Missouri-Kansas-Texas R. Co. v. Northern Oklahoma Rys.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation25 F.2d 689
Docket NumberNo. 7913.,7913.
Decision Date27 March 1928

Maurice D. Green, of Muskogee, Okl. (Joseph M. Bryson and Charles S. Burg, both of St. Louis, Mo., and John E. M. Taylor, of Muskogee, Okl., on the brief), for appellant.

Guy Patten, of Vinita, Okl. (W. J. Holloway and J. Berry King, both of Oklahoma City, Okl., on the brief), for appellees.

Before STONE and VAN VALKENBURGH, Circuit Judges, and KENNEDY, District Judge.

STONE, Circuit Judge.

Appellant is an interstate railroad running through Vinita, Oklahoma. The corporate appellee is an Oklahoma corporation empowered to build and operate a standard gauge railroad "to transport freight, passengers, mail and express over said line of railway and to receive compensation therefor." The individual appellees are persons undertaking to construct the above line of railroad. The contemplated road is to begin near the right of way of the St. Louis-San Francisco Railway Company at a small station, Nemo, about three miles from Vinita, and to extend 10 or 11 miles to some coal fields. This action is to enjoin such construction on the ground that no certificate of necessity or convenience (under section 402, par. 18, Transportation Act of 1920 49 USCA § 1, par. 18; Comp. St. § 8563, par. 18) has been obtained from the Interstate Commerce Commission. Upon motion, after hearing the evidence for the plaintiff, the trial court dismissed the bill "without prejudice" upon the grounds "that the plaintiff's evidence is insufficient to prove that the defendant railroad when constructed will engage in interstate commerce, or that the railroad proposed to be constructed by the defendants was such a road as to bring it within the provisions of the Transportation Act of February 28, 1920 49 USCA § 71 et seq.; Comp. St. § 10071¼ et seq.. The court is of the opinion under the evidence introduced that the contemplated railroad is one to be used only in intrastate commerce." From that decree, plaintiff brings this appeal.

The appeal presents the sole question of whether section 402, par. 18, of the Transportation Act of 1920 (41 Stat. 456, 477), is applicable to the facts shown by this evidence. To answer this question, it is necessary, first, somewhat to define the scope of that section and, second, to examine the facts in the light of such definition.

This section is part of an extended and comprehensive act which "introduced into the federal legislation a new railroad policy." New England Divisions Case, 261 U. S. 184, 189, 43 S. Ct. 270, 273 (67 L. Ed. 605); R. R. Comm. v. C., B. & Q. R. R. Co., 257 U. S. 563, 585, 42 S. Ct. 232, 66 L. Ed. 371, 22 A. L. R. 1086. The purpose of this policy is repeatedly expressed in the act (sections 402, 407, 422 49 USCA §§ 1, 5, 15a; Comp. St. §§ 8563, 8567, 8583a) and may be stated in the language used in section 402 as being to "best promote the service in the interest of the public and the commerce of the people." An important feature of the means to accomplish such purpose was "affirmatively to build up a system of railways prepared to handle promptly all the interstate traffic of the country" (Dayton-Goose Creek Ry. v. United States, 263 U. S. 456, 478, 44 S. Ct. 169, 172 68 L. Ed. 388, 33 A. L. R. 472) so as "to insure * * * adequate transportation service" (New England Divisions Case, 261 U. S. 184, 189, 43 S. Ct. 270, 273 67 L. Ed. 605).

Probably the most important novel features of the act are the provisions designed to build up such an adequate system of railways. Those provisions have to do with railway capitalization, loans, consolidations, support of weak roads, common use of terminals, distribution of equipment and other matters. Belonging to the same class is the provision here involved. It deals "primarily with rights sought to be exercised by the carrier" (Cleveland, C., C. & St. L. Ry. Co. v. United States U. S. Sup. Ill. 48 S. Ct. 189, decided January 3, 1928) concerning its trackage. It applies to all mileage "used in interstate commerce" (Colorado v. United States, 271 U. S. 153, 164, 46 S. Ct. 452, 454 70 L. Ed. 878) except "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" (section 402, par. 22, 41 Stat. 478 49 USCA § 1, par. 22; Comp. St. § 8563, par. 22; also see Colorado v. United States, 271 U. S. 153, 164, 46 S. Ct. 452, 70 L. Ed. 878). With the above exceptions, it comprehensively covers increase or decrease of mileage used in interstate commerce by providing for abandonment, extension, acquisition or new construction of such mileage. It is as follows (41 Stat. 477):

