State v. Duluth, M. & I. R. Ry. Co.

• Court: Minnesota Supreme Court
• Writing for the Court: KNUTSON
• Citation: State v. Duluth, M. & I. R. Ry. Co., 75 N.W.2d 398, 246 Minn. 383 (Minn. 1956)
• Decision Date: 24 February 1956
• Docket Number: No. 36621,36621
• Parties: STATE of Minnesota, Respondent, v. DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY, Appellant, and Order of Railway Conductors et al., Intervenors, Respondents.

Page 398

75 N.W.2d 398

246 Minn. 383

STATE of Minnesota, Respondent, v. DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY, Appellant and Order of Railway Conductors et al., Intervenors, Respondents.

No. 36621.

Supreme Court of Minnesota.

Feb. 24, 1956.

Syllabus by the Court.

1. On appeal to the district court from an order of the Railroad and Warehouse Commission, the function of the district court is to judicially determine whether the order is reasonable and lawful. In the determination of these questions the court must consider all the evidence before it in the same manner as an appellate court considers the findings of a jury.

2. On appeal from an order of the district court reviewing an order of the Railroad and Warehouse Commission, the function of this court is to determine whether all the evidence, inclusive of the evidence submitted to the trial court, sustains the findings of the district court that the order was reasonable and lawful.

3. The burden rests on appellant to overcome the prima facie effect that must be given an order of the Railroad and Warehouse Commission. The evidence to overcome such order must be clear and convincing.

4. The evidence in this case sufficiently supports the order of the commission, tested by the rules applicable to appeals from such orders.

5. Due process in an administrative proceeding must include a hearing attended by at least the rediments of fair play. This involves a hearing in which interested parties are not deprived of a fair opportunity to present evidence and be heard.

6. The right to a fair hearing embraces the right to know the claims of opposing parties and what issues are to be investigated or litigated.

Donald D. Harries, Franklin B. Stevens, William H. Crago, Duluth, for appellant.

Gordon Rosenmeier, Little Falls, Fred A. Cina, Virginia, for Intervenors.

Miles Lord, Atty. Gen., Victor J. Michaelson, Sp. Asst. Atty. Gen., for the State.

KNUTSON, Justice.

This is an appeal from a judgment affirming an order of the Railroad and Warehouse Commission requiring the reestablishment of railroad passenger service on defendant's lines hereinafter described.

For the sake of brevity, we shall include only those facts deemed essential to an understanding of the issues to be determined.

Defendant Duluth, Missabe and Iron Range Railway Company, referred to hereinafter as the railway company, is a railway corporation, organized under the laws of Minnesota, engaged in operating as a common carrier of passengers and freight. It operates principally between the city of Duluth and the villages and towns on the Iron Range in this state. Several years ago it operated several passenger trains between the cities and villages connected by its tracks, but most of these were abandoned long ago. At the time of the commencement of these proceedings it operated a passenger train, designated as No. 1, which left Duluth at 8:20 a.m. and arrived at Hibbing at 11:38 a.m. With this service, it furnished bus service between some of the smaller towns. Its train No. 2, going in the opposite direction, left Hibbing at 1:15 p.m. and arrived at Duluth at 4:10 p.m. Train No. 11 connected with train No. 1 at Iron Junction and ran from that point to Virginia. It left Iron Junction at 10:46 a.m. and arrived at Virginia at 11:22 a.m. Train No. 12 left Virginia at 9:45 a.m. and arrived at Iron Junction at 10:20, connecting with train No. 1 at that point; and train No. 14 left Virginia at 1:10 p.m. and arrived at Iron Junction at 1:56 p.m. so as to connect with train No. 2. Trains Nos. 1 and 2 stopped at the following intermediate stations between Duluth and Virginia-Hibbing-Buhl: Missabe Junction (Duluth), 57th Avenue West (Duluth), Proctor, Adolph, Saginaw, Grand Lake, Burnett, Culver, Alborn, Payne, Kelsey, Zim, Forbes, Iron Junction, Wolf, Wilpen, Mitchell, Shenango, and Chisholm and would stop on flag at Munger, Birch, Sax, Fens, Macon, and Sherwood. Trains Nos. 11, 12, and 14, between Virginia and Iron Junction, stopped at the intermediate stations of Eveleth and Largo and by flag at Spruce and Rainy Junction.

The distance from Duluth to Hibbing is 84 miles; from Duluth to Buhl 90 miles; and from Duluth to Virginia 78 miles.

