Source: https://www.legalcrystal.com/case/96807/united-states-vs-lowden
Timestamp: 2017-07-24 05:39:59
Document Index: 326472991

Matched Legal Cases: ['§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 301', '§ 151', '§ 201', '§ 2009', '§ 5', '§ 422']

United States Vs Lowden - Citation 96807 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize United States Vs. Lowden - Court Judgment	LegalCrystal Citationlegalcrystal.com/96807CourtUS Supreme CourtDecided OnDec-04-1939Case Number308 U.S. 225AppellantUnited StatesRespondentLowdenExcerpt:
united states v. lowden - 308 u.s. 225 (1939)
section 5(4)(b) of the interstate commerce act provides that the commission may authorize carriers to consolidate or lease their properties where it finds that that action, subject to such conditions and modifications as it shall find to be just and reasonable, will be in harmony with and in furtherance of the plan of consolidation of railway properties established pursuant to paragraph (3) of that section, and will..... Judgment:
Section 5(4)(b) of the Interstate Commerce Act provides that the Commission may authorize carriers to consolidate or lease their properties where it finds that that action, subject to such conditions and modifications as it shall find to be just and reasonable, will be in harmony with and in furtherance of the plan of consolidation of railway properties established pursuant to paragraph (3) of that section, and will promote the public interest. Upon an application to the Interstate Commerce Commission for authority to lease the road and properties of one railroad to another, with consequent large savings in the operating costs of the road, the Commission found that the proposed lease would promote the public interest, and authorized it upon conditions which it found to be just and reasonable --
that the employees of the leased road be compensated for a limited time for any reduction of salary, that dismissed employees be paid partial compensation for the loss of their employment, and that transferred employees be paid moving and traveling expenses, including losses incurred through their being forced to sell their houses.
1. The term "public interest," as used in the statute, may be understood for the purposes of this case as relating not to public interest in general, but to public interest in the maintenance of an adequate and efficient transportation service. P.
308 U. S. 230
2. The policy of consolidating the railways is so intimately related to the maintenance of an adequate and efficient rail transportation system that the "public interest" in the one cannot be dissociated from that in the other. P.
308 U. S. 232
3. In determining whether conditions attached to an order authorizing a lease will promote the public interest under § 5(4)(b), the Commission may consider their effect upon the national policy of consolidation, as well as their more immediate effect upon the adequacy and efficiency of the transportation system. P.
4. Interpreting the term "public interest" not in a general sense, but as meaning public interest in maintaining an adequate and efficient transportation system, an order of the Commission authorizing a lease under § 5(4)(b) may affix reasonable conditions for the compensation of railway employees who will be seriously affected. Pp.
308 U. S. 228
308 U. S. 238
5. It cannot be said as a matter of law that the prescribed conditions whose justice and reasonableness are not challenged will not advance the public interest in the statutory sense by facilitating the national policy of railroad consolidation and by promoting the adequacy and efficiency of the railroad transportation system by preventing interruption of interstate commerce through labor disputes and by their effect on employee morale. P.
6. The Act as so applied is within the commerce power. P.
7. The carrier is not deprived of property without due process of law in being required to devote part of the savings resulting from the exercise of the leasing privilege to compensate employees for losses resulting from it. P.
308 U. S. 240
Appeal from a decree of the District Court of three judges which set aside conditions attached by the Interstate Commerce Commission to an order permitting one carrier to lease its railroad to another.
The Commission found that the lease would not impose upon the public any change in conditions affecting
It accordingly authorized the lease upon the conditions which it found to be just and reasonable: that, for a period not exceeding five years, each retained employee should be compensated for any reduction in salary so long as he is unable, in the exercise of his seniority rights under existing rules and practices, to obtain a position with compensation equal to his compensation at the date of the lease; that dismissed employees unable to obtain equivalent employment be paid partial compensation for the loss of their employment in specified amounts and for specified periods, depending on the length of their service, and that the transferred employees be paid their traveling and moving expenses, including losses incurred through being forced to sell their homes. The maximum cost of compliance with the conditions, it was found, would be $290,000 spread over a period of five years, during which the savings effected by the lease would be not less than $500,000. The Commission found that the proposed lease, with the specified conditions "will be in harmony with and in furtherance of our plan for the consolidation of railroad properties, and will promote the public interest."
New York Central Securities Co. v. United States,
287 U. S. 12
, we pointed out that the phrase "public interest" in this section does not refer generally to matters of public concern apart from the public interest in the maintenance of an adequate rail transportation system; that it is used in a more restricted sense defined by reference to the purposes of the Transportation Act of 1920, of which the section is a part and which, as had been recognized in earlier opinions of this Court, sought through the exercise of the new authority given to the Commission to secure a more adequate and efficient transportation system.
