Case Name: ST. LOUIS-SAN FRANCISCO RY. CO. v. STATE (two cases)
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1950-11-21
Citations: 204 Okla. 432
Docket Number: Nos. 34356, 34357
Parties: ST. LOUIS-SAN FRANCISCO RY. CO. v. STATE (two cases).
Judges: CORN, LUTTRELL, HALLEY, JOHNSON, and O’NEAL, JJ., concur. DAVISON, C.J., and WELCH, J., dissent.
Reporter: Oklahoma Reports
Volume: 204
Pages: 432–443

Head Matter:
ST. LOUIS-SAN FRANCISCO RY. CO. v. STATE (two cases).
Nos. 34356, 34357.
Nov. 21, 1950.
Rehearing Denied May 1, 1951.
230 P. 2d 709.
E. G. Nahler, St. Louis, Mo., and Sat-terfield, Franklin & Harmon, Oklahoma City, for plaintiff in error.
James G. Welch, Choice D. Holden, and D. C. McCurtain, Oklahoma City, for Corporation Commission.
Paul Harkey, Idabel, and James G. Welch, Oklahoma City, for protestants and intervener.

Opinion:
GIBSON, J.
These are separate appeals from orders of the Corporation Commission in each of which appellant was denied permission to discontinue the operation of its passenger trains on a branch of its system in Oklahoma. The appeals are consolidated for the purpose of review.
In case 34356 there was sought to discontinue trains 609 and 610 operating between Enid, Oklahoma, and the Oklahoma-Texas line, south of Frederick, Oklahoma, and in cause 34357 trains 773 and 774 between Hugo, Oklahoma, and the Oklahoma-Arkansas line east of Bokhoma, Oklahoma.
The grounds alleged for the permission to discontinue are that public necessity and convenience no longer require the continued operation of said trains at a tremendous deficit to the railway company, which condition has obtained for a long period and will continue. It is further represented that if the authority be granted the towns presently served by said trains will be served by mixed trains on an indicated time schedule.
In each case the commission found, in substance, as follows: That the railway by virtue of its charter and franchise was under an absolute duty to furnish adequate and reasonable passenger service and that the obligation could be avoided only by a showing that the rendition thereof is an undue burden upon the entire system. That the only passenger service being rendered was that afforded by the trains sought to be discontinued and that there was no showing that the operation of the branch, including both freight and passenger service or the operation of the entire system, was unprofitable. And, that the mixed train service proposed would not afford reasonable and adequate service.
The company charges in each case that the evidence does not sustain the findings nor the findings the order, and that such order would deprive the company of its property without due process of law and, further, would constitute an unauthorized burden upon interstate commerce.
There is no dispute as to the salient facts.
The extent of the Enid line in Oklahoma is approximately 191 miles, and that of the Hugo line approximately 60 miles. The only passenger service being rendered on the lines is that of trains 609 and 610 on the Enid line and trains 773 and 774 on the Hugo line. The train equipment is known as electric motor car with passenger compartment attached as a trailer, .such car being a combined passenger, mail, baggage and express car.
The trains on each line have, for a number of years, been operated at a deficit, which has greatly increased during the recent years by reason of a rapid decline in public patronage. The direct or out of pocket cost (which does not include taxes, depreciation of rolling stock, administration expenses and other expense and costs which are apportioned on system-wide basis) of operation of said trains on the Enid line during 1948 was $115,365.75, and the revenues derived therefrom, other than for the carriage of mail ($27,-593.59) were: passenger service $16,-953.03; express $11,387.00; baggage $106.63; milk and cream $811.13, or a total of $29,257.79, thus showing a deficit of $86,107.96, or 61.3 cents per train mile. The direct or out of pocket cost on the Hugo line for 1948 was $35,521.36, and the revenues therefrom other than from mail carriage ($9,-601.90) were: passenger service $7,-583.61; express $1,449.36; baggage $92.84; milk and cream $534.93, or a total of $9,666.74, thus showing a deficit of $25,929.46 or 57.1 cents per train mile. The revenues derived from the carriage of mail are not included in the computation because they are received by the company while serving as an agency of the Federal Government and have no relation to the rights and liabilities of the company as a common carrier. Atchison, Topeka & Santa Fe R. Co. v. United States, 225 U. S. 640, 32 S. Ct. 702, 703.
