The Chicago Junction Case Baltimore Co v. United States

• Decision Date: 03 March 1924
• Docket Number: No. 489,489
• Citation: 264 U.S. 258,68 L.Ed. 667,44 S.Ct. 317
• Parties: THE CHICAGO JUNCTION CASE. BALTIMORE & O. R. CO. et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

264 U.S. 258

44 S.Ct. 317

68 L.Ed. 667

THE CHICAGO JUNCTION CASE. BALTIMORE & O. R. CO. et al.

v UNITED STATES et al.

No. 489.

Argued Jan. 24, 1924.

Decided March 3, 1924.

Messrs. Luther M. Walter and John S. Burchmore, both of Chicago, Ill., for appellants.

Messrs. Blackburn Esterline and Robert J. Cary, both of Chicago, Ill., for the United States.

Mr. P. J. Farrell, of Washington, D. C., for Interstate Commerce Commission.

Mr. Ralph M. Shaw, of Chicago, Ill., for appellees Chicago Junction Ry. Co. and others.

Mr. Justice BRANDEIS delivered the opinion of the Court.

The Chicago Junction Railway and the Chicago River & Indiana Railroad are terminal railroads located within the Chicago switching district. Prior to May 16, 1922, they were operated as independent belt lines, uncontrolled by any trunk line carrier, and they were used by the 23 railroads entering Chicago, impartially and without discrimination. Among these were the New York Central Lines and their chief competitors, the 6 carriers who are plaintiffs in this suit.¹ The New York Central sought to obtain control of these terminal railroads. To this end, it made an application to the Interstate Commerce Commission, on December 28, 1920, under paragraph 18 of section 1 and paragraph 12 of section 5 of the Act to Regulate Commerce, as amended by Transportation Act 1920, c. 91, 41 Stat. 456, 477, 481.² The authorization requested was to make an agreement with stockholders then owning these properties by which, among other things, the New York Central would purchase all the capital stock of the Chicago River & Indiana Railroad for $750,000, and the latter company would lease for 99 years (and thereafter) the Chicago Junction Railway at an annual rental of $2,000,000. Upon this application hearings were had. The Baltimore & Ohio Railroad, and its coplaintiffs herein, intervened, and opposed granting the application. On May 16, 1922, an order was entered which authorized the New York Central to acquire the Chicago River & Indiana Railroad stock and authorized the latter company to lease the Chicago Junction Railway.³ Chicago Junction Case, 71 Interst. Com. Comn. R. 631. The order did not fix the date when it should become effective.⁴ Immediately after its entry, the purchase of the stock was completed and the lease was executed.

On April 10, 1923, this suit was brought in the federal court for the Eastern district of Illinois against the United States, the Commission, the New York Central, the terminal railroads, and the stockholders thereof.⁵ The relief sought is to have the order declared void, to have set aside the sale of the stock and the lease, to restore the status quo ante the order, and for an injunction. The case was heard before three judges on plaintiffs' motion for an interlocutory injunction and on defendants' motions to dismiss the bill.⁶ The District Court, without opinion, denied the injunction and dismissed the bill. The case is here on direct appeal under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220 (Comp. St. § 998).

The order did not provide for the issue of a certificate of public convenience and necessity. It did not disclose whether it was issued under paragraph 18 of section 1 or under paragraph 2 of section 5. An application, by the carriers who are plaintiffs herein, that this be specified was denied by the Commission without opinion. In this court counsel for all the defendants stated that the order was entered solely under paragraph 2 of section 5. We have, therefore, no occasion to consider the incidents of applications under paragraph 18 of section 1, or rights thereunder. Several reasons are urged why the order should be held void. The defendants, besides asserting its validity, insist that the plaintiffs have no interest which entitles them to assail the order, and that there are, also, other obstacles to the maintenance of this suit.

First. Plaintiffs contend that the order is void because there was no evidence to support the finding that the acquisition of control of the terminal railroads by the New York Central 'will be in the public interest.' The bill charges, in clear and definite terms, that this finding was wholly unsupported by evidence. We must take that fact as admitted for the purposes of this appeal. The allegation is made as one of fact. There is no suggestion in the motions to dismiss (which are both general and special) that this fact is not well pleaded, or that a copy of the evidence introduced at the hearing should have been annexed to the bill. Compare Louisiana & Pine Bluff Ry. Co. v. United States, 257 U. S. 114, 42 Sup. Ct. 25, 66 L. Ed. 156. Facts conceivably known to the Commission, but not put in evidence, will not support an order. Interstate Commerce Commission v. Louisville & Nashville R. R. Co., 227 U. S. 88, 93, 33 Sup. Ct. 185, 57 L. Ed. 431. The defendants concede that the New York Central could not legally acquire control of these terminal railroads unless authorized so to do by the Commission, pursuant to paragraph 2 of section 5, and that the Commission cannot legally grant such authority unless it finds, after hearing, that the acquisition 'will be in the public interest.' They contend that this order is not one of those subject to judicial review, and that, if subject to review, it cannot be held void merely because unsupported by evidence. These objections are based on the nature of the order, not on the class of persons by whom the judicial review is invoked.