See New England Divisions Case,
Dayton-Goose Creek Ry. Co. v. United States,
263 U. S. 456
. Thus restricted, the term public interest,
Appellees do not challenge the Commission's contention that the conditions are germane to the transaction involved in the lease because the purpose of the conditions is to mitigate the direct effect of the lease upon the employees.
See United States v. Chicago, M., St.P. & P. R. Co.,
282 U. S. 311
282 U. S. 324
282 U. S. 339
-340. But they insist that the conditions which the Commission is permitted by this section to attach to its order must also conform to the standard of public interest which the statute sets up to guide the Commission's action. From this premise, they argue that the prescribed conditions are unauthorized, because unrelated to the public interest in its statutory sense. They maintain that a carrier's employees, as such, are
Appellees do not attack the sufficiency of the evidence on which the Commission's findings are based, and that evidence was not submitted to the district court for review. Hence, we are free to disturb the findings only if we can say that there can be no rational basis for them.
Mississippi Valley Barge Line Co. v. United States,
292 U. S. 282
Swayne & Hoyt, Ltd. v. United States,
300 U. S. 304
Rochester Telephone Corp. v. United States,
307 U. S. 146
. Appellees do not deny that the use of part of the savings resulting from the lease to compensate the employees for the loss which it will occasion is just and reasonable so far as the interest and relations of employer and employee are concerned, or that the lease will be in harmony with and further the Commission's plan for consolidation of the railroads, as the Commission found. They urge only that the conditions imposed can have no relationship to the maintenance of an adequate and efficient transportation system,
Obedient to the mandate of § 5(2) of the Act, the Commission has prepared and published a plan under which it is proposed that the railroads of the country be consolidated into a limited number of large systems. Consolidation of Railroads, 159 I.C.C. 522; 185 I.C.C. 403. By § 5 of the Act, the ban on consolidation of railway carriers was removed, and, acting under it, the Commission has granted authority for numerous consolidations and leases in furtherance of the plan. In the preparation and execution of the plan, it speedily became apparent that the great savings which would result from consolidation could not be effected without profoundly
affecting the private interests of those immediately concerned in the maintenance of the existing nationwide railway system, the railroad security holders and employee. The security holders are usually, though not always, favorably affected by economics resulting from consolidation. [
] But the Commission has estimated in its report on unification of the railroads that 75% of the savings will be at the expense of railroad labor. Not only must unification result in wholesale dismissals and extensive transfers, involving expense to transferred employees, but in the loss of seniority rights which, by common practice of the railroads, are restricted in their operation to those members of groups who are employed at specified points or divisions. It is thus apparent that the steps involved in carrying out the Congressional policy of railroad consolidation in such manner as to secure the desired economy and efficiency will unavoidably subject railroad labor relations to serious stress, and its harsh consequences may so seriously affect employee morale as to require their mitigation both in the interest of the successful prosecution of the Congressional policy of consolidation and of the efficient operation of the industry itself, [
] both of which are of public concern within the meaning of the statute.