It thus appears that the company in the operations of said trains on both lines sustained an actual direct loss during 1948 or $111,968.58 or an average of 60 cents for each mile operated. From the company's reports to the Interstate Commerce Commission and Corporation Commission of Oklahoma, covering the year 1947, the evidence shows that the company operated its passenger service over its entire system at a loss of $6,799,299 and within the state of Oklahoma of $2,218,176. And in the company's brief attention is called to the fact that like reports for the year 1948, filed since the hearing, reflect corresponding losses of $8,-488,033 and $2,836,849, respectively. The evidence does not disclose the revenues received from the operation of freight trains on either line nor that the opera tion of either line including both freight and passenger service was unprofitable, nor that the entire system was operated at a loss during the period.
The extent of the public patronage is reflected by the fact that on the Enid line there was one passenger for each ten miles operated and on the Hugo line one for each two miles operated, or one-tenth person per train mile on the Enid line and one-half person per train mile on the Hugo line. That such decline in patronage is not local but general is reflected from the fact that in 1916 the railroads throughout the United States handled 97.98 per cent of the passenger miles in this country while in 1941 they handled only 9.39 per cent of the passenger miles (Civilian War Transport — a record of the control of domestic operations — Office of Defense Transportation — published May 1, 1948.) And, bearing upon the cause of such decline, in 1914 there were only 11,954 miles of improved highways in the United States while in 1946 there were 349,786 miles of improved highways. In 1915 there was an average of over 40 persons for each motor vehicle registered while in 1947 there was an average of only 3.8 persons for each motor vehicle registered in the United States. In Oklahoma, the 1948 registration reflects one passenger car for each 4.61 persons. In the counties traversed by the Hugo line there was an average of 12.62 persons per passenger car and in those traversed by the Enid line there was an average of 3.92 persons per passenger car (population 1940 census).
The territory through which the Enid line passes is criss-crossed by state and federal highways as well as improved country roads serving practically every community served by the trains. The line from Arapaho south to the state line (a distance of about 100 miles) is paralleled by U. S. Highway 183. There are four daily bus schedules operating along Highway 183 between Clinton and said state line (a distance of approximately 95 miles). Between Enid and Vernon, Texas (the terminus of said line) there are six daily bus schedules, over alternate routes. Of the population in the communities served by the Enid line 98 per cent live in communities situate on a state or federal highway and 94.29 per cent thereof have available intercity bus service.
The Hugo line is paralleled by U. S. Highway 70 between Hugo and Idabel (43.5 miles) and by State Highway 21 from Idabel to the Arkansas line. With the exception of Kulli, Oklahoma (having a population of three, according to 1940 census,) all the communities served by the trains are also served by either a state or federal highway. There are fourteen bus schedules operated between Hugo and Idabel and eight daily bus schedules between Ida-bel and Ashdown (an Arkansas point on the line) through Haworth and Bok-homa, two of the intermediate points on the line. Of the population of the communities served by the Enid line 94.29 per cent have intercity bus service and of the population served by the Hugo line 99.97 per cent have intercity bus service.
The mixed train service proposed to be furnished in lieu of each of the trains if discontinued will consist of a combination passenger and baggage car attached to a freight train serving each of the communities now served by the passenger trains. The schedule time of the run of the mixed trains is much longer than that of the passenger train, and by reason of the varying freight service also being rendered its movement according to the schedule is less likely than that of the passenger train.
Against the discontinuance of trains 609 and 610 on the Enid line there were, filed two protests signed by numerous citizens of the town of Drummond, Oklahoma, situate on the line, and at the hearing there was offered as exhibits 32 protests each signed by either a chamber of commerce or citizens and business men of communities served by said trains, and 27 witnesses testified. Against the discontinuance of trains 773 and 774 on the Hugo line eight witnesses testified and there was introduced as exhibits 20 written protests each signed either by a chamber of commerce or citizens and business men of the communities served.
