Pennsylvania R. Co. v. United States

• Decision Date: 02 March 1944
• Docket Number: Civil Action No. 2091.
• Citation: 54 F. Supp. 381
• Parties: PENNSYLVANIA R. CO. et al. v. UNITED STATES (INTERSTATE COMMERCE COMMISSION et al., Interveners).
• Court: U.S. District Court — District of Maryland

54 F. Supp. 381

PENNSYLVANIA R. CO. et al. v. UNITED STATES (INTERSTATE COMMERCE COMMISSION et al., Interveners).

Civil Action No. 2091.

District Court, D. Maryland.

March 2, 1944.

William Pepper Constable and Francis R. Cross, both of Baltimore, Md., and Joseph F. Eshelman, of Philadelphia, Pa., for petitioners.

Edward M. Reidy, Asst. Chief Counsel, Interstate Commerce Commission, of Washington, D. C., Robert L. Pierce, Sp. Asst. to Atty. Gen., C. R. Hillyer, of Chicago, Ill., and Charles F. Wagaman and John Wagaman, both of Hagerstown, Md., for interveners-defendants.

Before SOPER, Circuit Judge, and COLEMAN and CHESNUT, District Judges.

COLEMAN, District Judge.

This suit is instituted under Section 17 (9) of the Interstate Commerce Act, 49 U.S.C.A. § 17(9), and the provisions of the Act of Congress of October 22, 1913, c. 32, 38 Stat. 219, 28 U.S.C.A. §§ 41 (28), 43-48, to enjoin the operation and effect of an order of the Interstate Commerce Commission.

This order requires the establishment of certain additional through routes and joint rates and charges applicable thereto, on shipments of grain and grain products, originating at points in States included in what is commonly known as Central Territory (defined generally as that territory lying north of the Ohio River, south of the Great Lakes, east of Chicago, St. Louis and Cairo, Illinois, and west of Buffalo and Pittsburgh), and carried to Hagerstown, Maryland. There, the grain and grain products are allowed to be held over under what is known as a transit privilege, for the purpose of being manufactured into live stock and poultry feed, and then the manufactured product is reshipped to destinations on the lines of the Pennsylvania Railroad east of York, Pennsylvania, and Fulton Junction (Baltimore), and between New York City and Cape Charles, Virginia, inclusive, and more particularly to destination points in Delaware, Maryland and Virginia between the Chesapeake and Delaware Bays, some times called the Del-Mar-Va Peninsula. The Pennsylvania Railroad is the only carrier serving these latter points. The so-called transit privilege allowed at Hagerstown rests, like other transit privileges such as creosoting lumber or fabricating iron and steel, upon the fiction that the incoming and the outgoing transportation services, which are in fact distinct, constitute a continuous shipment of the identical article from point of origin to final destination.

Thirteen carriers affected by this order are the petitioners in the present suit. The defendant is the United States, and interveners-defendants are the Interstate Commerce Commission and D. A. Stickell & Sons, Inc., a Maryland corporation engaged in the milling and mixing of grain, grain products and grain by-products, and in the manufacture of mixed live stock and poultry feed at Hagerstown, Maryland, this company being the original petitioner before the Interstate Commerce Commission on whose complaint the Commission's order here under review was passed.

Independently of the Commission's order, there are, and have been for some time, joint rates in effect on grain and grain products with the so-called transit or mixing privilege at Hagerstown, Maryland, and other points, applicable from points of origin in Central Territory, to all points in so-called Trunk Line Territory, which is generally defined as that territory east of Central Territory and west of New England, New York City and Norfolk, Virginia. However, these existing joint rates are restricted by the carriers so that they apply only over certain through routes. For example, they do not apply on traffic originating in Central Territory or west thereof, if destined to points on the Pennsylvania Railroad, unless that carrier receives the traffic at or west of Pittsburgh or Buffalo. A similar situation exists with respect to traffic moving over the Baltimore & Ohio Railroad. As a result, these existing through routes of the latter road and of the Pennsylvania, through Hagerstown, embrace out-of-line hauls of 48 and 149 miles, respectively. The Pennsylvania's out-of-line haul is from its Enola Yard, a point on the Susquehanna River opposite Harrisburg, to Hagerstown and return, for which out-of-line or back-haul operation, the Pennsylvania charges, in addition to the joint through rate with the transit privilege at Hagerstown (which is 26½¢ per 100 pounds from Chicago to Salisbury, Maryland), 4.5¢ per 100 pounds, or 90¢ a ton. It will thus be seen that this additional charge is approximately 17% of the through rate.

