State Corporation Com'n of Kansas v. United States
| Decision Date | 11 May 1959 |
| Docket Number | Civ. A. No. T-1869. |
| Court | U.S. District Court — District of Kansas |
| Parties | STATE CORPORATION COMMISSION OF The State of KANSAS, Plaintiff, v. UNITED STATES of America, Defendant. |
COPYRIGHT MATERIAL OMITTED
Jay Kyle, Gen. Counsel, Topeka, Kan., Byron M. Gray, Special Counsel, Topeka, Kan., for plaintiff, State Corp. Commission, of Kansas.
Victor R. Hansen, Asst. Atty. Gen., William C. Farmer, U. S. Dist. Atty., Topeka, Kan., James E. Kilday, Willard R. Memler, Attys., Dept. of Justice, Washington, D. C., for the United States.
Robert W. Ginnane, Gen. Counsel, I. K. Hay, Assoc. Gen. Counsel, Interstate Commerce Commission, Washington, D. C., for Interstate Commerce Commission.
James E. Gillen, Chicago, Ill., M. E. Clinton, Dallas, Tex., Toll R. Ware, E. D. Grinnell, Jr., St. Louis, Mo., Edwin N. Bell, Houston, Tex., William R. McDowell, Dallas, Tex., William P. Higgins, Wichita, Kan., C. J. Putt, Edwin M. Wheeler, Topeka, Kan., Martin L. Cassell, James M. Souby, Jr., Chicago, Ill., Clayton Davis, Mark Bennett, Topeka, Kan., of counsel, for intervening Railroads.
Clarence Raymond, Louisville, Ky., James L. Tapley, Washington, D. C., Ralph W. Oman, Topeka, Kan., of counsel, for Intervening Southern Railroads.
Before BRATTON, Chief Circuit Judge, HUXMAN, Circuit Judge, and HILL, Chief District Judge.
This action is brought by the State Corporation Commission of the State of Kansas against the United States under the provisions of 28 U.S.C. §§ 1336, 1337, 1398 and 2321 to 2325, inclusive, to enjoin, annul and set aside an order of the Interstate Commerce Commission. The Interstate Commerce Commission and certain Western railroads were permitted to intervene as party defendants and forty-two Southern railroads have been allowed to intervene as party plaintiffs. Pursuant to 28 U.S.C. § 2284, a three-judge court was constituted and convened.
This is a rate relationship case involving Section 3(1) of the Interstate Commerce Act, 24 Stat. 380, as amended, 54 Stat. 902 (1940) 49 U.S.C.A. § 3(1).1 The genesis of this controversy begins with the Hoch-Smith Resolution passed by Congress in 1925 requiring an investigation of the grain rate structure. 43 Stat. 801, 49 U.S.C.A. § 55. In its investigation of the national grain structure, the Commission divided the country into five major rate territories, including the Official, Southern, Western Trunk Line, Southwestern and Mountain Pacific territories.2 This mandate precipitated two grain rate cases which are the predecessors of the instant action, commonly referred to as the Grain and Southern cases.3 The latter case was a continuation of the Grain case.
Pursuant to the Hoch-Smith resolution, the Commission held extensive hearings relative to the grain rate structure. In 1935, the Commission filed its report, which included the grain rates for the Oklahoma and Kansas area via the Memphis gateway.4 In the preparation of the report, it considered the Enid and Wichita groups as representative areas of the two states, and correlated the rates of the other groups in each state to the rate established for the representative group in that state.5 For many years prior to the effective date of the order of the Commission in the Grain case, the rates to Memphis were, from Enid 31.5 cents, from Wichita, the southern Kansas area, 36 cents, and from Beloit, the northern section of the Wichita group, 39.5 cents.6 On August 1, 1936, a supplemental report in the Grain case was made.7 In 1946, the Commission issued its order on rates to, from, and within the South.8 The rates, as prescribed in the Southern case, became effective May 16, 1946.
