abandoned, and said original plan and project is hereby reaffirmed and approved.'

"Upon motion of Mr. J. P. Gossett, duly seconded by Mr. J. H. Separk, the following resolution was unanimously adopted: `Be it resolved, That the officers of the company be, and they hereby are, directed and instructed to proceed toward the completion of the lines of the company as originally planned and projected, by forthwith commencing construction upon and prosecuting to completion, with due diligence and dispatch, the line from Spartanburg, South Carolina, to Gastonia, North Carolina, which will connect and join together the existing lines of the company.'

"I, J. C. McGowan, Secretary of Piedmont and Northern Railway Company, hereby certify that the foregoing is a true and correct transcript from the minutes of special meeting of Board of Directors of Piedmont and Northern Railway Company, held at Greenville, South Carolina, on March 10, 1930, and that said...