Railway Exp. Agency, Inc. v. Louisiana Public Service Commission

• Decision Date: 19 February 1962
• Docket Number: No. 45844,45844
• Citation: 243 La. 518,145 So.2d 18
• Parties: RAILWAY EXPRESS AGENCY, INC. v. LOUISIANA PUBLIC SERVICE COMMISSION et al.
• Court: Louisiana Supreme Court

Page 18

145 So.2d 18

243 La. 518

RAILWAY EXPRESS AGENCY, INC. v. LOUISIANA PUBLIC SERVICE COMMISSION et al.

No. 45844.

Supreme Court of Louisiana.

Feb. 19, 1962.

On Rehearing Oct. 3, 1962.

Lemle & Kelleher, Murphy Moss, New Orleans, for plaintiff-appellant.

Jack P. F. Gremillion, Atty. Gen., Joseph H. Kavanaugh, Special Counsel to the Atty. Gen., for defendants-appellees.

HAMLIN, Justice.

Railway Express Agency, Incorporated, (hereinafter referred to as Railway Express), alleging that it was engaged in express transportation business over the lines of railroads and via other means of transportation throughout the country in both interstate and intrastate commerce in each of the several states, petitioned the Louisiana Public Service Commission (hereinafter referred to as the Commission) during December, 1959, for the issuance of an order authorizing the closing of its offices at Algiers, Gretna, and Harvey, Louisiana, ¹ and the consolidating of said offices with the New Orleans, Louisiana, general agency, with the result that express traffic of said offices be handled through the company's general agency at New Orleans by the extension of pickup and delivery service to those portions of the Cities of Gretna and Harvey (including Westwego and Marrero) which are served through separate offices at Gretna and Harvey, Louisiana.

After hearing before the Commission at regular session held at Gretna, Louisiana, on September 14, 1960, the case was held open for additional testimony to be presented by the Jefferson Parish Council although the Council was asked to advise the Commission whether it desired to submit such testimony, no reply was received. The Commission considered the matter as to final disposition on November 18, 1960; on November 29, 1960, it issued Order No. 8274, which recites in part:

'Testimony adduced is that for a period of twelve months ending August 31, 1960, at Gretna, Louisiana, the monthly averages were: 1083 shipments, $5,543.73 revenue, $689.94 expenses; at Harvey, Louisiana, 1150 shipments, $8,408.34 revenue,.$983.96 expenses; at Algiers, Louisiana, for a period of twenty months ending August 31, 1960, the monthly averages were: 32 persons calling to receive shipments and 7 persons calling to forward shipments.

'Upon consideration of the matter it is the Commission's opinion that the public convenience and necessity do not require the maintenance of the sub-station at Algiers, Louisiana, but do require the continuance of agency stations at both Gretna and Harvey, Louisiana, Accordingly, it is

'ORDERED, that the Railway Express Agency, Inc., be and it is hereby authorized to close their sub-station at Algiers, Louisiana, and it is further

'ORDERED, that the application to close the agency stations at Gretna and Harvey, Louisiana, be and it is hereby denied.'

Railway Express applied to the Nineteenth Judicial District Court for its review of Order No. 8274, praying that the court set aside the order, except insofar as it authorized the closure of plaintiff's substation at Algiers, Louisiana. LSA-R.S. 45:1192. Plaintiff alleged that it was aggrieved and dissatisfied with Order No. 8274, and that same was contrary to fact and law as well as arbitrary, except insofar as said order authorized the closing of its sub-station at Algiers, Louisiana. The Commission answered in the form of a general denial. New Orleans Traffic and Transportation Bureau, uniting with the Commission, intervened in the matter and prayed that the court sustain the validity of Order No. 8274. Plaintiff excepted to the petition of intervention, alleging that it failed to disclose a cause of action and failed to disclose a right of action or interest in New Orleans Traffic and Transportation Bureau.

The trial court stated that no hearing was requested on the peremptory exceptions filed to the petition of intervention, and that plaintiff, defendant, and intervener, had by joint stipulation submitted the matter to the court for its decision on the record. The court rejected plaintiff's demands and dismissed its action, stating that it was in agreement with the conclusion of the Commission that the public convenience and necessity required the continued operation of plaintiff's offices at Gretna and Harvey.

