Southern Ry. Co. v. South Carolina Public Serv. Com'n

Citation31 F. Supp. 707
CourtUnited States District Courts. 4th Circuit. United States District Court of South Carolina
Decision Date26 February 1940
PartiesSOUTHERN RY. CO. v. SOUTH CAROLINA PUBLIC SERVICE COMMISSION et al.

COPYRIGHT MATERIAL OMITTED

Sidney S. Alderman, of Washington, D. C. (Frank G. Tompkins, of Columbia, S. C., on the brief), for plaintiff.

Irvine F. Belser, of Columbia, S. C. (John M. Daniel, of Columbia, S. C., on the brief), for defendants.

Before PARKER, Circuit Judge, and MYERS and LUMPKIN, District Judges.

PARKER, Circuit Judge.

This is a suit, instituted by the Southern Railway Company against the members of the South Carolina Public Service Commission and the Governor and the Attorney General of that state, to enjoin them from attempting to enforce against the Railway Company penalties for discontinuing the operation of two certain passenger trains between Branchville, S. C., and the South Carolina-Georgia state line. An interlocutory injunction was asked and a court of three judges was constituted pursuant to section 266 of the Judicial Code, 28 U.S.C.A. § 380. The hearing on the application for interlocutory injunction was continued and the case was submitted for final decree on the date to which continuance was granted. No question arises as to the jurisdiction of the court, since the case arises under the Constitution and laws of the United States. More than $3,000 is involved, administrative remedies have been exhausted and irreparable injury is threatened if the position of plaintiff is well grounded. The Johnson Act of May 14, 1934, 48 Stat. 775, 28 U.S.C.A. § 41(1, 1a), has no application, since the suit does not involve a question of rates and, on the allegations of the complaint, does involve an interference with interstate commerce.

Plaintiff, the Southern Railway Company, is operating a line of railroad in the State of South Carolina, extending from Charleston to the South Carolina-Georgia line at Augusta, 136.91 miles in length, constructed under a charter granted by the State of South Carolina to the South Carolina Canal and Railroad Company in 1827. The road was built from Charleston to Aiken, S. C. in the year 1833 and, at the time of its construction, was the longest continuous railroad in the world. The franchise of the original company passed, by sundry reorganizations and foreclosures, through the South Carolina Railroad Company, the South Carolina Railway Company, and the South Carolina and Georgia Railroad Company, and came finally into the hands of the Southern Railway-Carolina Division, by which it was leased to the plaintiff, Southern Railway Company, under a 999-year lease. It is operated by plaintiff as a part of its interstate system of railways, the portion of the line extending from Charleston to Branchville, 61.91 miles in length, being used by plaintiff as a part of its main line from Charleston to Columbia. The remainder of the line, approximately 75 miles in length, being the portion between Branchville and Augusta, serves as a highway for traffic of local origin or destination and also for freight from Charleston to Augusta and the West.

As a result of the building of good roads and the use of buses and private automobiles, plaintiff has experienced a loss of passenger traffic, especially that of a local character. It has reduced the passenger service on the 75 mile stretch of this railroad to one train a day each way between Branchville and Augusta, and finds that even this minimum service results in a loss. For the year September 1937 to August 1938 the total revenue derived from the operation of the two trains was $16,990.29, of which amount $4,819.50 was for passenger fares, $8,417.34 was for carrying mail and $3,753.45 was for carrying express; whereas the expense of operation was $31,774.98, involving a loss of $14,784.69. For the ten months' period from October 1938 to July 1939, the loss of operation was $10,920.58; and for the four months' period from August to October 1939 it was $5,225.36. For this reason plaintiff desires to abandon all passenger service on the portion of the line between Branchville and Augusta, while continuing to use that portion of the line for transportation of freight and while maintaining passenger service over the Branchville-Charleston portion of the line as a part of its main line between Columbia and Charleston. It accordingly applied to the South Carolina Public Service Commission for leave to discontinue the passenger service of one train a day each way which it was operating between Branchville and Augusta, setting forth the loss arising from the operation of these trains, the fact that the entire passenger service of the system was being operated at a loss and in South Carolina at a greater proportionate loss than on the system as a whole, and that upon its entire operations it was not earning an adequate return upon invested capital and must necessarily effect economies by the elimination of operations involving loss. It urged that the need for passenger service through the territory served by these trains was supplied by the buses and private automobiles that used the state highways and that the public had largely abandoned the use of the trains for passenger service.

