State of Texas v. United States, 2424.

• Decision Date: 06 February 1934
• Docket Number: No. 2424.,2424.
• Citation: 6 F. Supp. 63
• Parties: STATE OF TEXAS et al. v. UNITED STATES et al.
• Court: U.S. District Court — Western District of Missouri

6 F. Supp. 63

STATE OF TEXAS et al. v. UNITED STATES et al.^*

No. 2424.

District Court, W. D. Missouri, W. D.

February 6, 1934.

James V. Allred, Atty. Gen., for the State of Texas.

Elmer L. Lincoln, of Texarkana, Tex., for City of Texarkana, Tex.

J. A. R. Moseley, Jr., of Texarkana, Tex., for Bowie County, Tex.

E. M. Reidy, Asst. Chief Counsel, Interstate Commerce Commission, of Washington, D. C., Elmer B. Collins, Sp. Asst. to Atty. Gen., Harold M. Stephens, Asst. Atty. Gen., and William L. Vandeventer, U. S. Atty., of Kansas City, Mo., for the United States.

Samuel W. Moore, of New York City, and Frank H. Moore, and Cyrus Crane (of Lathrop, Crane, Reynolds, Sawyer & Mersereau), both of Kansas City, Mo., for defendant railway companies.

Before VAN VALKENBURGH, Circuit Judge, and REEVES and OTIS, District Judges.

PER CURIAM.

The Texarkana & Fort Smith Railway Company is a Texas corporation owning in two segments approximately eighty-one miles of railway in that state and having its general offices and principal place of business at Texarkana. On February 13, 1932, the Kansas City Southern Railway Company, a Missouri corporation, applied to the Interstate Commerce Commission for an order authorizing the acquisition by it of control under lease of the properties of the Texarkana & Fort Smith Railway Company. Subsequently, on August 8, 1933, on account of an amendment of the Interstate Commerce Act effective June 16, 1933 (the Emergency Railroad Transportation Act 48 Stat. 211), a supplemental application was made for a similar order. The application was granted by the Commission and its order made October 4, 1933.

The lease which had been entered into between the two railway companies included, in the second paragraph of Section 5 thereof, the following provision: "The Southern Company does not assume any obligation to maintain, during the term of this lease, any general offices, machine shops, or roundhouses for or belonging to the Texarkana Company at any particular place or places, regardless of present or previous locations thereof; but shall have the right to change any existing location of general offices, machine shops, roundhouses and terminal facilities, belonging to the Texarkana Company, and to relocate the same, and, from time to time, to change the same, during the full term of this lease, and shall have the right to make all such locations, changes, and alterations as in the judgment of the Southern Company will enable it to operate the demised premises in the public interest and with the greatest economy and efficiency; and the Southern Company shall not be obligated or bound to perform any contractual, statutory or other obligations with reference to such matters which may now or hereafter rest upon the Texarkana Company; and any and all such changes may be made, from time to time, by the Southern Company as may be approved by the judgment of its officers or Board of Directors."

By its order the Commission authorized the acquisition by the Missouri corporation of the properties of the Texas corporation under the lease entered into between them, and so approved the lease, including the provision of the lease hereinbefore set out. The Kansas City Southern now proposes, as permitted by the lease between it and the Texas corporation, to remove from Texarkana, Tex., where they are now located, and to relocate outside of Texas, the general offices, machine shops, roundhouses, and terminal facilities of the leased railroad. The state of Texas, the railroad commission of that state, Boyd county, Tex., and the city of Texarkana, the complainants in this proceeding, being interested in retaining at Texarkana the general offices, machine shops, roundhouses, and terminal facilities of the Texarkana and Fort Smith, have brought this proceeding in equity to restrain the relocation proposed and the execution of the lease in so far as the second paragraph of section 5 thereof is concerned. The two railroad companies, the Interstate Commerce Commission, and the United States are made defendants and have filed answers to complainants' bill.

The case is here on final hearing. No question of fact is in dispute. It is admitted by complainants that the application for approval of the acquisition by the Missouri company of the properties of the Texas company by lease and for approval of the lease was duly presented to the Commission and so heard by that Commission as to comply with all requirements of the applicable statute and due process; that the Commission made a finding, fully supported by the evidence, to the effect that the continued maintenance at Texarkana of the facilities and agencies here involved would impose an annual and unnecessary burden on interstate commerce in the amount of $81,000. But it is insisted that the provision in the lease permitting the proposed relocation and the authorization of that provision by the Commission are invalid as violating article 6278, tit. 112, of the Revised Civil Statutes of Texas for 1925.

Article 6278 must be read in connection with article 6260. In substance they require every corporation owning or operating a railway in Texas to incorporate in that state and to maintain its general offices in that state. The text of articles 6260 and 6278, so far as necessary, is set out in the margin.¹

The complainants disavow any contention that Congress could not under the commerce clause vest the Interstate Commerce Commission with jurisdiction to approve the acquisition by lease by one railroad company of the properties of another and to approve a provision in such a lease of the character of that in question here notwithstanding such a statute as article 6278. The very limited contention of the complainants is that Congress has not conferred such authority on the Commission. Whether it has done so is the narrow and the only question the case presents. The question seems to us scarcely debatable.

1. When the supplemental application was presented to the Commission and its order made, the Emergency Railroad Transportation Act of 1933 had been approved and was the law. In title 2 of that act, among other things, it is provided (section 202(4) (a, b), (15), 49 USCA § 5(4) (a, b), (15) that:

"(4) (a) It shall be lawful, with the approval and authorization of the Commission * * * for any carrier * * * to * * * lease * * * the properties * * * of another. * * *

"(b) Whenever a * * * lease * * * is proposed * * * the carrier * * * seeking authority therefor shall present an application to the Commission, and thereupon the Commission shall notify the Governor of each State in which any part of the properties * * * involved in the proposed transaction is situated, and also such carriers and the applicant or applicants, of the time and place for a public hearing. If after such hearing the Commission finds that * * * the proposed * * * lease * * * will be in harmony with and in furtherance of the plan for the consolidation of railway properties * * * and will promote the public interest, it may enter an order approving and authorizing such * * * lease * * * upon the terms and conditions and with the modifications * * * found to be just and reasonable. * * *

"(15) The carriers and any corporation affected by any order made under the foregoing provisions of this section shall be, and they are hereby, relieved from the operation of the antitrust laws as designated in section 1 of the Act entitled `An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,' approved October 15, 1914, and of all other restraints or prohibitions by or imposed under authority of law, State or Federal, insofar as may be necessary to enable them to do anything authorized or required by such order."

Since no question is made of the power of Congress to enact this statute, only its interpretation is now required. The language is plain and unambiguous. Unequivocally it empowers the Commission to approve the acquisition of properties of one railroad by another through a lease of those properties and to pass upon and, therefore, to approve or reject, the terms and conditions of the lease. When in a given instance the Commission has made an order approving acquisition by a lease and approving the lease, the carriers affected are, by the very words of the statute, relieved from the operation of any state law to the restraint or prohibition of which otherwise they would be subjected, if such relief be necessary to the doing of anything which the order authorizes. The order of the Commission here approved and authorized a lease under which the lessee was authorized to remove the general offices of the lessor from the state of Texas. A Texas statute restrained and prohibited the very thing thus authorized. Here then is just such a restraint and prohibition, imposed by authority of state law, as is expressly eliminated by the very words and plain meaning of the act of Congress.

But it is contended by counsel for complainants that the language of paragraph (15) set out above is not to be construed to refer to all restraints and prohibitions imposed under authority of law, state or federal, as a literal reading of the...