St Louis Fallon Ry Co v. United States United States v. St Louis Fallon Ry Co

Decision Date20 May 1929
Docket NumberNos. 131,132,s. 131
Citation73 L.Ed. 798,279 U.S. 461,49 S.Ct. 384
PartiesST. LOUIS & O'FALLON RY. CO. et al. v. UNITED STATES et al. UNITED STATES et al. v. ST. LOUIS & O'FALLON RY. CO. et al
CourtU.S. Supreme Court

Messrs. Daniel N. Kirby, of St. Louis, Mo., Frederick H. Wood, of New York City, Robert H. Kelley, of Houston, Tex., and Leslie Craven, of Chicago, Ill., for St. Louis and O'Fallon Ry., et al.

[Argument of Counsel from pages 462-467 intentionally omitted] The Attorney General and Mr. George W. Wickersham, of New York City, for the United States.

[Argument of Counsel from pages 468-473 intentionally omitted]

Page 473

Messrs. Walter L. Fisher, of Chicago, Ill., and P. J. Farrell and Oliver E. Sweet, both of Washington, D. C., for the Interstate Commerce Commission.

[Argument of Counsel from pages 473-478 intentionally omitted]

Page 478

Mr. Donald R. Richberg, of Chicago, Ill., for National Conference on Valuation of American Railroads, as amicus curiae, by special leave of Court.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

These are cross-appeals from the final decree of the District Court, Eastern Missouri, three judges sitting, in a suit to annul an Interstate Commerce Commission order, dated February 15, 1927, which directed St. Louis & O'Fallon Railway Company to place in a reserve fund one-half of its determined excess income for the years 1920 (ten months), 1921, 1922, and 1923 (that is, half of the sum by which the net railway operating income for each of those years exceeded 6 per cent. of the ascertained value of property devoted to public service); and to pay to the Commission the remaining one-half, with 6 per cent. interest, beginning four months after termination of the year; i. e., May 1, 1921, 1922, 1923, and 1924.

Section 15a, added to the Interstate Commerce Act by Transportation Act 1920, contains nineteen paragraphs (49 USCA § 15a). Of those specially important here, 1, 2, 3, 5, 7, and 8 are copied in the margin;* 4 and 6 follow:

'(4) * * * For the purposes of this section, such aggregate value of the property of the carriers shall be determined

Page 479

by the Commission from time to time and as often as may be necessary. The Commission may utilize the results of its investigation under section 19a of this Act, in so far as deemed by it available, and shall give due consideration to all the elements of value recognized by the law of the

Page 480

land for rate-making purposes, and shall give to the property investment account of the carriers only that consideration which under such law it is entitled to in establishing values for rate-making purposes. Whenever pursuant to section 19a of this Act the value of the railway property of any carrier held for and used in the service of transportation has been finally ascertained, the value so ascertained shall be deemed by the Commission to be the value thereof for the purpose of determining such aggregate value.'

'(6) * * * If, under the provisions of this section, any carrier receives for any year a net railway operating income in excess of 6 per centum of the value of the railway property held for and used by it in the service of transportation, one-half of such excess shall be placed in a reserve fund established and maintained by such carrier, and the remaining one-half thereof shall, within the first four months following the close of the period for which such computation is made, be recoverable by and paid to the Commission for the purpose of establishing and maintaining a general railroad contingent fund as hereinafter described.

Page 481

For the purposes of this paragraph the value of the railroad property and the net railway operating income of a group of carriers, which the Commission finds are under common control and management and are operated as a single system, shall be computed for the system as a whole irrespective of the separate ownership and accounting returns of the various parts of such system. In the case of any carrier which has accepted the provisions of section 209 of this amendatory Act the provisions of this paragraph shall not be applicable to the income for any period prior to September 1, 1920. The value of such railway property shall be determined by the Commission in the manner provided in paragraph (4).'

After an investigation instituted under section 15a, May 14, 1924, for the purpose of determining incomes received by St. Louis & O'Fallon Railway Company (the O'Fallon) and Manufacturers' Railway Company (the Manufacturers'), asserted to be parts of one system, for the years 1920-1923, the Commission found: (1) Although the stock of both corporations was mostly owned by the Adolph Busch estate, and their principal officers were the same, they were not carriers operated under common control and management as a single system within paragraph 6. (2) The Manufacturers' had received no excess operating income: (3) The value of the O'Fallon's property devoted to public service in 1920 (ten months) was $856,065; in 1921, $875,360; in 1922, $978,874; in 1923, $997,236; and during each of those years it received net operative income exceeding 6 per cent. upon the stated valuation.

The above-described recapture order followed.

The cause is properly here under the Judicial Code, as amended by Act of February 13, 1925 (U. S. C. tit, 28, § 345 (28 USCA § 345)):

'Sec. 238. A direct review by the Supreme Court of an interlocutory or final judgment or decree of a district

Page 482

court may be had where it is so provided in the following Acts or parts of Acts, and not otherwise: * * *

'(4) So much of 'An Act making appropriations to supply urgent deficiencies in appropriations for the fiscal year 1913, and for other purposes,' approved October 22, 1913, as relates to review of interlocutory and final judgments and decrees in suits to enforce, suspend, or set aside orders of the Interstate Commerce Commission other than for the payment of money. * * *'

The Act of October 22, 1913 (38 Stat. 219, 220), transferred to District Courts the jurisdiction granted to the Commerce Court by Act of June 18, 1920 (36 Stat. 539), and provided for review by this court of causes embraced therein. The jurisdiction for the Commerce Court included:

'First. All cases for the enforcement, otherwise than by adjudication and collection of a forfeiture or penalty or by infliction of criminal punishment, of any order of the Interstate Commerce Commission other than for the payment of money.