As a result of subsequent general increases, the rates to Memphis prior to the order of the Commission presently under attack on shipments destined to the South, were 45 cents from Enid, 49 cents from Wichita, and 55.5 cents from Beloit. On shipments to Memphis proper, the rates were 52 cents from Enid and 55.5 cents from Wichita and Beloit. The rates to Tennessee and the Carolinas, commonly known as the Carolina Territory, were 95.5 cents from Beloit, 95 cents from Wichita and 91 cents from Enid.9
The order of the Commission in the Southern case was first challenged by the original plaintiff herein on June 26, 1947, when its complaint was filed with the Commission. Extensive hearings were had before the Commission upon this complaint and the Commission's first report was thereafter filed.10
The original plaintiff herein attacked that report by a suit filed in this district. The court set aside that report and order of the Commission on the ground that the Commission had applied an improper yardstick in arriving at its conclusions and the matter was remanded to the Commission for further consideration.11 Upon reconsideration, including the taking of additional evidence, the Commission adhered to its former conclusions and filed its report, including findings.12 The Commission found that the rates from Southern Kansas, Oklahoma, and Texas on and north of the Texas and Pacific to Memphis, as components of through combination rates to the South, were unreasonable and unduly preferential to the extent that they failed to conform to the flat rates from those states to Memphis, and that the proportional rates, lower than the flat rates, should be cancelled. The resulting lawful rates, set by the Commission, were 55.5 cents on grain originating in the entire Wichita group, including northern and southern Kansas, and 52 cents from the Enid group.
In conjunction with this finding, the Commission also found that the proportional rate of 46 cents from Memphis to Raleigh, a representative point in the Carolina Territory, applicable on Southern Kansas, Oklahoma, and Texas traffic, was unreasonable and unduly preferential to the extent that it exceeded 40 cents, and that revision of proportional rates on this traffic from Memphis to other destinations in the Carolina Territory should be made in harmony with the prescribed rate to Raleigh.
In support of its contention for an equality of rates from the Wichita and Enid groups to Memphis, as components of through combinations to the South, the original plaintiff alleges that it is unwarranted by comparison of relative distances and transportation conditions of the two groups. In addition, the State Corporation Commission contends that this court should not reconsider the former opinion, that it is res judicata, and that the Commission filed its second report without the taking of any new evidence, nor the making of new findings of fact which would support the 3.5 cent differential. The Western carriers support, in general, the contentions of the original plaintiff, and urge that the combinations on Kansas City to Memphis from Northern Kansas were prescribed, as were the rates generally in the Grain case, to satisfy the requirements of the Hoch-Smith resolution.
The defendant and the Interstate Commerce Commission contend that the findings in the Commission's report are adequate and meet all existing principles of law as it is based on the historical relationship of the involved rates, that the two regional groups present essential differences, and that such a conclusion is necessary to restore and preserve rate relationships throughout the grain territory. They also contend that the establishment of a shrinkage proportional rate for grain and grain products shipped from Oklahoma and Kansas beyond Memphis to Tennessee and the Carolinas, is within the powers of the Commission under Section 15(1) of the Interstate Commerce Act, 49 U.S.C.A. § 15(1).
The intervening Southern railroads deny that the Commission has authority under Section 15(1), in this case, to change the rates beyond Memphis as there is no injury to Kansas east of Memphis and the one cent preference should have been cured by changing rates west of Memphis, not by reducing the rate beyond by six cents and raising the rate to Memphis seven cents from Oklahoma origins.
At this juncture, two basic issues are presented: (1) whether the grain rates from the Western Territory to the Gateway of Memphis for shipments destined to Memphis, the Carolinas, and the rest of the Southern Territory, upon shipments originating in Wichita, Enid, and Amarillo, representative points in Kansas, Oklahoma, and Texas, respectively, were fixed in accordance with established principles of law, including the statement by the Commission of a rational basis for such rates; and (2) whether the Commission had the power to establish shrinkage proportional rate under Section 15(1), in this case, for shipments destined to Tennessee and the Carolinas, originating in Oklahoma and Kansas, where the title complainant alleged undue preference on rates to Memphis and the entire South from such areas.
Under the doctrine of administrative finality, the scope of judicial review is very limited. Administrative orders entered by the Commission in the exercise of its power are not to be overturned on judicial review unless they exceed constitutional limits, are based upon a mistake of law, are made without a hearing, are unsupported by the evidence, or for some other reason amount to an abuse of power.13
As the record relative to the proceedings before the Interstate Commerce Commission is not before the Court, the complainant cannot challenge the order on the ground of insufficient evidence. It is a settled principle of law that the findings of the Commission may not be assailed upon appeal in the absence of the evidence upon which they were made.14 Under the contentions of the complainant, there remains but one consideration for the Court to determine in the present case. Is there a rational basis for the action of the Commission? Admittedly, the judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the Commission.15
The basis, if any, for the Commission's conclusions is found in the...
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