Texas Electric Ry. Co. v. Eastus

• Decision Date: 29 December 1938
• Docket Number: No. 3662,3663.,3662
• Parties: TEXAS ELECTRIC RY. CO. v. EASTUS, U. S. Atty. SAME v. THOMAS, Collector of Internal Revenue.
• Court: U.S. District Court — Northern District of Texas

25 F. Supp. 825

TEXAS ELECTRIC RY. CO. v. EASTUS, U. S. Atty.

SAME v. THOMAS, Collector of Internal Revenue.

Nos. 3662, 3663.

District Court, N. D. Texas, Dallas Division.

December 29, 1938.

COPYRIGHT MATERIAL OMITTED

C. D. Cass and Robert E. Quirk, both of Washington, D. C., and J. M. Burford, of Dallas, Tex., for plaintiff.

John A. Erhard, Asst. U. S. Atty., of Dallas, Tex., D. W. Knowlton, Counsel, Interstate Commerce Commission, of Washington, D. C., Leo F. Tierney, Sp. Asst. to Atty. Gen., and Robert L. Stern, Sp. Atty., of Washington, D. C., for defendants.

Before HUTCHESON, Circuit Judge and ATWELL and DAVIDSON, District Judges.

ATWELL, District Judge.

By these two bills the complainant seeks to avoid certain provisions of the Labor Board Act and of the Tax Act, Act Aug. 29, 1935, 49 Stat. 974.

It alleges in each bill, that it operates interurban lines between Dallas and Waco, Texas, Dallas and Corsicana, Texas, Dallas and Denison, Texas, and street lines within the cities of Waco, Corsicana, Waxahachie, Denison, Sherman and McKinney. That it is a true electric interurban system, within the provisions of Section 1 of the Railway Labor Act, 45 U.S.C.A. § 151, and that as such, it is exempt from any and all of the provisions thereof. That it is a typical electric interurban railway, constructed and being used for passenger service, which has merely developed, in addition, such freight traffic as can be undertaken without interference with the performance of its main purpose, viz., the transportation of passengers and express. That its purely local traffic in freight, passengers, baggage and express greatly preponderates over any and all traffic, interline or interstate. That it is not operating as a part of a general railroad system of transportation.

That it is not subject to the Tax Act, Act Aug. 29, 1935, 49 Stat. 974, nor to the Railway Labor Act, 45 U.S.C.A. § 151 et seq., but that in each of such Acts, while its activities and corpus are exempted, there is a provision that the Interstate Commerce Commission may, upon complaint of any party interested, determine whether any line operated by electric power falls within the terms of such exempting proviso.

That Section 2 of the Tax Act, 49 Stat. 975, provides for the levy and collection and payment upon the income of every employee of a carrier subject to the Act, of three and one-half percent of the compensation of such employee, not in excess of $300 per month, received by him after the effective date of the Act, which was March 1st, 1936. That such tax shall be collected by the carrier or employer of the tax payer by deducting the amount from the compensation of the employee and that the employer is liable for the payment of the same. That, in addition, the carrier when subject to the Act, shall pay an excise tax of three and one-half percent of the compensation. That such collection shall be made by the Commissioner of Internal Revenue and paid into the treasury of the United States. That such collections and payments shall be made quarterly. That the Act provides punishment by fine of not less than $1,000 nor more than $20,000, such misdemeanors covering failures to return, keep records and supply information, in addition to the willful failure to pay or make return. Imprisonment may be fixed in addition to the fines, together with the costs of prosecution. That the real purpose of the Act is not to obtain funds for public purpose but to set up a pension or retirement system for employees.

That complainant has not complied with the provisions of the Tax Act for the reason that it is not subject thereto, and that its legal remedy, after payment, is so hedged about by regulations as to be neither full, complete nor adequate. That the respondents are charged with the duty of prosecuting both civil and criminal actions and that they are threatening to, and will, enforce such statutes unless restrained.

That the Railway Labor Act provides certain activities by those subject to its provisions, among which is the posting of a notice that all employees, in case of disputes between them and the carrier, will be handled in accordance with that Act. That it is not subject to the Act and cannot admit such subjugation by posting such notices. That if it were to take that course it would be deprived of its liberty of contract and would be compelled to negotiate with its employees through representatives other than of its own choosing. That applications have already been made for increase in wages and that complainant is unable to grant any such increase or to agree to rules and working conditions that have been demanded of it. That if disputes arise between it and its employees, and it were subject to the Act, such disputes must be submitted to the National Railroad Adjustment Boards, in the choice of which the complainant has had no part. That if it refuses to comply with such order it is liable to criminal prosecution with resultant heavy fines whereby it would suffer irreparable injury and damage.