'Second. Cases brought to enjoin, set aside, annul, or suspend in whole or in part any order of the Interstate Commerce Commission. * * *'

Paragraph (4), § 238, applies to all those causes formerly cognizable by the Commerce Court and reviewable here. The words 'other than for the payment of money' were taken from clause first, Act of 1910, above quoted, and, as there, they delimit the trial court's jurisdiction. They do not inhibit review here of any cause formerly cognizable by the Commerce Court. Moreover, the order under consideration was not merely for payment of money; and the proceeding below was to set aside, not to enforce it.

Wisconsin Railroad Commission v. Chicago, Burlington & Quincy R. Co., 257 U. S. 563, 42 S. Ct. 232, 66 L. Ed. 371, 22 A. L. R. 1086, and Dayton-Goose

Page 483

Creek Railway Co. v. United States, 263 U. S. 456, 44 S. Ct. 169, 68 L. Ed. 388, 33 A. L. R. 472, point out the general purpose of the Transportation Act 1920, and uphold the validity of section 15a.

The Manufacturers' is a switching road with 30 miles of track within St. Louis, Mo. The O'Fallon-a coal-carrying road-has 9 miles of main line, all in Illinois, and this connects with the Terminal Railroad at East St. Louis. Through the latter deliveries are made to sundry points in St. Louis, some of which are on the Manufacturers' line. 'The distance between the railroad of the O'Fallon and the railroad of the Manufacturers' is about 12 miles, and all communication by rail between the two properties is effected over the tracks of the Terminal, including a bridge over the Mississippi River.' Both the Commission and the District Court held that the record failed to show these two roads were under common control and management and operated as a single system within the meaning of paragraph 6. We accept their conclusion.

The Commission directed the O'Fallon to pay 6 per cent. interest on the recaptured one-half of its ascertained excess net railway operating income beginning four months from the end of the year during which the excess accrued (paragraph 6). The District Court rightly ruled that, as the carrier made bona fide denial of any excess under circumstances sufficient to justify a contest, no interest should have been imposed for any time prior to the final order. Not until then could the carrier know what, if anything, it should pay.

Also, we think the District Court rightly rejected the claim that excess earnings were not recapturable unless and until the Commission had fixed a general level of rates intended to yield fair return upon the aggregate value of carrier property either as a whole, or in some prescribed rate or territorial group. Congress, of course,

Page 484

realized that final valuations would require prodigious expenditure of time and effort; but the language concerning recapture indicates that prompt action was expected. Practical application of paragraphs 5 and 6 does not necessarily depend upon prior compliance with paragraphs 2 and 3. The act should be construed so as to carry out the legislative purpose. The proviso of paragraph 3 prescribing action to be taken during two years beginning March 1, 1920, and the clause of paragraph 6 excepting the income of certain roads prior to September 1, 1920, are hardly compatible with this claim by the carrier.

Paragraph 4, § 15a, directs that, in determining values of railway property for purposes of recapture, the Commission 'shall give due...

To continue reading

Request your trial
71 cases
  • Utah Power & Light Co. v. Public Service Commission
    • United States
    • Utah Supreme Court
    • October 10, 1944
    ... ... filed its reply brief, the United States Supreme Court ... decided the case of ... St. Louis & San Francisco Railroad Co. v ... Gill , 156 ... 1176; and ... St. Louis & O'Fallon Railway Co. v. United ... States , 279 U.S ... ...
  • Farmers Union Cent. Exchange, Inc. v. F.E.R.C.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • June 26, 1984
    ...consideration." 169 U.S. 466, 546-47, 18 S.Ct. 418, 433-34, 42 L.Ed. 819 (1898). Furthermore, in St. Louis & O'Fallon, Ry. Co. v. United States, 279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798 (1929), the Supreme Court disapproved the ICC's attempt to rely solely on original cost ratemaking. Of co......
  • St Joseph Stock Yards Co v. United States
    • United States
    • U.S. Supreme Court
    • April 27, 1936
    ...58 L.Ed. 1267; or because it applied a rule thought wrong for determining the value of the property, St. Louis & O'Fallon Ry. v. United States, 279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798. These cases deal with errors of law or irregularities of Second. The contention of the appellant is that ......
  • Railroad Commission of California v. Pacific Gas Electric Co
    • United States
    • U.S. Supreme Court
    • January 3, 1938
    ...order fell within the principle of the Northern Pacific Case. No such procedure appears here. In St. Louis & O'Fallon Railway Co. v. United States, 279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798, the Court was not dealing with the order of a state commission, or with a question of due process, bu......
  • Request a trial to view additional results
1 books & journal articles
  • Valuation and Rate Problems
    • United States
    • Sage ANNALS of the American Academy of Political and Social Science, The No. 159-1, January 1932
    • January 1, 1932
    ...272 U. S. 400.2 Smyth v. Ames, 169 U. S. 547.3 McCardle v. Indianapolis Water Co., 272U. S. 400; St. Louis and O’Fallon R. Co. v. U. S.,279 U. S. 461. 85seems to have lost a good deal of itsvigor and vitality. It does not seem to&dquo;click&dquo; as a major political issue. Itdoes not seem ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT