New York Cent. R. Co. v. United States

• Decision Date: 30 July 1951
• Docket Number: Civ. A. No. 51-65.
• Citation: 99 F. Supp. 394
• Parties: NEW YORK CENT. R. CO. et al. v. UNITED STATES et al.
• Court: U.S. District Court — District of Massachusetts

99 F. Supp. 394

NEW YORK CENT. R. CO. et al. v. UNITED STATES et al.

Civ. A. No. 51-65.

United States District Court D. Massachusetts.

July 30, 1951.

COPYRIGHT MATERIAL OMITTED

R. J. Fletcher, Washington, D. C., and Kenneth F. Stone, New York City (Neal J. Holland, Boston, Mass., Francis L. Brown, B. J. Viviano, New York City, and John F. Reilly, Washington, D. C., on the brief), for plaintiffs.

Walter D. Matson, Attorney, Office of the Solicitor, United States Department of Agriculture, Washington, D. C., and William D. McFarlane, Sp. Asst. to Atty. Gen. (H. G. Morison, Asst. Atty. Gen., James E. Kilday and John F. Baecher, Sp. Assts. to Atty. Gen., George F. Garrity, U. S. Atty., Boston, Mass., and Charles W. Bucy, Associate Solicitor, United States Department of Agriculture, Washington, D. C., on the brief), for the Secretary of Agriculture, intervening plaintiff, and United States of America, defendant.

B. A. Brickley, Boston, Mass. (Timothy J. Murphy, Asst. Atty. Gen., Commonwealth of Massachusetts, William L. Baxter, Corp. Counsel, and Ashelen P. Senopoulos, Asst. Corp. Counsel, City of Boston, Oliver R. Waite, and Brickley, Sears & Cole, all of Boston, Mass., on the brief), for Port of Boston Authority, Maritime Association of Boston Chamber of Commerce, Inc., Boston Grain & Flour Exchange, Foreign Commerce Club of Boston, Inc., and City of Boston, intervening plaintiffs.

Wilbur La Roe, Jr., Washington, D. C. (Henry E. Foley, Foley, Hoag & Eliot, all of Boston, Mass., Leander I. Shelley, General Counsel, Port of New York Authority, New York City, Frederick E. Brown, Arthur L. Winn, Jr., and Samuel H. Moerman, all of Washington, D. C., on the brief), for Port of New York Authority, intervening plaintiff.

Edward M. Reidy, Associate Chief Counsel, Washington, D. C. (Daniel W. Knowlton, Chief Counsel, Washington, D. C., on the brief), for Interstate Commerce Commission, defendant.

Harry C. Ames, Washington, D. C. (Sumner Babcock, Boston, Mass., and James B. Doak, Philadelphia, Pa., on the brief), for Chamber of Commerce of Philadelphia and Commercial Exchange of Philadelphia, intervening defendants.

Paul V. Miller, Philadelphia, Pa. (Anthony P. Donadio, Lockwood W. Fogg, Jr., Philadelphia, Pa., W. Harvey Small, Baltimore, Md., and Choate, Hall & Stewart, Boston, Mass., on the brief), for Baltimore & O. R. Co., Reading Co., Pennsylvania R. Co., and Western Maryland Ry. Co., intervening defendants.

Karl J. Grimm, Baltimore, Md., for Baltimore Ass'n of Commerce and Baltimore Chamber of Commerce, intervening defendants.

Alfred G. Malagodi, Asst. U. S. Atty., Boston, Mass., for U. S.

Foley, Hoag & Eliot and Herbert L. Berman, all of Boston, Mass., for Port of New York Authority; also Wilbur La Roe, Jr., Washington, D.C., for same Intervenor.

Thomas N. Biddison, Baltimore, Md., City Sol., and Daniel B. Leonard, Asst. City Sol., for Maryland City Council of Baltimore.

Bailey Aldrich, Choate, Hall & Stewart, all of Boston, Mass., for Pennsylvania R. Co., Baltimore & O. R. Co., Reading Co., Western Maryland Ry. Co., intervenors.

Before MAGRUDER, Circuit Judge, and SWEENEY and FORD, District Judges.

MAGRUDER, Circuit Judge.

This action was brought by the New York Central, Boston and Maine, Delaware, Lackawanna and Western, and Lehigh Valley railroads, pursuant to 28 U.S.C. §§ 1336, 2321-2325, to set aside and enjoin enforcement of an order of the Interstate Commerce Commission cancelling certain new rate schedules proposed by the plaintiff railroads. Investigation and Suspension Docket No. 5641, Export Grain from Buffalo to New York, 278 I.C.C. 31(1950). The United States in its answer admitted all the allegations of the complaint and prayed that the relief requested be granted, and the Secretary of Agriculture and various commercial and port interests in Boston and New York intervened on behalf of plaintiffs. The action has been defended by the Commission, intervening commercial and port interests in Philadelphia and Baltimore, and the Baltimore and Ohio, Pennsylvania, Reading, and Western Maryland railroads.