The evidence in support of the protests in each case is substantially to the following effect: The present passenger, mail and express services afforded by the trains are, in the opinion of the witnesses, necessary to the communities affected. That the mixed trains would not afford adequate service in such respects. That it would not afford a mail service necessary for registered mail and insured parcel post nor an express service necessary for various articles. That by reason of the change in time schedule and delay in transit personal travel would be handicapped and shipments suffer an unreasonable delay. There is recognition of the fact that more people in the territory of the lines ride buses than ride trains, and there is expressed the opinion that with the modernization of the equipment of the trains which is antiquated and poorly heated patronage would be increased and thus solve the problem.
It is urged on behalf of the protestants that by reason of its charter obligation the company is under the absolute duty to furnish passenger train service until it is made to appear that the combined operation of both freight and passenger service was unprofitable, a fact not shown herein; that the mixed train would not be sufficient as a substitute for the passenger train nor afford adequate service; and, therefore, no ground obtains for the discontinuance of the passenger trains.
We think it to be evident that the proposed mixed train service is not an equivalent substitute for the existing passenger train service or that contemplated under a charter which, as here, contemplates both passenger and freight service. The reasons are clearly outlined in Missouri P. R. Co. v. Kansas ex rel. Railroad Commissioners, etc., 216 U. S. 262, 54 L. Ed. 472, 480. Consequently, if the company is under the absolute duty to render passenger train service in absence of showing of loss to its operations as a whole, which is the case here, the proposed mixed train service would not afford justification for the discontinuance of the passenger trains. Hence the first question is whether the company is under the absolute duty to maintain passenger train service.
As supporting the contention that the company is under an absolute duty to maintain passenger train service, sole reliance is placed on Chesapeake & Ohio Railway Co. v. Public Service Commission, etc., 242 U. S. 603, 61 L. Ed. 520, from which there is quoted the following:
" . . . the act whereby the railway company was granted the right to construct and operate the branch line did not leave the company free to devote it to freight service only or to passenger service only, . . .
"Thus, in legal contemplation, the branch line was devoted to the transportation of passengers as well as of freight . An obligation to use it for both was imposed by law, and so could not be thrown off or extinguished by any act or omission of the railway company."
In the cited case the carrier sought to avoid its charter obligation by furnishing no passenger service whatever. Such fact is noted in Atlantic Coast Line R. Co. v. Public Service Commission etc., 77 Fed. Supp. 675, where, in construing the doctrine, there is said:
" . . . The basis of the rule is said to be that although a railroad may not constitutionally be compelled to operate its system as a whole at a loss, Railroad Commission of Texas v. Eastern Tex. R. Co., 264 U. S. 79, 44 S. Ct. 247, 68 L. Ed. 569, yet it may not seek to retain its franchise and at the same time avoid its contractual obligation to provide reasonably adequate service arising from the franchise by singling out specific parts or branches of its business for complete elimination."
Therein the contention was made that the carrier, by accepting the privilege of operating in the state, was under contractual duty to continue the facility notwithstanding loss. In reference thereto there is stated:
"The contention overlooks the distinction between the absolute duties of a carrier and its relative duties. This distinction is admirably summarized by the court in Southern Ry. Co. v. Public Service Commission et al., 195 S. C. 247, at page 261, 10 S. E. 2d 769. It cites, among others, the case of Kurn v. State. 175 Okla. 379, 52 P. 2d 841, and quotes its effect as follows: 'In performance of absolute duty by railway company, question of expense is not to be considered, but, where duty sought to be enforced is one of additional convenience rather than necessity, question of expense to company and relative benefit to public is deciding factor, and may not be disregarded.' "
The doctrine so announced was recognized and applied in Chicago, B. & Q. R. Co. v. Illinois Commerce Commission, 82 Fed. Supp. 368, 377, which involved the question that is involved herein. It is there stated:
"Plaintiff's system-wide railroad earnings are immaterial in a proceeding to discontinue and abandon local railroad passenger train service, such as that formerly provided by plaintiff's trains 51 and 52, where there is no public necessity, as distinguished from public convenience, for the continued operation of said trains and where the trains can only be operated at an out-of-pocket loss to plaintiff.
