Source: https://www.legalcrystal.com/case/96828/palmer-vs-massachusetts
Timestamp: 2018-02-23 15:00:34
Document Index: 419961436

Matched Legal Cases: ['§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 77', '§ 124']

Palmer Vs Massachusetts - Citation 96828 - Court Judgment | LegalCrystal
Palmer Vs. Massachusetts - Court Judgment
LegalCrystal Citation legalcrystal.com/96828
Case Number 308 U.S. 79
.....proceedings under § 77, has not been conferred by congress either upon the federal courts or the interstate commerce commission. the circuit court of appeals, one judge dissenting, reversed the district court, converse v. commonwealth, 101 f.2d 48. a summary of the facts will lay bare the legal issues. on december 28, 1937, the bankruptcy trustees of the new haven, acting under the requirements of massachusetts law, [ footnote 2 ] applied to that commonwealth's department of public utilities for leave to abandon eighty-eight passenger stations. [ footnote 3 ] twenty-one hearings were held by page 308 u. s. 83 the department on the questions raised by this application. during the pendency of these hearings and before the department had taken any action,.....
U.S. Supreme Court Palmer v. Massachusetts, 308 U.S. 79 (1939)
1. Creditors of a railroad, debtor in a reorganization proceeding under § 77 of the Bankruptcy Act, petitioned the District Court for an order directing the reorganization trustees to discontinue certain local transportation service. The trustees had previously applied to the state commission for authority to discontinue the same service, which application accorded with requirements of the state law and was then pending and being given orderly hearing and consideration. Held, the District Court was without power to order discontinuance of the service. P. 308 U. S. 88 .
2. In the light of the history of the legislation, such power in the District Court may not be implied from § 77(a), granting to the bankruptcy court "exclusive jurisdiction of the debtor and its property wherever located," or § 77(c)(2), permitting the trustees, subject to the control of the court, "to operate the business of the debtor." P. 308 U. S. 85 .
October 23, 1935, opened another chapter in the long history of the vicissitudes of the New York, New Haven, and Hartford Railroad Company. [ Footnote 1 ] By filing a petition for reorganization under § 77 of the Bankruptcy Act, 47 Stat. 1474, as amended by 49 Stat. 911 and 49 Stat. 1969,
A summary of the facts will lay bare the legal issues. On December 28, 1937, the bankruptcy Trustees of the New Haven, acting under the requirements of Massachusetts law, [ Footnote 2 ] applied to that Commonwealth's Department of Public Utilities for leave to abandon eighty-eight passenger stations. [ Footnote 3 ] Twenty-one hearings were held by
To be sure, in recent years, Congress has from time to time exercised authority over purely intrastate activities of an interstate carrier when, in the judgment of Congress, an interstate carrier constituted, as a matter of economic fact, a single organism, and could not effectively be regulated as to some of its interstate phases without drawing local business within the regulated sphere. [ Footnote 4 ] But such absorption of state authority is a delicate exercise of legislative policy in achieving a wise accommodation between the needs of central control and the lively maintenance of local institutions. [ Footnote 5 ] Therefore, in construing legislation, this court has disfavored inroads by implication on state authority, and resolutely confined restrictions upon the traditional power of states to regulate their local transportation to the plain mandate of Congress. Minnesota Rate Cases, 230 U. S. 352 ; cf. Kelly v. Washington ex rel. Foss Co., 302 U. S. 1 .
The dependence of local communities on local railroad services has for decades placed control over their curtailment within the regulatory authorities of the state. [ Footnote 6 ]
Even when the Transportation Act in 1920 gave the Interstate Commerce Commission power to permit abandonment of local lines when the overriding interests of interstate commerce required it, Colorado v. United States, 271 U. S. 153 , [ Footnote 7 ] this was not deemed to confer upon the Commission jurisdiction over curtailments of service and partial discontinuances. Public Convenience Application of Kansas City Southern Ry., 94 I.C.C. 691; see Proposed Abandonment, Morris & Essex Ry. Co., 175 I.C.C. 49. If this old and familiar power of the states was withdrawn when Congress gave district courts bankruptcy powers over railroads, we ought to find language fitting for so drastic a change.
