New York Central Railroad Company v. United States

• Decision Date: 15 January 1962
• Citation: 201 F. Supp. 958
• Parties: The NEW YORK CENTRAL RAILROAD COMPANY, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Southern District of New York

201 F. Supp. 958

The NEW YORK CENTRAL RAILROAD COMPANY, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.

United States District Court S. D. New York.

January 15, 1962.

Jerome H. Shapiro, Kenneth H. Lundmark, New York City, for plaintiff.

Lee Loevinger, Asst. Atty. Gen., Joel E. Hoffman, Dept. of Justice, Washington, D. C., Robert M. Morgenthau, U. S. Atty., S. D. N. Y., New York City, for the United States, defendant.

Robert W. Ginnane, Gen. Counsel, Washington, D. C., Robert S. Burk, Interstate Commerce Commission, Washington, D. C., for Interstate Commerce Commission, defendant.

Before MOORE, Circuit Judge, and DAWSON and CASHIN, District Judges.

MOORE, Circuit Judge.

The New York Central Railroad (the Railroad) brings this action to set aside Service Order No. 938 of the Interstate Commerce Commission (the Commission) which annulled Embargo No. 164 issued by the Railroad. The Railroad through this embargo had announced to the public that it would no longer accept interstate less-than-carload (LCL) shipments of less than trap or ferry car quantity except those originating in one of twelve listed cities. The order of the Commission annulling the embargo stated that in the opinion of the Commission the embargo was not valid and that there was presently a need for the service. Service Order No. 938 was issued by the Commission's Safety and Service Board No. 1 and was appealed to Division Three of the Commission which affirmed and adopted the order of the Board.

Prior to the promulgation of Embargo No. 164, the Railroad had been attempting to obtain from the Commission modifications of certain restrictions which were alleged to hamper the operation of the Railroad's LCL service. In June, 1961, the Railroad applied to the Commission for permission to conduct operations without regard to these restrictions. After this relief was denied, the Railroad decided to suspend its LCL service. The Railroad claims that it was forced to promulgate Embargo No. 164 because of heavy losses incurred in operating the LCL service.

The Railroad contends that Service Order No. 938 is invalid because the Commission does not have statutory authority to annul embargoes. However, the Interstate Commerce Act imposes on carriers a duty to furnish reasonable transportation upon request therefor, Section 1(4), 49 U.S.C.A. § 1(4), and makes all unreasonable practices with respect to such transportation unlawful, Section 1(6), 49 U.S.C.A. § 1(6). Section 13(2) of the Act confers on the Commission the power:

"at any time to institute an inquiry on its own motion in any case and as to any matter or thing * * * concerning which any question may arise under any of the provisions of this chapter, or relating to the enforcement * * * of this chapter. And the said Commission shall have * * * the power to make and enforce any order or orders in the case, or relating to the matter or thing concerning which the inquiry is had excepting orders for the payment of money." (49 U.S.C.A. § 13(2)).

Thus, if the imposition of the embargo on the shipments is an unreasonable practice in violation of the Railroad's duty to provide transportation, the Commission has the power to issue an order annulling the embargo. Moreover, the Commission has consistently construed the Interstate Commerce Act as giving it the authority to determine the validity of embargoes, e. g., Rogers & Co. v. Philadelphia & Reading Ry. Co., 12 I.C.C. 308 (1907); New Orleans Traffic & Transp. Bureau v. Mississippi Valley Barge Line Co., 280 I.C.C. 105 (1951). Such a consistent and unchallenged administrative practice should not be overturned except for cogent reasons, e. g., Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796; Federal Housing Administration v. The Darlington, Inc., 358 U.S. 84, 79 S.Ct. 141, 3 L.Ed.2d 132.

The Railroad argues, however, that carriers have the right to lay embargoes and that the issuance of Embargo No. 164 was a reasonable exercise of its managerial discretion. The right of carriers to limit their duty to provide transportation by the issuance of embargoes in the time of emergency is not disputed. The question in this case is whether the fact that a railroad is losing money on the operation of a particular service justifies the issuance of an embargo suspending that service. In almost all cases in which the laying of an embargo has been...