Virginian Ry Co v. United States United States v. Virginian Ry Co

Decision Date13 December 1926
Docket NumberNos. 281,282,s. 281
Citation272 U.S. 658,47 S.Ct. 222,71 L.Ed. 463
CourtU.S. Supreme Court

[Syllabus from pages 658-660 intentionally omitted] Messrs. James W. Carmalt, of Washington, D. C., W. H. T. Loyall, of Norfolk, Va., and E. W. Knight, of Charleston, W. Va., for Virginian Ry. Co.

Messrs. Blackburn Esterline, P. J. Farrell, and Ewing H. Scott, all of Washington, D. C., for the United States.

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

Mr. Justice BRANDEIS delivered the opinion of the Court.

An extensive territory in West Virginia, comprising the coal mining districts known as New River, Tug River, and Pocahontas, is served by three railroad systems. Each grants blanket rates to destination from the mines within the district served by it. The blanket rates to each destination are the same on all the systems. Two of them, the Chesapeake & Ohio and the Norfolk & Western, have lines extending from the Atlantic Ocean to the Middle West. The line of the third, the Virginian, extends only eastward to tidewater. Some mines in the district are served directly by only one of these railroads; some by more. Nintey-nine mines are located only on the Virginian. Of these 45 enjoy, by reason of the trackage agreements to be described, the same rates to the West as do mines on the Chesapeake & Ohio and on the Norfolk & Western. The remaining 54 are denied the opportunity of reaching the Western markets.

Some of the 54 made complaint to the Interstate Commerce Commission that they are denied access to the Western markets, and sought relief under both section 1 and section 3 of the Act to Regulate Commerce (Comp. St. §§ 8563, 8565). For most of these 54 mines access to these markets was and is physically possible through a junction of the Virginian and the Chesapeake & Ohio. But that route is closed commercially, because these two carriers have not established any joint rates to the West from any of these 54 mines, and the combination of the Virginian's local rate from the mines to the junction with the Chesapeake & Ohio's rates from the junction to the West results in charges so high as to be prohibitive. The complainants contended before the Commission that the existing rate schedule to the West subjects them to unjust discrimination, and also that the combination rates are unreasonable. To establish the discrimination, the shippers relied, among other things, upon the fact that 45 other mines located only on the Virginian enjoy the favorable blanket rates to the West. To establish the unreasonableness. they showed, among other things, that mines similarly situated, located only on the Chesapeake & Ohio and on the Norfolk & Western, enjoy those rates.

The Chesapeake & Ohio did not oppose granting to the 54 mines the relief sought. The Virginian resisted strenuously. The complete record of the proceedings before the Commission occupies 713 pages of the printed record in this court, besides 67 exhibits, many of them elaborate, one covering 89 pages. The proceedings before the Commission, begun on May 15, 1922, did not close until February, 1923. The proposed report of the examiner was served on April 30, 1924, was submitted to division 3 of the Commission on June 30, 1924, and its original report was filed on March 10, 1925. The Commission found that the existing rates from the mines in question subjected the shippers to undue prejudice, and also that the rates were themselves unreasonable. Wyoming Coal Co. v. Virginian Railway Co., 96 Interest. Com. Com'n R. 359, and 98 Interst. Com. Com'n R 448. It ordered the carriers, 'according as they participate in the transportation.' to cease and desist from collecting, for the transportation of coal from certain stations on the Virginian Railway to interstate destinations in the West, rates which exceed those to be prescribed pursuant to the order, and then directed the carriers to establish 'rates which shall not exceed the district rates maintained on like traffic' by those carriers respondents to the same destinations 'from mines in the New River districts of the Chesapeake & Ohio Railway Company and the Virginian Railway Company, respectively, and the Pocahontas and Tug River districts of the Norfolk & Western Railway Company, those districts forming part of what is generally referred to as the 'Outer Crescent." See Bituminous Coal to Central Freight Association Territory, 46 Interst. Com. Com'n R. 66, 69. A petition for reargument before the whole Commission was denied on April 14, 1925; but an amended report and order was filed on May 19, 1925.