One must disregard the entire history of railroad labor relations in the United States to be able to say that the just and reasonable treatment of railroad employees in mitigation of the hardship imposed on them in carrying out the national policy of railway consolidation has no bearing on the successful prosecution of that policy, and no relationship to the maintenance of an adequate and efficient transportation system. As was pointed out by Commissioner Eastman in his concurring opinion in this case, the protection afforded to employees by the challenged conditions is substantially that provided in event of consolidation by an agreement entered into in May, 1936, between 219, the great majority, of the railroad lines of the country, and 21 labor organizations. [
] He also directed attention to the fact that the Committee of Six, three of whom were railroad executives, in their report to the President of December 23, 1938, recommended that the federal agency passing upon railroad consolidation "require as a prerequisite to approval a fair and equitable arrangement to protect the interests of . . . employees," [
] and that this report had been approved
We can hardly suppose that the railroads, in entering into this agreement and endorsing this recommendation, left out of account their own interest in the maintenance of transportation service, or that their interest in this respect differs or is separable from that of the public interest. In fact, before this action by the railroads, the Commission itself had taken the view that the welfare of dismissed employees must be considered in passing upon proposed consolidations, [
] and, in its sixth annual report in 1892, it declared, in recognition of the same principle, that "relations existing between railway corporations and their employees are always of public interest." [
] The Federal Coordinator of Railroads, in his fourth annual report to Congress in 1936, recommended the enactment of a comprehensive system of dismissal compensation, stating that such a system "would enhance the safety or efficiency of railroad service." H.Doc. No. 394, 74th Cong., 2nd Sess., p. 56. [
The now extensive history of legislation regulating the relations of railroad employees and employers plainly evidences the awareness of Congress that just and reasonable treatment of railroad employees is not only an essential
aid to the maintenance of a service uninterrupted by labor disputes, but that it promotes efficiency, which suffers through loss of employee morale when the demands of justice are ignored. Title 3 of the Transportation Act of 1920, [
] which was enacted at the same time as the provisions reenacted in substance in § 5(4)(b), set up a "Labor Board" to decide railroad labor disputes involving grievances, rules, and working conditions, and declared in § 301,
Congress has passed successive measures for arbitration of railroad disputes between railroad employees and employers, all aimed at the prevention of interruptions of railroad service through such disputes, and culminating in the passage of the Railway Labor Act of 1926, 44 Stat. 577, and in its amendments in 1934, 48 Stat. 1185, 45 U.S.C. §§ 151-163;
Texas & New Orleans R. Co. v. Brotherhood of Railway & Steamship Clerks,
Virginian Ry. Co. v. System Federation,
. By the Wagner Labor Relations Act of 1935, 49 Stat. 449,
29 U.S.C. 151
it recognized and sought to prevent the interference with interstate commerce which may ensue from labor disputes arising in industry not engaged in transportation.
301 U. S. 42
Labor Board v. Fainblatt,
306 U. S. 601
306 U. S. 604
The Safety Appliance Act of 1893, 27 Stat. 531,
see Southern Railway Co. v. United States,
222 U. S. 20
, the Hours of Service Act of 1907, 34 Stat. 1415,
see Baltimore & Ohio R. Co. v. Interstate Commerce Commission,
221 U. S. 612
, and the Federal Employers Liability Act of 1908, 35 Stat. 65,
, were designed mainly to insure the safety and welfare of railroad employees, and the constitutionality of those measures was sustained in part on the ground that they fostered the commerce in which the employees were engaged. In passing the Adamson Act of 1916, 39 Stat. 721, fixing the wages of railroad employees, Congress thought that it was safeguarding the railroads of the country from interruption which might result from labor disputes, and the constitutionality of the Act was sustained on that ground.
Wilson v. New,
243 U. S. 332
243 U. S. 351
. And, in the Act of 1934, as amended in 1937, 48 Stat. 1283; 50 Stat. 307, 45 U.S.C. §§ 201-214, 228a to 228r, providing for a retirement and pension plan for railroad employees, Congress declared in terms that the plan was adopted for the purpose of "promoting efficiency and safety in interstate transportation."
In the last regular session of Congress, an act to amend the Interstate Commerce Act was passed by the Senate, § 2009, 76th Cong., 1st Sess. The House passed a substitute bill embodying extensive changes. H.Rept. 1217, 76th Cong., 1st Sess. Both bills are now in conference. But both, as passed, contain a provision carrying into effect the recommendation of the Committee of Six,
In the light of this record of practical experience and Congressional legislation, we cannot say that the just and reasonable conditions imposed on appellees in this case will not promote the public interest in its statutory meaning by facilitating the national policy of railroad consolidation; that it will not tend to prevent interruption of interstate commerce through labor disputes growing out of labor grievances, or that it will not promote that efficiency of service which common experience teaches is advanced by the just and reasonable treatment of those who serve. In the light of that record, too, we do not doubt that Congress, by its choice of the broad language of § 5(4)(b), intended at least to permit the Commission, in authorizing railroad consolidations and leases, to impose upon carriers conditions related, as these are, to the public policy of the Transportation Act to facilitate railroad consolidation and to promote the adequacy and efficiency of the railroad transportation system.
It is said that the statute, as we have construed it, is unconstitutional because not within the Congressional power to regulate interstate commerce, and is a denial of due process. It is true that, in
Railroad Retirement Board v. Alton R. Co.,
295 U. S. 330
, in declaring the Railroad Retirement Act of June 27, 1934, 48 Stat. 1283, not to be a valid regulation of interstate commerce, it was said, among other reasons advanced to support that conclusion, that a compulsory retirement system for railroad employees can have no relation to the promotion of efficiency, economy, or safety of railroad operation. But, notwithstanding what was said there, and even if we were doubtful whether the particular provisions made here for the protection of employees could have the effect which we have indicated upon railroad consolidation and upon the adequacy and efficiency of the railroad transportation system, we could not say that the Congressional judgment that those conditions have a relation to
the public interest as defined by the statute is without rational basis.