In the schedules filed to become effective April 11, 1949, plaintiffs proposed to reduce by 0.5 cent per hundred pounds the export rates on ex-lake grain (grain having had a prior movement on the Great Lakes) from Buffalo and Oswego, N. Y., to Albany, N. Y., Boston, Mass., New York, N. Y., and Portland, Maine, and from Ogdensburg, N. Y., to Boston; to increase from ten days to twenty days the period of free storage time on grain held for export at New York; and to increase to 0.07 cent per bushel per day the storage charges on grain held for export at Portland and Boston. The effect of these proposed changes would have been to equalize rail rates, free time storage allowance, and storage charges on ex-lake grain from Buffalo for export through Portland, Boston, New York, Philadelphia and Baltimore. On protest of the port interests in Baltimore and Philadelphia and the railroads serving those cities, the Commission suspended the proposed schedules pending an investigation into their lawfulness. After hearing and review by the Commission, it issued its order cancelling the schedules, upon an ultimate finding "that the proposed schedules have not been shown to be just and reasonable except the proposed increase in free storage time at New York, which we find just and reasonable." (278 I.C.C. at 39.) No objection has been made here to this increase in free storage time. As to the proposal to increase storage charges at Boston and Portland, it was indicated at the hearing before the Commission that this was a concession advanced only for the purpose of bringing about complete equalization among the ports, and that the plaintiffs did not desire the increases if the proposed rail-rate reductions were not permitted. Since the lower storage charges at Boston and Portland are considered a competitive advantage to those cities, the Baltimore and Philadelphia interests would of course have no objection to the increase therein. Consequently, the only question before this court is the correctness of the Commission's holding on the proposed rate reductions to Albany, Boston, New York and Portland.

The existing differential on ex-lake grain of 0.5 cent per hundred pounds in favor of Baltimore and Philadelphia under New York and Boston was established by the railroads in 1905, upon the recommendation of the Commission. In the Matter of Differential Freight Rates to and from North Atlantic Ports, 11 I.C.C. 13 (1905).¹ Prior to that time there had been intense carrier competition both for the ex-lake grain and for grain which was shipped entirely by rail (hence, "all-rail grain") from central and western territories, and the many rate agreements entered into by the carriers with regard to this traffic had invariably proved ineffective. In the 1905 proceeding the Commission, at the request of the competing carriers, sought to arbitrate the dispute and to arrive at rate relationships which would be fair to all the ports. As the Commission stated (11 I.C. C. at 66): "The rates are to be so adjusted that there can be fair competition for this business via all the ports, so that no one shall possess a distinct advantage over the other."

In the 1905 proceeding, the Commission concluded that on the all-rail grain, Philadelphia should be given a 1.0-cent differential, and Baltimore a 1.5-cent differential, under New York and Boston. These differentials were apparently intended partly to give effect to the shorter rail distances to Baltimore and Philadelphia, and partly to offset the lower ocean rates which prevailed from Boston and New York. The all-rail differentials are still in effect, and are not under attack here. As the Commission pointed out in the instant case (278 I.C.C. at 33 note 4), the ex-lake and all-rail differentials, though originating in the same proceeding, no longer bear any relationship to each other. They are not competing routes, since the all-rail grain originates principally in the central United States producing area, while the ex-lake grain is largely from Canada or from northwestern United States. (278 I.C.C. at 33.)

On the ex-lake grain, the Commission stated in the 1905 report that Baltimore and Philadelphia had no substantial rail-distance advantage. See also Maritime Association of Boston Chamber of Commerce v. Ann Arbor Railroad Co., 95 I.C.C. 539, 571 (1925). The Commission's recommendation in 1905 of a 0.5-cent differential in their favor seems to have been based wholly on the ocean-rate advantage of Boston and New York. The Commission pointed out that the ocean rates fluctuated greatly and that it was almost impossible to say just how much those from Baltimore and Philadelphia exceeded those from New York and Boston, but it thought there was some difference, at least 0.5 cent per hundred pounds. (11 I.C.C. at 23-25, 75.) In the light of the objective sought in the proceeding, quoted above, the Commission must have concluded that, because of the ocean-rate differences, Baltimore and Philadelphia needed a rail-rate differential fairly to compete.

While the differential on ex-lake grain has been in effect since 1905, it has by no means been acceptable to all parties at all times. Indeed, the commercial and port interests at nearly every port involved have attacked the differential on one or more occasions. Chamber of Commerce of State of New York v. New York Central & Hudson River Railroad Co., 24 I.C.C. 55 (1912); Maritime Association of Boston Chamber of Commerce v. Ann Arbor Railroad Co., 95 I.C.C. 539 (1925), rehearing 126 I.C.C. 199 (1927); Baltimore Chamber of Commerce v. Ann Arbor Railroad Co., 159 I.C.C. 691 (1929); Port of New York Authority v. Baltimore & Ohio Railroad Co., 248 I.C.C. 165 (1941). In each of these proceedings the Commission held the differential to be not unlawful and refused to change it. It should be noted, however, that in all of these attacks the...