Court Opinion

ID: 9691437
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:31:55.235171+00
Date Added: 2024-06-11T18:19:19.685530
License: Public Domain

On Petition for Rehearing.
PER CURIAM.
The Bondholders have petitioned for a rehearing on our denial of mínimums to the “Peoria,” very largely repeating their former argument. They point out however that we were wrong in saying that there was no difference in the situation after 1930 if the “Central” be regarded as one system; we failed to notice that, so long as the “Big Four” and the “Peoria” formed a system separate from the New York Central system, it was not necessary for the “Big Four” to allow mínimums to the “Peoria,” for its share of the rate upon hauls ending upon “Big Four” rails was always at least twenty per cent of the whole rate. Therefore, the question does arise whether if, by the lease of 1930 the lessor and lessee became one road, it was an abuse of the “Central’s” power over the “Peoria” not to allow it mínimums over hauls in which the “Big Four” figured as an overhead carrier. As to this we are to apply the standard which we applied throughout: i. e. whether the “Peoria,” assuming that it was an independent road could have exacted minimums from the combined road — the “Central.” Confining ourselves therefore to the period after 1930, and assuming that the lease of the “Big Four” to the New York Central Railroad gave the lessee a free choice to allow mínimums, and that it might do so without recourse to the Interstate Commerce Commission, we are to say whether it should have done so; which means whether the “Peoria” has proved that in dealing at arms length with the “Central” it could have exacted this as a condition. The Master has found that mínimums of twenty per cent were not by any means uniformly allowed to all small roads; and that the issue seems to have been a matter of private bargaining. The Bondholders point to the fact that the “Peoria” secured the minimum upon hauls that left its rails upon which the “Big Four", was not an overhead carrier, as evidence that it could have procured them at arms length bargaining. These mínimums the “Big Four” secured for the “Peoria”; the “Peoria” did not secure them for itself; and the difference is extremely material. To take an instance which seems particularly impressive at first blush: the minimum granted by the Pennsylvania for traffic which left the “Peoria’s” rails at Indianapolis. The argument is that the “Central” would have been obliged to meet Pennsylvania competition by a like concession ; but it does not follow that the “Peoria” dealing with both the “Central” and the Pennsylvania would have been able to get a minimum — or at least a minimum of twenty per cent — from either of them. As we have said, there were a number of cases in which small roads could not do so. In the supposititious case we have made the test, we must imagine the “Peoria,” not speaking as part of a great system, but as a road 212 miles in length which alone had never succeeded in keeping alive. How can we measure the strength of its bargaining power ?
Nor are those instances persuasive where divisions of a road continued to receive mínimums after they had been taken over by another road. The Springfield division of the “Big Four” was such an instance; the minimum had existed since 1890 when the Springfield division was part of the same road as the “Peoria” itself. There were apparently a number of such cases; and, whether they were thought to'be preserved under § 76(b) of Title 49 U.S.C.A.; or out of meie conservatism; or for some other reason, does not appear; but at least *338they are not evidence which makes against the Master’s finding that the Bondholders did not prove that a minimum of twenty per cent was the invariable or regular practise. But it may be said that the Interstate Commerce Commission might have intervened to compel the grant of such a minimum. There would indeed, upon the hypothesis we are assuming, have been a division of joint rates, and the Commission would have had jurisdiction; but we do not see that we have any indication as to how it would have exercised its power. So we conclude that, viewed as a question of what the “Peoria,” if it stood alone against the “Central” could have secured, the Bondholders did not present a case which shows that the Master’s finding was “clearly erroneous.” That finding is one of fact in the strictest sense; it included no “standard,” no “norm”; it was merely as to what was the practice of railroads.
Indeed, the question is more complicated than we have indicated. We have held that we could pass upon the division of income received, because as between the “Peoria” and the “Big Four,” as part of the “Central,” there was no “division of ‘joint rates,’ appearing in ‘joint tariffs’ ” which “contain the names of the participating carriers.” However there continued to be “divisions of ‘joint rates’ appearing in ‘joint tariffs’ ” between the “Big Four” and the New York Central Railroad, after the lease of 1930 as well as there had been before, and over these the Commission had exclusive jurisdiction. Any minimum granted by the New York Central Railroad, as lessee of the “Big Four,” would affect the division of “joint rates” between itself and the “Big Four,” and we should not have jurisdiction to pass upon it. At most we could say that the “Central” should divide the share of the joint rates which came to the “Big Four” —as between itself and the “Peoria” — as though the “Peoria” had been granted a minimum in a division between the three. That, however, presupposes that the Commission would have granted the minimum, had the matter come before it; and, as we have just said, that we cannot know. Moreover, although, perhaps in logic we should remain within the limits of our jurisdiction in making such a division, we should be really acting as a substitute for the Commission which we have not the competence to do. This difficulty cannot be avoided by saying that in fixing the division of the joint rate between the “Big Four” and the New York Central Railroad, the latter could, by consenting to give a minimum to the “Peoria,” avoid the Commission under § 76(b) of Title 49 U.S.C.A. It is true that it was a lessee, but, since the two roads are treated for purposes of rate divisions as separate carriers, it is highly improbable that the New York Central would be allowed to consent for the “Big Four” to a reduction in the “Big Four’s” share, such as would result from the grant of a minimum to the “Peoria.” Even as majority shareholder of the “Big Four,” the New York Central Railroad could not lawfully give such a consent, unless the situation of the “Big Four” vis-a-vis the “Peoria” independently justified it. It would therefore seem to us that to the limited degree to which we can on any theory have jurisdiction, it is extremely doubtful that we should attempt to exercise it; even were we satisfied that the Master’s finding was “clearly erroneous.” Whether for the future the “Peoria” would have any standing before the Commission as a party interested in the division of rates between the “Big Four” and the New York Central Railroad, we cannot of course say; but on this record we see no reason to change our first decision.
Petition denied.