Minneapolis St Louis Railway Company v. United States State of South Dakota v. United States State of Minnesota v. United States

• Decision Date: 14 December 1959
• Docket Number: Nos. 12,27,28,s. 12
• Citation: 80 S.Ct. 229,361 U.S. 173,4 L.Ed.2d 223
• Parties: MINNEAPOLIS & ST. LOUIS RAILWAY COMPANY, Appellant, v. UNITED STATES of America et al. STATE OF SOUTH DAKOTA et al., Appellants, v. UNITED STATES of America et al. STATE OF MINNESOTA et al., Appellants, v. UNITED STATES of America et al
• Court: U.S. Supreme Court

361 U.S. 173

80 S.Ct. 229

4 L.Ed.2d 223

MINNEAPOLIS & ST. LOUIS RAILWAY COMPANY, Appellant,

v UNITED STATES of America et al.

STATE OF SOUTH DAKOTA et al., Appellants,

v. UNITED STATES of America et al.

STATE OF MINNESOTA et al., Appellants,

v. UNITED STATES of America et al.

Nos. 12, 27, 28.

Argued Nov. 16, 17, 1959.

Decided Dec. 14, 1959.

Rehearing Denied Jan. 18, 1960.

Argued April 18, 1960.

See 361 U.S. 945, 80 S.Ct. 405.

[Syllabus from pages 173-175 intentionally omitted] Messrs. Max Swiren, Chicago, Ill., and Harold J. Soderberg, for appellants.

Messrs. Robert W. Ginnane, Washington, D.C., and Starr Thomas, Chicago, Ill., for appellees.

Mr. Justice WHITTAKER delivered the opinion of the Court.

These appeals present questions arising out of rival applications by several rail carriers to the Interstate Commerce Commission under § 5(2) of the Interstate Commerce Act¹ for authority to acquire control of Toledo, Peoria & Western Railroad Company.

'Western' is an independent, shortline 'bridge carrier'² of through eastwest traffic by-passing the congested Chicago gateway. Its line is about 234 miles long, extending from its connection with the Pennsylvania Railroad Company ('Pennsylvania') at Effner, on the Illinois-Indiana state line, westward, through Peoria, to its connection with the main line of the Atchison, Topeka & Santa Fe Railway Company ('Santa Fe') at Lomax, Illinois, and thence southwesterly a short distance to Keokuk, Iowa. Its headquarters, shops and yards are located in East Peoria where it has 24 executives and where, and elsewhere along its line, it has about 225 other employees. It has connections for the interchange of traffic with 16 railroads, the principal ones being with the Pennsylvania at Effner, with the Santa Fe at Lomax, and with the New York, Chicago & St. Louis Railroad Company ('Nickel Plate'), the Illinois Terminal Railroad Company, the Chicago, Burlington & Quincy Railroad Company ('Burlington') and the Minneapolis & St. Louis Railway Company ('Minneapolis') at Peoria. Its interchange connections with the other 10 railroads are at 17 other towns along its line.

Western has outstanding 90,000 shares of common capital stock, 82% of which is owned by the testamentary trustees of the estate of George P. McNear—Wilmington Trust Company and Guy Gladson—and the remaining 18% is owned by members of the McNeaar family, a bank and the president of Western. In 1954, the trustees determined to sell their Western stock, and rival efforts were commenced by Minneapolis, on the one hand, and by the Santa Fe and Pennsylvania, on the other hand, to purchase it. (Four of Wilmington Trust Company's directors were also directors of Pennsylvania.) Those negotiations culminated in a contract between the trustees and the Santa Fe, dated May 26, 1955, providing for the sale by the former and purchase by the latter of the stock at a price of $135 per share, subject to the Commission's approval.³ Soon afterward, like agreements were made by the Santa Fe with the holders of the remaining 18% of the Western stock.

On June 28, 1955, the Santa Fe entered into a contract to sell to the Pennsylvania Company, a wholly owned subsidiary of Pennsylvania, 50 % of fthe outstanding capital of Western at $135 per share,⁴ subject to approval of the Commission.

On July 8, 1955, the Santa Fe and Pennsylvania Company and its parent, Pennsylvania, applied to the Commission under § 5(2) of the Act⁵ for approval of those stock purchase agreements and the consequent joint control of Western. The Minneapolis intervened and objected to the application, as did also the States of Minnesota and South Dakota and their respective public service regulatory commissions.

Thereafter, on October 13, 1955, the Minneapolis applied to the Commission, under the same section of the Act, for authority to acquire sole control of Western, expressing its willingness to enter into contracts with Western's stockholders to purchase their stock at the same price and on the same terms as set forth in their existing contracts with the Santa Fe. The Santa Fe, the Pennsylvania Company and Pennsylvania intervened in the latter proceeding and objected to the Minneapolis application.