We are asked to find it in § 77(a), granting to the bankruptcy court "exclusive jurisdiction of the debtor and its property wherever located," [ Footnote 8 ] and in § 77(c)(2), permitting the trustees, subject to the Court's control, "to operate the business of the debtor." [ Footnote 9 ] In order to expedite the reorganization of insolvent railroads, such broad and general provisions doubtless suffice to confer
upon the district courts power appropriate for adjusting property rights in the railroad debtor's estate and, as to such rights, beyond that in ordinary bankruptcy proceedings. Cf. Continental Bank & Trust Co. v. Rock Island Ry. Co., 294 U. S. 648 . But the District Court claimed power over the carrier's relation to the state. It has become the settled social policy both of the states and the nation to entrust the type of public interest here in question to expert administrative agencies because of "the notion," as Judge Learned Hand pointed out below, "that a judge is not qualified for such duties." [ Footnote 10 ]
Not only is there no specific grant of the power which the District Court exercised, but the historic background of § 77, the considerations governing Congress in its enactment, and the scheme of the legislation as disclosed by its specific provisions reject the claim. Until the amendment of March 3, 1933, railroads were outside the Bankruptcy Act. [ Footnote 11 ] But the long history of federal railroad receiverships, with the conflicts they frequently engendered between the federal courts and the public, left an enduring conviction that a railroad was not like an ordinary insolvent estate. [ Footnote 12 ] Also, an insolvent railroad, it was realized, required the oversight of agencies specially charged with the public interest represented by the transportation system. Indeed, when, in the depth of
the depression, legislation was deemed urgent to meet the grave crisis confronting the railroads, there was a strong sentiment in Congress to withdraw from the courts control over insolvent railroads and lodge it with the Interstate Commerce Commission. [ Footnote 13 ] Congress stopped short of this remedy. But the whole scheme of § 77 leaves no doubt that Congress did not mean to grant to the district courts the same scope as to bankrupt roads that they may have in dealing with other bankrupt estates.
The judicial process in bankruptcy proceedings under § 77 is, as it were, brigaded with the administrative process of the Commission. From the requirement of ratification by the Commission of the trustees appointed by the Court to the Commission's approval of the Court's plan of reorganization, the authority of the Court is intertwined with that of the Commission. [ Footnote 14 ] Thus, in § 77(c), and
§ 77(o), the power of the district courts to permit abandonments is specifically conditioned on authorization of such abandonments by the Commission. In view of the judicial history of railroad receiverships and the extent to which § 77 made judicial action dependent on approval by the Interstate Commerce Commission, it would violate the traditional respect of Congress for local interests and for the administrative process to imply power in a single judge to disregard state law over local activities of a carrier the governance of which Congress has withheld even from the Interstate Commerce Commission, except as part of a complete plan of reorganization for an insolvent road. [ Footnote 15 ] About a fourth of the railroad mileage of
the country is now in bankruptcy. [ Footnote 16 ] The petitioners ask us to say that district judges in twenty-nine states have effective power, in view of the weight which often attaches to findings at nisi prius, to set aside the regulatory systems of these twenty-nine states, with all the consequences implied for those communities. Congress gave no such power.
Other arguments, drawn from the legislative history of § 77 and from the general equity powers conferred by § 77(a) and § 77(c)(2) [ Footnote 17 ] were urged, but we deem it unnecessary to say more.
E.g., The Shreveport Cases, 234 U. S. 342 ; Railroad Comm'n of Wisconsin v. Chicago, B. & Q. R. Co., 257 U. S. 563 . See I Sharfman, "The Interstate Commerce Commission," pp. 82-86, 219-225. For the careful observance of state interests in applying the Shreveport doctrine, see Illinois Cent. R. Co. v. Public Utilities Comm'n, 245 U. S. 493 , and Florida v. United States, 282 U. S. 194 .
In re Tyler, 149 U. S. 164 , and other decisions of this Court cited by petitioners deal with attempts at "physical invasion" of the properties held in the custody of a Federal court. See 149 U.S. at 149 U. S. 182 . Section 65 of the Judicial Code, 36 Stat. 1104, 28 U.S.C. § 124, decisively indicates that Congress did not intend that those who operate a business under the control of a federal court should be immune from the regulatory authority of the several states, any more than they are from their taxing power.