State of Florida v. United States

• Decision Date: 24 February 1933
• Docket Number: 691,No. 690,695.,690
• Citation: 4 F. Supp. 477
• Parties: STATE OF FLORIDA et al. v. UNITED STATES et al. WILSON CYPRESS CO. et al. v. SAME. F. S. BUFFUM CO., Inc., v. SAME.
• Court: U.S. District Court — Northern District of Georgia

4 F. Supp. 477

STATE OF FLORIDA et al. v. UNITED STATES et al.

WILSON CYPRESS CO. et al. v. SAME.

F. S. BUFFUM CO., Inc., v. SAME.

Nos. 690, 691, 695.

District Court, N. D. Georgia, Atlanta Division.

February 24, 1933.

Cary D. Landis, Atty. Gen., for the State of Florida.

Theo. T. Turnbull, of Tallahassee, Fla., for complainant Florida Railroad Commission.

Henry P. Adair and F. C. Hillyer, both of Jacksonville, Fla., J. Van Dyke Norman, of Louisville, Ky., and August G. Gutheim, of Washington, D. C., for other complainants.

Elmer B. Collins, Sp. Asst. to Atty. Gen., for the United States.

J. Stanley Payne, Asst. Chief Counsel, Interstate Commerce Commission, of Washington, D. C., for defendant Interstate Commerce Commission.

Robert C. Alston, of Atlanta, Ga., for Atlantic Coast Line R. Co., intervening defendant.

SIBLEY, Circuit Judge, and UNDERWOOD and STRUM, District Judges.

Three bills were filed against the United States and Interstate Commerce Commission, one by the state of Florida and the Florida Railroad Commission, another by Wilson Cypress Company and Wilson Lumber Company, and the third by F. S. Buffum & Co., Inc. Each upon similar allegations seeks to set aside and enjoin an order of the Interstate Commerce Commission made July 5, 1932, and amended July 28, 1932, whereby rates were prescribed for the intrastate carload shipments in Florida of logs of certain classes conforming to rates established as reasonable for like shipments in interstate commerce between Florida and Georgia. The Atlantic Coast Line Railroad Company, the carrier whose rates were involved, intervened. After the grant of an order suspending the operation of the rates the bills were by consent consolidated and heard before a court of three judges on the pleadings and on the evidence submitted.

Findings of Fact.

The attacked order of the Commission is its final judgment on a proceeding instituted in 1926 by the Georgia Public Service Commission to which the complainant and intervener in the present bills became parties. The then existing interstate rates on logs between Florida and Georgia were complained of, and the Florida intrastate rates referred to as the Cummer Scale were attacked as causing undue prejudice to persons and places in Georgia in their commerce with Florida, and unjust discrimination against interstate commerce under section 13 of the Interstate Commerce Act (49 USCA § 13). After lengthy hearings, on August 2, 1928, reasonable interstate rates were fixed, and upon a general finding that the intrastate rates in question caused discrimination against interstate commerce an intrastate rate was prescribed to conform to the new interstate rates. Georgia Public Service Comm. v. Atlantic Coast Line R. Co., 146 I. C. C. 717. On attack in this court against that part of the order fixing the intrastate rate it was upheld as justified for the removal of discrimination against persons and places in Georgia by confining its application to north Florida. State of Florida v. U. S. (D. C.) 30 F.(2d) 116. The order was, however, clarified by the Commission so as to require its application to the entire state, and upon further attack it was upheld as proper to remove a discrimination against the general interstate commerce of the carrier in that state rates were so low as to be unremunerative and to burden the revenues of the carrier. State of Florida v. U. S. (D. C.) 31 F.(2d) 580. On appeal the Supreme Court declined to consider the evidence, but reversed the judgment because there were not distinct findings by the Commission of the facts going to show such discrimination by a burden on revenues, the court holding that the general finding that there existed a discrimination against interstate commerce in the language of section 13 (4) of the act (49 USCA § 13 (4) was insufficient to authorize the Commission to exercise its powers under that section; but it was suggested that such findings might yet be made upon proper evidence. State of Florida v. U. S., 282 U. S. 194, 51 S. Ct. 119, 75 L. Ed. 297. This court accordingly entered its decree setting aside and annulling the portion of the order complained of. Thereupon the Georgia Public Service Commission and the Atlantic Coast Line Railroad Company on due notice to all parties, including the present complainants, moved the Interstate Commerce Commission to reopen the case before it, which over objection was done, and much new evidence was added to that previously taken. A motion was made by the present complainants at the beginning of the hearing to dismiss the proceedings as respects any issue of burden on the revenues of the carrier, and to exclude all evidence directed to that contention. The motions were overruled by the Examiner, and again by the full Commission, which after argument made an elaborate and lengthy report of its findings, put aside the question of undue prejudice by the state rates to persons and places in Georgia as unnecessary to be decided, but held the rates to be burdensome on the interstate carrier's revenues and thus a discrimination against interstate commerce, which it removed by again prescribing under section 13 (4) of the act future state rates to conform to the interstate rates which it had established as reasonable. Georgia Public Service Comm. v. Atlantic Coast Line R. Co., 186 I. C. C. 157.