Cf. South Carolina Highway Dept. v. Barnwell Bros.,
303 U. S. 189
-191;
304 U. S. 147
Pittman v. Home Owners' Loan Corp., ante,
If we are right in our conclusion that the statute is a permissible regulation of interstate commerce, the exercise of that power to foster, protect, and control the commerce with proper regard for the welfare of those who are immediately concerned in it, as well as the public at large, is undoubted.
Second Employers' Liability Cases, supra,
263 U. S. 478
United States v. Carolene Products Co., supra,
. Nor do we perceive any basis for saying that there is a denial of due process by a regulation otherwise permissible, which extends to the carrier a privilege relieving it of the costs of performance of its carrier duties, on condition that the savings be applied in part to compensate the loss to employees occasioned by the exercise of the privilege. That was decided in principle in
Dayton-Goose Creek Ry. Co. v. United States, supra.
There, it was held that the Fifth Amendment does not forbid the compulsory application of income, attributable to a privilege enjoyed by a railroad as a result of Commission action, to specified purposes "in the furtherance of the public interest in railway transportation." § 422(10), Transportation Act, 41 Stat. 490. Moreover we cannot say that this limited and special application of the principle, fully recognized in our cases sustaining workmen's compensation acts, that a business may be required to carry the burden of employee wastage incident to its operation, infringes due process.
Second Employers' Liability Cases, supra; New York Central R. Co. v. White,
Cudahy Packing Co. v. Paramore,
In several cases, the Commission has disapproved proposals for consolidations and for acquisition of control because of a failure to deal fairly with minority stockholders. Nickel Plate Unification, 105 I.C.C. 425; Unification of Southwestern Lines, 124 I.C.C. 401. In others, it has approved the proposal on condition that these objections be removed. Buffalo, Rochester & Pittsburgh R. Control, 158 I.C.C. 779; Buffalo & Susquehanna R. Corp. Control, 162 I.C.C. 656; Upper Coos R. Control, 166 I.C.C. 76; Springfield Terminal R. Co. Control, 166 I.C.C. 90; Denver & Salt Lake R. Co. Control, 170 I.C.C. 4; Saint Louis Southwestern R. Co. Control, 180 I.C.C. 175.
282 U. S. 337
On several occasions, strikes of railroad employees affected by consolidations of plant facilities have threatened. To avoid interruption of transportation service, an Emergency Board was invoked in 1929 under the Railway Labor Act of 1926 to arbitrate the dispute between the railroad and the employees of the Texas & Pacific Railway Company. The Board awarded the employees compensation for loss from depreciation of the value of their homes (
Clause 4 in the order here involved). The Board, after extensive hearings, found that such a requirement was reasonable in view of the fact that railroads themselves had, on several prior occasions, compensated the employees affected. 28 Monthly Labor Review, 1191 (1929).
43 Monthly Labor Review, 867 (1936), where dismissal compensation was agreed upon in similar circumstances under threat of a strike.
Consolidation of Railroads, 185 I.C.C. 403, 427; Unification of Lines in Southern New Jersey, 193 I.C.C. 183, 198; St. Paul Bridge & Terminal Railway Co. Control, 199 I.C.C. 588. For later cases to the same effect,
Associated Railways Company Acquisition and Securities, 228 I.C.C. 277, 336; Louisiana & Arkansas Ry. Co., Merger, 230 I.C.C. 156; Louisiana & Arkansas Ry. Co., Merger, 233 I.C.C. 37; Louisiana & Arkansas Ry. Co. Control, 233 I.C.C. 123.
For a similar conclusion,
J. Douglas Brown, et al., Railway Labor Survey, Social Science Research Council, Division of Industry & Trade (1933), 1, 94; Robertson, The Stake of Railroad Labor in the Transportation Problem, 187 Ann.Am.Acad. 88 (1936).
This Act resulted from the experiences of the Director General in operating the railroads during the World War period. Sharfman, The Interstate Commerce Commission, Vol. I, p. 181. The Director General recognized the necessity of maintaining a loyal and devoted personnel in the interest of uninterrupted service. Thirty-third Annual Report of the Interstate Commerce Commission (1919), p. 4. In agreements executed by the Director General with several railroad unions, provision was made for protection of seniority rights and for free transportation for the employee, his family and household goods (
Clause 3 of order here involved), when consolidations of facilities were ordered by the Director General.
Agreement between the Director General of Railroads and the Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees (1920), Rule 77.