Railway Express appealed to this Court, setting forth the following specification of errors:

'1. The District Court and the Commission erred in disregarding uncontradicted evidence relative to the historical evolution and emergency reorganization program of Railway Express, in addition to changing conditions and local developments, necessitating the proposed consolidation.

'2. The District Court and the Commission erred in failing to conclude that the public convenience and necessity require Railway Express to make the proposed consolidation.

'3. The District Court erred in failing to annul and set aside the Commission's Order No. 8274 for the reason that in issuing it the Commission acted arbitrarily and unreasonably.

'4. The District Court and the Commission erred in basing their decisions upon legally inadmissible evidence.'

The trial court stated that plaintiff's chief contention is that it is fighting for its life, so to speak, and that unless it is permitted to effect consolidations as here sought it will not be able to continue in business. In its petition filed in the district court, plaintiff alleged that Order No. 8274 failed to recognize the importance of consolidation in Gretna and Harvey to the nationwide program of petitioner to effect drastic economies and thereby forestall liquidation.

A. D. Satterwhite, ² General Manager of the Southern Division of plaintiff company, who lives in Atlanta, Georgia, testified that Railway Express was organized in 1928 at the insistence of the Federal Government, the first contract between the railroads and Railway Express being effective March 1, 1929; that prior to 1929 (except during World War I), ³ this country's express business was conducted by separate independent companies, including the Adams, Wells Fargo, and a number of others. By the agreement of 1929, Railway Express was to act as an agent for approximately three hundred owning railroads; under the agreement the Agency was to collect all of the revenues and pay the expenses, and the railroads were to take what was left over. Mr. Satterwhite said that Railway Express was simply an agent of and for the railroads. The 1929 agreement continued until 1954 when a new agreement was executed; this new contract gave the railroads the privilege of withdrawal. Mr. Satterwhite stated that the provision was inserted in the contract because the earnings of the railroad were not sufficient; they were losing money; they felt that with the small package business as it was and the increasing wages and inflation, they might have to retire from the field. Mr. Satterwhite further stated that the outlook of Railway Express under the 1954 contract was not good; that the railroads had been suffering losses for quite some time, and they reached the point where they decided they couldn't continue to subsidize the Agency.

Mr. Satterwhite testified that exhibits filed with the Interstate Commerce Commission would reflect that Railway Express suffered a deficit of around $16 million in 1955; $24 million to $24 and a half million in 1956; $33 million to $34 million in 1957; and $40 million in 1958. Mr. Satterwhite said that the deficits were subsidized by the railroads, and that in December, 1958, the New York Central Railroad gave notice of its intention to withdraw from the 1954 operating agreement.

Approximately three months after the withdrawal of the New York Central Railroad, Mr. William B. Johnson assumed the presidency of Railway Express; at that time (March 1, 1959) there was an approximate deficit of $38 million. With respect to the actions of the new president and the ensuing events, Mr. Satterwhite testified as follows:

'A. Well, when the new President took over he called in the top officers of the Company and explained the condition of our situation, and told them that with a normal set of books that we were hopelessly bankrupt and that it would be necessary, if we expected to save the Company, it would be necessary that we take drastic action in making all economies possible. So, we got busy and made a lot of internal consolidations of departments like claim bureaus, district accounting bureaus and we consolidated offices, we retired a lot of people, we fired a lot of people and did everything that we could to try to save the Company, and as a result of that we were able to reduce the deficit some $12 million to $13 million, as I recall.'

Under an emergency reorganization program, the Interstate Commerce Commission approved a Standard Express Operations Agreement, effective October 1, 1959 and ending December 31, 1973, between the 'Rail Company' (approximately 176 railroad companies, including the Missouri Pacific and Texas and Pacific Railroads) and Railway Express. In its report of approval, the Interstate Commerce Commission stated:

'* * * It is the applicants' definite hope that the Agency may become a profit-making enterprise in every sense of the word, although the Agency's president predicts that the profits 'will no doubt be modest at first and will probably all be used for necessary capital expenditures for some time to come.' This change in the Agency's status is expected to bear fruit in a greater degree of cost-consciousness on the part of the Agency's officials and employees for reasons explained by one witness in the following statement:

"The present accounting provisions provide the Agency with a blank check to pay its expenses, with the railroads' getting what is left over for line haul transportation. As a result, we discovered that many people, including some of the Agency's own personnel, looked upon the difference between what the Agency collected from the public and its own costs...