"Plaintiff cannot be compelled to operate local railroad passenger trains, such as Nos. 51 and 52, at an out-of-pocket loss, where there is no public necessity, as distinguished from public convenience, for the continued operation of said trains. Defendants' attempt to compel the restoration of trains 51 and 52 pursuant to Section 49a and/or said Commission's order in Docket 36251 by invoking the severe penalties by fine and imprisonment provided in the Illinois Public Utilities Act, is arbitrary and unreasonable, denies to plaintiff the equal protection of the law and, if successful, would impose an illegal burden on interstate commerce.
"In determining whether public convenience and/or necessity requires the restoration of plaintiff's local railroad passenger trains 51 and 52, the rules announced in older legal precedents established prior to the transportation revolution wrought by the national system of improved highways and the widespread use of the private automobile, the certificated bus and truck, are no longer applicable, inasmuch as the widespread use of. the motor vehicle on said highways not only destroyed the railroads' former monopoly of the passenger transportation business, but it has also made the local railroad passenger train an obsolete form of transportation."
The same doctrine in substance is recognized and applied in Southern Ry. Co. v. Public Service Commission et al., 195 S. C. 247, 10 S. E. 2d 769; Corporation Commission, etc., v. Southern Pac. Co., 55 Ariz. 173, 99 P. 2d 702; In re Application of Chicago, Burlington & Quincy Railroad Co. v. Municipalities of Holdrege, 152 Neb. 352, 41 N. W. 2d 157; Chicago, B. & Q. R. Co. v. Nebraska State Ry. Commission, 152 Neb. 367, 41 N. W. 2d 165; Lynchburg Traffic Bureau v. Commonwealth, etc., 189 Va. 612, 54 S. E. 2d 66; Texas & New Orleans R. Co. v. Railroad Commission of Texas (Tex. Civ. App.) 220 S.W. 2d 273.
The holding in the quoted case that there is no absolute duty in absence of public necessity is not at variance with the holding in Chesapeake & Ohio Railway Co. v. Public Service Commission, supra. The effect thereof is merely to declare the line of distinction between absolute and nonabsolute duties. The existence of such distinction had been declared before and is recognized in the Chesapeake case. In the earlier case of Atlantic Coast Line Railroad Co. v. Wharton, 207 U. S. 328, 335, 28 S. Ct. 121, 123, 52 L. Ed. 230, there is said:
"The term 'adequate or reasonable facilities' is not in its nature capable of exact definition. It is a relative expression, and has to be considered as calling for such facilities as might be fairly demanded, regard being had, among other things, to the size of the place, the extent of the demand for transportation, the cost of furnishing the additional accommodations asked for, and to all other facts which would have a bearing upon the question of convenience and cost."
In the Chesapeake case, immediately following the language relied on by protestants which is quoted, supra, it is also said:
" . . . It follows that the order, instead of enlarging the public purpose to which the line was devoted, does no more than to prevent a part of that purpose from being neglected.
"One of the duties of a railroad company doing business of a common carrier is that of providing reasonably adequate facilities for serving the public. This duty arises out of the acceptance and enjoyment of the powers and privileges granted by the state, and endures so long as they are retained. It represents a part of what the company undertakes to do in return for them, and its performance cannot be avoided merely because it will be attended by some pecuniary loss. (Citations omitted.) That there will be such a loss is, of course, a circumstance to be considered in passing upon the reasonableness of the order, but it is not the only one. The nature and extent of the carrier's business, its productiveness, the character of service required, the public need for it, and its effect upon the service already being rendered, are also to be considered. Cases, supra. Applying these criteria to the order in question, we think it is not shown to be unreasonable."