On motion of Minneapolis, the Commission consolidated the two proceedings. Thereafter, seven other railroads having interchange connections with Western's line intervened. Two of them sought authority, at all events,⁶ and two others of them sought authority, under stated conditions,⁷ to participate, under s 5(2)(d) of the Act in the acquisition of the Western stock on an equal basis with the successful applicant. The State of Illinois, 18 cities or towns and seven chambers of commerce located on or along Western's line, two labor organizations representing Western's employees, and a large number of shippers over Western's line, intervened in support of the Santa Fe-Pennsylvania application and in opposition to the Minneapolis application.

After an extended consolidated hearing before him, the Commission's examiner issued a proposed report recommending approval of the Santa Fe-Pennsylvania application and dismissal of the Minneapolis application. Thereafter, upon exceptions, and briefs and arguments in their support, Division 4 of the Commission issued its report. It was confronted, as it said, with four alternative proposals, (1) for authorization of joint control of Western by the Santa Fe and Pennsylvania, (2) for authorization of sole control by the Minneapolis, (3) for authorization to two other railroads, at all events, and of two more railroads, under stated conditions, to participate in the acquisition of the Western stock on an equal basis with the successful applicant,⁸ and (4) denial of both applications.

The Commission observed that '(t)hese proceedings represent a new and more complicated phase in the administration of § 5, since (they involve) 2 applications for authority to control the same property, and petitions by 4 other carriers for inclusion in the transaction under varying circumstances.' It recognized that, under § 5(2) of the Act and the National Transportation Policy,⁹ it was required to 'weigh whether each application is consistent with the public interest, with or without inclusion of other railroads, considering not only other intervening petitioners seeking such inclusion but also the other applicant and nonparticipating railroads as well.' It thought that the burden of proof was 'most heavy for an applicant in a proceeding like this, because it must not only overbalance the claims of those seeking to share in the control but also of those seeking to exclude it from the transaction.' It conceived it to be its duty, under the Act and the National Transportation Policy, to 'arrive at a standard of public interest and determine which of the various plans of control most nearly approximates it.'

The Commission found that the Santa Fe-Pennsylvania plan contemplates that Western 'will continue to be operated as a separate and independent carrier with responsible management located along its lines'; that it 'will continue to maintain its own solicitation forces and will be entirely free to solicit traffic in such manner as best to serve the interests of the Western,' and that all 'existing routes and channels of trade via the Western will be maintained and kept open without discrimination between connecting lines of railroad.' It found, on the other hand, that the Minneapolis plan 'unequivocally contemplates the disappearance of the Western as an independent and neutral connection for the other 15 carriers with which it presently works'; that '(f)or all practical purposes the Western would be integrated, consolidated, and merged into the Minneapolis for ownership, management and operation'; that features of the Minneapolis plan 'would be extremely harmful to other carriers'; that Western's headquarters office at Peoria would be eliminated, leaving only a trainmaster and a roadmaster at that point, and that the employment of most of Western's 24 executives and 225 other employees would be severed.

The Commission further found that '(o)nly the Minneapolis and its supporting interveners, the States of Minnesota and South Dakota, advocate the disappearance of the Western as a separate and independent operating carrier,' and that all other parties to, and intervenors in, the proceedings 'insist that the separate and independent operation of the Western under its present local management is a public necessity.' It then found that the '(p)ublic interest demands that the present policies of the Western in all respects be continued.' It thereupon made the ultimate finding, required by § 5(2)(b) of the Act, that the acquisition and plan of operation by the Santa Fe and Pennsylvania, subject to stated conditions, was 'within the scope of § 5(2) of the Interstate Commerce Act, as amended; that the terms and conditions proposed (by them) are just and reasonable, and that the transaction will be consistent with the public interest.' The Commission then entered its order approving the Sante Fe-Pennsylvania application, dismissing the Minneapolis application, and denying the petitions of the several intervening railroads which sought to participate in the acquisition of the Western stock. 295 I.C.C. 523.

Thereafter, Minneapolis petitioned the whole Commission for a reconsideration, and alternatively requested that, if the approval of the Santa Fe-Pennsylvania application be permitted to stand, it be authorized to participate equally with those railroads in the purchase of Western's stock on the same terms. That petition was denied.

Minneapolis then timely filed a complaint in the District Court for Minnesota against the United States and the Interstate Commerce Commission to vacate the Commission's order. The States of Minnesota and South Dakota and their respective regulatory commissions being interested in strengthening the Minneapolis, which...