The Stickell Company does not contest the reasonableness per se of this back-haul charge or of the joint rates, but claims that this extra charge almost completely destroys its margin of profit on the sale of its products. However, Stickell's basic claim is for better transportation service, on the ground that the existing route via Hagerstown over the Pennsylvania as just described, being indirect with an out-of-line back-haul, is inadequate, inefficient and uneconomical, and results in its shipments being unduly delayed in reaching customer consignees, thus placing it at a disadvantage as respects its competitors not located in Hagerstown but who buy their grain and grain products from the same general territory, and ship to the same markets.

Taking Chicago as a representative point of origin and Salisbury, Maryland, as a representative destination point, one of the new routes to and through Hagerstown, Maryland, ordered by the Commission and designated as route 1, embraces the use of the New York Central to Youngstown, Ohio; the Pittsburgh & Lake Erie from there to Connellsville, Pennsylvania; thence by the Western Maryland to York, Pennsylvania where the Pennsylvania finally receives the traffic and hauls it to destination. Similarly, new route 2 ordered by the Commission, embraces the use of the Wabash to Toledo, Ohio, the Wheeling & Lake Erie to Pittsburgh Junction, Ohio, the Pittsburgh & West Virginia to Connellsville, Pennsylvania, and thereafter the haul being the same as by new route 1 ordered by the Commission. However, such routes short-haul the Pennsylvania, that is to say, require it to embrace in such routes substantially less than the entire length of its lines between the termini of such routes. For example, again using Chicago as a representative origin point and Salisbury, Maryland, as a representative destination point, the distance over the direct route of the Pennsylvania alone, is 902 miles, whereas if the Pennsylvania is required to put into effect the new routes ordered by the Commission whereby it would participate in the traffic only from Fulton Junction, Baltimore, or York, Pennsylvania, its haul would be only 155 miles and 114 miles, respectively, or a reduction of 747 and 788 miles, respectively. This, the Pennsylvania contends, the Commission cannot lawfully require it to do without its consent.

No testimony was taken before this Court, the case being presented on the record of the proceedings before the Interstate Commerce Commission.

Under the provisions of Section 15(3) of the Interstate Commerce Act, 49 U.S.C.A. § 15(3), the Interstate Commerce Commission "may, and it shall whenever deemed by it to be necessary or desirable in the public interest, after full hearing upon complaint or upon its own initiative without complaint, establish through routes, joint classifications, and joint rates, fares, or charges * * *." Section 15(4) of the Act, as amended by the Transportation Act of 1940, 49 U.S.C.A. § 15(4), imposes limitations upon this power of the Commission, as follows: "In establishing any such through route the Commission shall not (except as provided in section 3 not involved here, and except where one of the carriers is a water line) require any carrier by railroad, without its consent, to embrace in such route substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith, which lies between the termini of such proposed through route, (a) unless such inclusion of lines would make the through route unreasonably long as compared with another practicable through route which could otherwise be established, or (b) unless the Commission finds that the through route proposed to be established is needed in order to provide adequate, and more efficient or more economic, transportation: Provided, however, That in prescribing through routes the Commission shall, so far as is consistent with the public interest, and subject to the foregoing limitations in clauses (a) and (b), give reasonable preference to the carrier by railroad which originates the traffic. No through route and joint rates applicable thereto shall be established by the Commission for the purpose of assisting any carrier that would participate therein to meet its financial needs. In time of shortage of equipment, congestion of traffic, or other emergency declared by the Commission, it may (either upon complaint or upon its own initiative without complaint, at once, if it so orders, without answer or other formal pleadings by the interested carrier or carriers, and with or without notice, hearing, or the making or filing of a report, according as the Commission may determine) establish temporarily such through routes as in its opinion are necessary or desirable in the public interest." (Italics inserted.)

Relying upon clause (b) of Section 15 (4) of the Act, just quoted, Stickell, in 1941, filed a complaint with the Commission against a large number of railroads, seeking the establishment of the two additional through routes and joint rates and charges applicable thereto, which we have just described. After due hearing, at which testimony was taken before an examiner of the Commission, he recommended that the relief sought be granted. The matter came on for argument before Division 2 of the Commission, and on March 18, 1943,...