This suit was brought by the Virginian against the United States, the Interstate Commerce Commission, and the Chesapeake & Ohio, in the federal court for the Southern District of West Virginia, to enjoin the enforcement of the order and to set it aside. All three defendants answered, the Chesapeake & Ohio asserting its readiness to comply with the Commission's order. Several coal companies intervened as defendants. The case was heard, on May 28, 1925, before three judges, upon application for an interlocutory injunction and also upon final hearing. The order was assailed mainly on the ground that the findings made were unsupported by evidence. It was also contended, among other things, that findings essential to the relief granted had not been made. Besides the full transcript of the proceedings before the Commission, the Virginian introduced, under objection, some additional evidence in support of a claim that the order should be set aside because of certain facts occurring since it was entered. On September 19, 1925, the court entered a final decree denying the injunction and dismissing the bill on the merits. No. opinion, written or oral, was delivered.

Before entry of the decree, the Virginian indicated an intention to appeal, and asserted that irreparable damage would result, pending the appeal, if the decree should be reversed. Thereupon the District Court included in the final decree a clause restraining enforcement of the Commission's order pending the perfecting and determination of the appeal. No. 282 is a cross-appeal by the United States and the Commission from so much of the decree as restrains enforcement of the Commission's order pending the appeal. No. 281 is the appeal by the Virginian. under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220, from so much of the decree as denied the injunction and dismissed the bill. The contentions made by the Virginian here seem to be the same that were made by it below, and largely the same that it made before the Interstate Commerce Commission.

First. The Virginian attacks the Commission's finding of unjust discrimination. There clearly was substantial evidence to support every fact specifically found. To consider the weight of the evidence before the Commission, the soundness of the reasoning by which its conclusions were reached, or whether the findings are consistent with those made by it in other cases, is beyond our province. Whether a rate is unjustly discriminatory is a question on which the finding of the Commission, supported by substantial evidence, is conclusive, unless there was some irregularity in the proceeding or some error in the application of rules of law. Western Paper Makers' Chemical Co. v. United States, 271 U. S. 268, 46 S. Ct. 500, 70 L. Ed. 941. No irregularity in the proceedings before the Commission is even suggested.

Second. The Virginian contends that the specific facts found are, as matter of law, insufficient to support the finding of undue prejudice. The facts material are these Ever since the Virginian was constructed, it has adhered to the policy of providing for the output of mines on its line transportation only to tidewater. This policy is pursued, not only because it is deemed profitable to the company, but also because it enables the Virginian to furnish to shippers the most efficient service at reasonable rates. It has never held itself out as equipped to carry coal to the West, or joint rates to Western markets. The 45 mines on its line which enjoy the blanket rates to the West have them as a natural result of certain trackage agreements entered into by the Virginian with the Chesapeake & Ohio for an entirely different purpose. The purpose was to secure additional east-bound tonnage without wasteful expenditure by paralleling branch lines. To be able to secure the eastbound traffic from certain mines located on independent lines connecting with the Chesapeake & Ohio, the Virginian, having acquired the independent lines, sought the right to use that system's tracks to those mines. As compensation for the trackage rights over the Chesapeake & Ohio, it gave that company the right to use the Virginian's tracks to these 45 mines. The carriers, instead of using these trackage rights by operating over the other's tracks, substituted, solely as a matter of economy and convenience, a reciprocal switching arrangement. As a result, the Virginian hauls west-bound coal from these 45 mines to a junction with the Chesapeake & Ohio; the latter absorbs the switching charges of the Virginian, and these mines enjoy the same rate to the West as do those located on the Chesapeake & Ohio. But the Virginian's purpose in making the traffic agreement was solely to increase its east-bound traffic.

The fact that the Virginian's intention was not to give the 45 mines a preference over others, but to increase its own east-bound business from mines located on the other system, and that the preference resulting is merely an incident of a legitimate effort to develop the carrier's east- bound traffic, is not of legal significance. These 45 mines to which the Western market has been thus opened obviously enjoy thereby an advantage over the 54 mines, found to be similarly situated, to which the market is closed; and the...

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