The Public Service Commission denied the application of plaintiff for leave to discontinue the trains and abandon passenger service on the portion of the road between Branchville and Augusta on the ground that the maintenance of passenger service is required by the franchise under which the road is operated, that the discontinuance of the trains in question would leave the communities on that portion of the road without adequate service for express and mail as well as without rail passenger service, and that, to insure the fair treatment of these communities contemplated by the statutes of the state, the operation of the trains should be continued. Summing up its conclusions, the Commission said:

"The Commission is of the opinion and finds that when the Southern Railway Company succeeded to and possessed itself of the rights and franchises conferred by the charters of the four railroad companies forming Southern Railway-Carolina Division, it assumed all the duties which are imposed upon it by the said charters or the general laws of this State, and that the said railroad company should not be permitted to pick and choose and to serve only those portions of its railroad which it finds most profitable.

"The right of carriage or transportation of persons is granted by the charter of this particular line of railroad to the Southern Railway Company and this Commission further finds that it can and should require the applicant carrier to perform a rail passenger service over that portion of its line between Branchville, S. C., and the South Carolina-Georgia state line, even at a loss if need be, as long as it retains any of the benefits of the charter.

"Upon consideration of the evidence of record the Commission is further of the opinion and finds that the discontinuance of train numbers 17 and 18 operating between Branchville, S. C., and Augusta, Ga., and serving stations on the Southern Railway Company in South Carolina, affect the small communities and these communities will be left without rail passenger service for the handling of passengers, express, newspapers, parcel post and other mail.

"Equality of treatment or near equality, has been one of the chief purposes underlying regulatory statutes. Regulatory statutes clearly show the intent to insure fair treatment to small communities and their inhabitants. In section 8251 of the Civil Code (1932) the Commission is given general supervision of all railroads in this State and in section 8405, the better to secure connections, the Commission may require all persons, associations or corporations operating any railroad or railroads to run at least one unmixed daily passenger each way over such railroad or railroads. The discontinuance of these trains removes all rail passenger service and eliminates rail connections at Branchville, Blackville, Aiken and other stations."

It is the contention of plaintiff that this order of the Commission, which, in effect, requires it to continue unprofitable passenger service between Branchville and Augusta, is so arbitrary and unreasonable as to amount to a denial of the due process and equal protection guaranteed by the 14th Amendment, and that, since the loss arising from the operation must be paid from revenues derived from interstate commerce, the order constitutes a burden upon that commerce in violation of the commerce clause of the Constitution.

A sufficient answer to both positions of plaintiff is that it has accepted from the State of South Carolina a franchise imposing upon it the burden of maintaining passenger service over this line of railroad, and that it cannot separate the benefits from the burdens of the franchise and accept one while rejecting the other. If it chooses to use in its operations this line of railroad which owes its existence to the State of South Carolina, it must operate the line in accordance with its charter and the laws of the state, unless relieved therefrom by state authority. If interstate operations are burdened by state requirements, relief may be had by application to the Interstate Commerce Commission to abandon the line or part of it. 49 U.S.C.A. § 1(18-20); Georgia v. United States, D.C., 28 F.Supp. 749; Colorado v. United States, 271 U.S. 153, 46 S.Ct. 452, 70 L.Ed. 878. The question before us is not whether the action of the state authorities of which complaint is made is wise, but whether it is unlawful; and, in view of the charter obligation of the plaintiff to maintain passenger service on the road in question, we cannot see how an order of the Public Service Commission refusing to permit abandonment of passenger service on a portion of the line can be said to be unlawful.

The plaintiff denies that it is charged with any duty under the charter of the...

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