"After ninety days after this paragraph takes effect no carrier by railroad subject to this act shall undertake the extension of its line of railroad, or the construction of a new line of railroad, or shall acquire or operate any line of railroad, or extension thereof, or shall engage in transportation under this act over or by means of such additional or extended line of railroad, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or will require the construction, or operation, or construction and operation, of such additional or extended line of railroad, and no carrier by railroad subject to this act shall abandon all or any portion of a line of railroad, or the operation thereof, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity permit of such abandonment."

Because interstate carriers are almost always also intrastate carriers it is natural that questions involving construction of this paragraph should arise in connection with the abandonment, extension or new construction of trackage located entirely within one state. Cases involving abandonment (Texas v. Eastern Texas R. R. Co., 258 U. S. 204, 42 S. Ct. 281, 66 L. Ed. 566; Colorado v. United States, 271 U. S. 153, 46 S. Ct. 452, 70 L. Ed. 878) and extensions (Texas & Pac. Ry. v. Gulf, etc., Ry., 270 U. S. 266, 46 S. Ct. 263, 70 L. Ed. 578; R. R. Comm. v. Atchison, T. & S. F. R. Co., 264 U. S. 331, 44 S. Ct. 376, 68 L. Ed. 713) of trackage located wholly in one state have been before the Supreme Court. Also a case (El Dorado & W. Ry. Co. v. C., R. I. & P. Ry. Co. C. C. A. 5 F.2d 777) in this court involving extension. These cases settle that the element of single state trackage is not determinative. The two cases involving abandonment define the limits of the paragraph in its influence upon intrastate operation. The Colorado Case holds that all intrastate operation may be abandoned where it constitutes a burden upon interstate commerce which would, in the judgment of the Commission, outweigh the necessity and convenience of its continued maintenance. In that case, the abandoned line was part of but not physically connected with the railroad system seeking the relief. The Texas & Eastern Case was of a short line (30 miles) separately owned and operated. In that case, it was held the Commission might order discontinuance of interstate business but not of intrastate business because the latter could be continued without affecting interstate commerce. We think the effect of these two cases is that the character of business (interstate) determines the right to control under this paragraph. We see no reason why the same rule should not apply as to new construction. New construction by an existing carrier might prejudicially affect the public by financially hampering that carrier in performing its function in furnishing an adequate interstate service to the public; by invading the territory already adequately served by another interstate carrier and thus injuring one or both of them; by causing an increase in the group rates or by other ways. Such new construction by a separate new corporation might have all of the above results. The Transportation Act is intended to cover new construction by a corporation not existing at the time the act was passed (section 422, being section 15a (18) 49 USCA § 15a, par. 18; Comp. St. § 8583a, par. 18).

With the above construction of the scope of this paragraph as to control over new construction, we pass to the matter of whether the road here contemplated will be an interstate carrier and, therefore, within the scope of the paragraph so that it must have a certificate from the Commission before it can be built. Appellees, properly, expressly disavow sole reliance either upon the fact that the entire mileage will be in Oklahoma or upon any form of billing the freight thereover. They plant themselves upon the proposition that they do not intend to and will not do any but an intrastate business over this single state trackage. They say:

"That the proposed road will start and end in Craig county, Oklahoma, and will be built and paid for, except for a local bonus, out of the private means of appellees. That no other railroad has or will have any interest in it. That it will be operated exclusively by themselves. That they do not have and will not have any arrangement with any other railroad for the operation of the proposed road. That they do not have and will not have any arrangement with any other road for interchange of traffic. That their purpose is to haul coal and other commodities to town, where the owner of such commodity so hauled will have his commodity at market where he can do with it as he pleases. That the proposed road will charge for its own service only, and will have no interest whatever in what is done with the commodity when it has placed it on its storage tracks. That it will not participate in any division of rates beyond its own road, should the...

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2 cases
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