That the respondent Eastus is United States Attorney and is charged under the law with filing such suits as come within the purview of the Act and has, in fact, threatened to file such suits against plaintiff and its agents and its officers for failure to comply with such Railway Labor Act.

Both bills ask for adjudication and declaration pursuant to the provisions of the Declaratory Judgment Act, Jud.Code § 274d, 28 U.S.C.A. § 400, to the effect that it is not subject either to the Tax Act or to the Railway Labor Act, and for a finding that the Act is unconstitutional, and for general orders of restraint.

These cases were tried before us in June. At the request of all parties, our decision was delayed until the Supreme Court should act in the Shields v. Utah Idaho Central Railroad Company Case, 59 S.Ct. 160, 83 L.Ed. ___. The opinion in that case was handed down on December fifth.

After that, the plaintiff asked permission to file an amendment, which conformed its pleadings, more carefully, to the facts. This amendment is granted. It also sought to withdraw a constitutional question which it had raised, and which was responsible for the assembling of the statutory three-judge court. This amendment is denied. Jurisdiction may not be defeated, after once tendered, and accepted, and the issue tried and rests in the breast of the court, by voluntarily abandoning that portion of the case which is responsible for the jurisdiction, the trial, and the proceedings.

Section 41 (28), Title 28 U.S.C.A., page 652, gives this court jurisdiction of cases brought to enjoin, set aside, annul, or suspend in whole or in part, any order of the Interstate Commerce Commission.

Section 46 of the same title, page 656, provides that such suits shall be brought against the United States and that the court in its discretion may sustain or suspend in whole or in part, the operation of the Commission's order pending the final hearing and the determination of the suit.

Section 47 of the same title, U.S.C.A., page 663, provides for the hearing in the District Court by three judges.

In the case of Shannahan v. United States, 303 U.S. 596, 58 S.Ct. 732, 82 L. Ed. 1039, the proviso of the Railway Labor Act, pleaded here, was under scrutiny. The Interstate Commerce Commission had determined that the electric line there treated was not within the meaning of the exempting proviso. It was also held that no "order" followed that finding by the Commission.

Trustees of a court reorganization proceeding moved to set aside the finding of the Commission. The Commission intervened, claiming that no "order" had been issued within the meaning of the Urgent Deficiencies Act. That contention was sustained by the lower court and affirmed by the Supreme Court.

It was also held that the function of the Commission was limited to the determination of a fact that its decision was not even in form an "order."

It was further determined that the finding by the Commission was not even a decision which the Mediation Board was empowered to enforce. The Act confers upon the Board possible duties in respect to interstate carriers by railroads not exempted by the proviso.

The opinion concludes with this statement page 735, "Whether the determination of the Commission is reviewable in a district court by some judicial procedure other than that of the Urgent Deficiencies Act we have no occasion to consider."

The pleadings here disclose no "order" by the Commission, though, the Commission has intervened.

It must be conceded that there is a controversy here. It also must be conceded that the controversy arises under the national laws. Jurisdiction is, therefore, present in this court so far as the subject matter is concerned. Whether the court may be called upon to perform a service which the congress has committed to the Interstate Commerce Commission is open for serious thought.

In Hudson & Manhattan Railway Company against Hardy, D.C., 22 F.Supp. 105, Judge Woolsey held that a suit to enjoin enforcement of an order of the Mediation Board, made under the Labor Act, was within the jurisdiction of the District Court and not one requiring three judges, because the constitutionality was not raised. In the present case the constitutionality of the legislation is raised. Also, in that case the Interstate Commerce Commission had found the railway to be subject to the Railway Labor Act.

Whether an electric railway is or is not an interurban electric railway not operating as a part of a general steam railroad system of transportation, is initially a question of fact, and when a finding on such question has been made by the Interstate Commerce Commission, in an order, and is embodied in an order of the Mediation Board, under the Railway Labor Act, it involves the determination of a question of administrative jurisdiction reviewable by the court in an action to enjoin enforcement of the order.

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