Therein, the public need for the passenger trains was not even questioned; the objection to the installation of the passenger service was based solely upon the fact it would prove unremu-nerative. The case is no authority for holding that there could obtain an absolute duty to render such service in absence of a public need therefor. The principles announced negative the very idea that it can be so construed. It is the fact that the transportation revolution has obviated the public necessity for passenger train service in so many instances where it theretofore obtained without exception that justifies the statement that the earlier decisions taking judicial knowledge of public necessity are no longer precedents as is declared in Chicago, B. & Q. case quoted, supra. Such an interpretation of the holding therein is given by the Supreme Court of Nebraska in Re Application of Chicago, Burlington & Quincy Railroad Co. v. Municipalities of Holdrege, supra, where there is said:
"In determining whether public convenience or necessity requires the continuance of trains 151 and 152, the rules announced in older legal precedents established prior to the transportation revolution wrought by public highways, private automobiles, certificated bus and common-carrier trucks and private trucks carrying commodities to customers, are no longer applicable, for the reason that the same have not only destroyed the railroad's former monopoly of the passenger transportation business, but it has also made the local railroad passenger train an obsolete form of transportation. See Chicago, B. & Q. R. R. Co. v. Illinois Commerce Commission, supra."
It follows from these holdings that as, in effect, declared in Chicago, B. & Q. R. Co. v. Illinois Commerce Commission, supra, it is only where passenger train service is required to meet a public necessity, in contradistinction to affording a public convenience, that there obtains an absolute duty to maintain the same. In the absence of such public necessity the question is, necessarily, the alleviation of a public inconvenience. Concerning this we stated in Missouri-Kansas-Texas R. Co. v. State, 189 Okla. 685, 119 P. 2d 835, the following:
"When a common carrier is called upon to alleviate a mere public inconvenience in the matter of transportation, the cost to be incurred thereby is of paramount importance. If the maintenance of facilities necessary to relieve the situation will result in financial loss in performing the particular service wherein the inconvenience arose, to require such facilities would be to take the carrier's property without due process of law."
The fact that there is no public necessity, as distinguished from public convenience, is made clearly to appear and the fact that such trains can be operated only at a loss is equally clear unless there is merit in the contention that improvement in the train equipment would probably encourage patronage sufficient to enable their operation without loss. If it appeared that the loss of patronage was due to the poor quality of such equipment or that with improvement of equipment patronage would be increased to a sufficient degree to reimburse the cost of the improvement and continued operation, there would be justification for such contention. But none of such facts appears and the very idea that the poor quality of the equipment could be the cause of the lack of patronage or that its improvement would invite a substantial public patronage is negatived by the facts shown. A similar contention was made in the Nebraska case, quoted, supra, and what was there said is equally applicable here. We quote:
"The appellees contend that the appellant has done everything it can to discourage, and nothing whatsoever to encourage and increase use of these trains, and should not now be heard to complain because of alleged conditions of its own making. It is suggested that better schedules might be arranged and the train improved as to equipment to attract passenger traffic. The passenger- transportation facilities on trains 151 and 152 are obsolete and outmoded. There is no evidence to show that under any circumstances would the passenger traffic improve on the two trains in question. There has been no apparent effort made by the public in the communities served by these trains to utilize such passenger service. Contra, the evidence shows the residents of the localities traversed by these trains do not care for the service by their failure to give them patronage. See Northern Pac. Ry. Co. v. Board of Railroad Commissioners, supra."
We hold there exists no public necessity for the operation of trains 609 and 610 on the Enid line and no public necessity for the operation of trains 773 and 774 on the Hugo line, and that therefore the company is under no absolute duty to operate the trains on either line. We hold, further, that such trains can be operated only at an out of pocket loss and that, therefore, the company is under no duty to operate said trains on either line for the convenience of the public. In view of these conclusions we think it unnecessary to consider the matter of the mixed trains which the company is committed to operate upon discontinuance of the passenger trains.
The orders of the Corporation Commission in causes 34356 and 34357 are reversed, with directions to enter in each case an order granting the application upon the terms sought.
CORN, LUTTRELL, HALLEY, JOHNSON, and O'NEAL, JJ., concur. DAVISON, C.J., and WELCH, J., dissent.