Whether this order can be described properly as legislative may be doubted. It is clear that legislative character alone would not preclude judicial review. Rate orders are clearly legislative. Prentis v. Atlantic Coast Line, 211 U. S. 210, 226, 29 Sup. Ct. 67, 53 L. Ed. 150. Nor would the further fact that the order is permissive preclude review, if by that term is meant an order which, in contradistinction to one compelling performance, authorizes a carrier to do some act otherwise prohibited. Orders entered under the Act of June 18, 1910, c. 309, § 8, 36 Stat. 539, 547 (Comp. St. § 8566), amending section 4 of the Interstate Commerce Act, are of this character. That section prohibits carriers from charging more 'for a shorter than for a longer distance over the same line or route in the same direction' without obtaining authority from the Commission. A suit will lie to set aside an order granting such authority, and to enjoin action by the carried thereunder. Skinner & Eddy Corporation v. United States, 249 U. S. 557, 562, 39 Sup. Ct. 375, 63 L. Ed. 772. Compare United States v. Merchants' & Manufacturers' Traffic Association, 242 U. S. 178, 37 Sup. Ct. 24, 61 L. Ed. 233. The order here challenged is wholly unlike those which have been held not subject to judicial review. In United States v. Illinois Central R. R. Co., 244 U. S. 82, 89, 37 Sup. Ct. 584, 61 L. Ed. 1007, the action of the Commission, with which the court refused to interfere, was the assignment of a complaint for hearing. As this court said: 'The notice * * * had no characteristic of an order, affirmative or negative.' In Proctor & Gamble v. United States, 225 U. S. 282, 32 Sup. Ct. 761, 56 L. Ed. 1091, Hooker v. Knapp, 225 U. S. 302, 32 Sup. Ct. 769, 56 L. Ed. 1099, and Lehigh Valley R. R. Co. v. United States, 243 U. S. 412, 37 Sup. Ct. 397, 61 L. Ed. 819, judicial review was refused, not because the order was permissive, or because it was negative in character, but because it was a denial of the affirmative relief sought.⁷ This court declined to interfere, because to do so would have involved exercise by it of the administrative function of granting the relief which the Commission, in the exercise of its jurisdiction, had denied. Here the order complained of is an affirmative one; that is, it grants the relief sought. Compare Manufacturers' Ry. Co. v. United States, 246 U. S. 457, 483, 38 Sup. Ct. 383, 62 L. Ed. 831.

It is further contended that paragraph 2 of section 5 confers a power purely discretionary, and that, for this reason, the order entered cannot be set aside by a court merely on the ground that the action taken was based on facts erroneously assumed, or of which there was no evidence.⁸ The power here challenged is not of that character. Congress by using the phrase 'whenever the Commission is of opinion, after hearing,' prescribed quasi judicial action.⁹ Upon application of a carrier, the Commission must form a judgment whether the acquisition proposed will be in the public interest. It may form this judgment only after hearing.¹⁰ The provision for a hearing implies both the privilege of introducing evidence and the duty of deciding in accordance with it. To refuse to consider evidence introduced or to make an essential finding without supporting evidence is arbitrary action. As it was admitted by the motion that the order was unsupported by evidence, and since such an order is void, there is no occasion to consider the other grounds of invalidity asserted by plaintiffs.

Second. The defendants contend that the plaintiffs have not the legal interest necessary to entitle them to challenge the order. That they have in fact a vital interest is admitted. they are the competitors of the New York Central. Practically all the tonnage originated at or destined to points on these terminal railroads is competitive, in that the same can be hauled either over the lines of the New York Central or over those of the plaintiffs. Prior to the date of the order, and while the terminal railroads were uncontrolled by any trunk line carrier, they were all served impartially and without discrimination, and they competed for the traffic on equal terms. The order substitutes for neutral control of the terminal railroads, monopoly of control in the New York Central, and, in so doing, necessarily gives to it substantial advantage over all its competitors and subjects the latter to serious disadvantage and prejudice. The main purpose of the...