The schedule of trains Nos. 1 and 2 was so arranged as to connect with trains coming into Duluth in the morning from Chicago, the Twin Cities, and other points to the east, south, and west and, similarly, in the evening with trains leaving Duluth for other points. All the trains carried mail and express.

The total population served by these trains is somewhat in excess of 150,000, of which approximately 107,000 live in the Duluth-Proctor area; 42,000 in the five major Range villages; and slightly in excess of 1,000 in the vicinity of the other intermediate stations named above.

Each train was manned by a full crew of five members.

Daily air service is available between Duluth, Hibbing, and Chisholm, and, except Sunday, other daily passenger train service is available between Duluth and Virginia. No passenger service, aside from that involved here, is available between Duluth and Hibbing or other towns served on that part of the line.

The railway company's track and track bed are among the best to be found anywhere. Its principal business is that of transporting iron ore from the Iron Range to the docks in Duluth and Superior. Its freight equipment has been improved and modernized so as to raise its efficiency to the highest possible level. Its passenger service, on the other hand, is rendered by an old-type steam locomotive. Its cars, while probably adequate for the limited use made of them, have not been modernized. Its time of operation has not been improved for many years.

At the time of trial, the net investment of the railway company after deducting depreciation and amortization, plus materials, supplies, and cash, was $101,753,864. The net operating income of the entire system for 1952 was $5,638,186 and for 1953 it was $10,405,444. In the operation of the passenger service here involved it suffered an 'out-of-pocket' loss in 1951 of $195,753.03 and for 1952 of $223,127.36. The railway company contends that there are other expenses common to both freight and passenger service, part of which properly is assignable to passenger service, which are not included in the above figures and that, if they had been included, the loss would have been even greater.

Over the years the number of passengers carried on the trains involved has decreased substantially. For the year 1952 the average number of passengers carried per train mile was 4.62 or slightly less than the five-man crew. The total number of passengers carried and revenue derived from them for the years covered by the evidence are as follows:

          Passengers   Revenue
                  Year     Carried    Received
                --------  ----------  ---------
                1950          12,066  $8,151.87
                1951          12,438   7,334.20
                1952          13,854   7,806.98
                3 months
                of 1953        2,431   1,403.05
                

In addition to the above, revenue was derived from mail and express transportation so that the total revenue for 1952 amounted to $75,193.15.

The larger villages involved in the service are served by a number of buses running each way each day and also by some air service. Some of the smaller towns are located from a short distance up to four or five miles from highways on which buses run. The number of people so situated that bus service would not be directly available would probably be slightly more than 1,000. Some of the roads on which buses run or might run are affected by climatic conditions so that in the spring of the year it is not possible for buses to run on them. Since the abandonment of rail passenger service, star routes have been established to carry mail to the Range towns and from those towns to Duluth, and it is somewhat doubtful from the evidence in this case whether contracts for the carrying of mail could be recaptured.

On March 5, 1952, the railway company filed its application with the Railroad and Warehouse Commission for authority to discontinue the above passenger service. Public hearings were held at Hibbing and Duluth. The Railroad and Warehouse Commission then consisted of Commissioners Ewald W. Lund, Elling A. Knutson, and Clifford C. Peterson. ¹ On November 7, 1952, after quite a lengthy hearing, the commission made its order authorizing discontinuance of the service. Commissioner Peterson dissented.

Thereafter an application was filed by the Range Municipalities and Civic Association for a rehearing. In the meantime the personnel of the commission had changed by the election, at the November 1952 general election, of Paul A. Rasmussen in the place of Commissioner Knutson. The commission set the application for hearing on December 11, 1952. The commission failed to act on the application, and, no appeal having been taken, the order of November 7 became final as provided by M.S.A. § 216.25. Pursuant thereto, passenger service was discontinued on May 15, 1953, and, under stays granted by the district court, no service has been rendered since that time.

On April 15, 1953, the commission, on its own initiative, issued an order to show cause why the service abandoned under the order of November 7, 1952, should not be reestablished. Hearing thereon was set for May 1, 1953, at Hibbing, and the commission, with Commissioner Lund dissenting, issued an ex parte order on May 6 requiring the reestablishment of the service abandoned. No change in schedule from the former service was provided in that order. The enforcement of the order was enjoined by the district court on the ground that the commission lacked authority to make it. The hearing on the order to show cause proceeded to completion on May 21. On October 6, 1953, the commission issued its order, Lund again dissenting, which, as far as material here, reads as follows:

'That the Duluth, Missabe and Iron Range Railway Company be and it...