We find the conclusions of fact in the Commission's report to be well supported by the evidence, and such as we would ourselves make therefrom. Referring to that report for details, we summarize the ultimate facts most material to the present issues. The state rates known as the Cummer Scale were voluntarily established in substance in 1903 and 1904 by Jacksonville & Southwestern Railroad Company, when railroad and timber to be transported were owned by the same interests. The rates were inherited by the Atlantic Coast Line Railroad Company on purchasing the railroad involved, and were by it applied as carload rates over all its lines in Florida in 1914. The Florida Railroad Commission at the time asserted that it did not approve the rates though perforce it allowed them, considering them too low and even confiscatory if involuntarily enforced. They apply on no other railroad in Florida. In 1928 and 1932 comparisons of these rates with other rates on logs and on similar traffic in the same and neighboring territories showed them to average less than half of most other comparable interstate and intrastate rates, and to be much the lowest of any of them. They are about one-half the rates fixed by the Interstate Commerce Commission for interstate traffic in the same logs in substantially the same territory. On the question of the cost of the service, figures were considered which showed the average cost of hauling logs over the Coast Line System; exact figures for the particular traffic in Florida not being available. But it appeared that the cost of the service in Florida was probably higher than elsewhere. It was found that there was no profit but an out-of-pocket loss to the carrier in the log traffic under these rates, not considering taxes and return on the investment, and that consequently there was no contribution to the maintenance of the carrier as an efficient instrumentality of commerce, but a drain upon it. The total amount of this drain before 1929 was not found, nor could it be approximated from the evidence. But for the two years, 1929 and 1930, when the interstate rates fixed by the Interstate Commerce Commission were enforced, the log traffic under them was 18,602 cars and the the gross revenue from this intrastate traffic was $571,508.94, whereas if the Cummer Scale had been applied it would have been $281,225.75. Although the traffic fell off greatly during this period, it is found to be more due to the universal depression in business and to the moving of mills to the timber than to the raise in rates, because there was no substantial increase after the Cummer rates were restored following the decision of the Supreme Court above referred to. Abundant available timber still exists in Florida, and is being rapidly reproduced, so that the future traffic will likely amount to at least 7,431 cars per year, and the average gross revenue on it under the new rates will be more than $100,000 per year greater than the Cummer Scale would yield, thus converting a loss on the business into a profit of that approximate amount. As showing that the carrier as an instrumentality of interstate commerce cannot afford to absorb the loss under the Cummer Scale, or to forego the support to be derived from the new scale, it is found that the carrier's net return on its investment is steadily falling from year to year, and in 1930 was only 2.54 per cent. On these findings the general finding was made that the Cummer rates are and in future will be unjustly discriminatory against interstate commerce, and that such unjust discrimination can and should be removed by rates not less than the scale prescribed for interstate commerce. Pending this litigation in October, 1932, the Commission reopened its order and took further evidence which showed that many voluntarily reduced rates had been established since the order by other carriers on lowgrade traffic in raw materials comparable to the log rates in dispute, in the western part of the southern territory and in southwestern territory. It found, and the evidence well warranted the finding, that the reductions were a temporary experiment made in the effort to recapture traffic which had been taken away by trucks, and generally the lowered rates carried an obligation that the manufactured article should also be moved by the carrier making...