Court Opinion

ID: 8891156
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:15:56.459691+00
Date Added: 2024-06-11T17:07:13.675364
License: Public Domain

ADAMS, Circuit Judge
(concurring) :
Though I concur in the result reached in this case, I am troubled by the heavy reliance by the majority upon the timeworn tenets of trust law in dealing with the issues presented here. Inasmuch as this appeal involves the functioning of the national transportation network, closer attention to pragmatic factors and to Congressional pronouncements would appear to be warranted.
Congress has long been concerned with the establishment and maintenance of a viable national rail system. In part, this concern is manifested in legislation tailored to encourage and facilitate “interline” fail transportation of freight and passengers.1 To resort, as the majority does, primarily to “traditional common law trust principles” to resolve this case is to overlook the legislative policy embedded in these pertinent statutes. Moreover, the majority’s stance fails to address the practical problems confronting the railroad industry today. In this time of proliferating difficulty for the railroads, such an approach does little to advance the enterprise of “developing, coordinating, and preserving a national transportation system.” 2
Section 1(4) of the Interstate Commerce Act3 makes it the duty of each regulated rail carrier to participate in the interstate transportation of freight and passengers. In addition, it requires that the carriers “establish reasonable through routes with other such carriers, and just and reasonable rates, fares [and] charges . . . applicable thereto.”4 Carriers participating in *532through routes are directed to “provide reasonable facilities for operating such routes and ... to make reasonable rules and regulations with respect to their operation . . . .’’If connecting carriers fail to create voluntary through routes, section 15(3) of the Act5 empowers the Interstate Commerce Commission, under certain conditions, to order their establishment.6
The policy underlying this statutory arrangement is not difficult to discern. “Interline,” long-distance rail carriage over a through route obviates much of the need for duplicative, parallel rail lines. Additionally, through-route service precludes the inconvenience that would result if a shipper had to make separate arrangements with each interconnecting carrier for a long-distance haul. A vigorous and efficient interline rail network thus assures that, as the court below stated, “[t]he nation’s railroads function in many ways as a single system.” The sections of the Interstate Commerce Act discussed above seek to foster and preserve this unitary rail scheme.
There is no statutory compulsion for interconnecting rail carriers to utilize any particular method of collecting fares and freight charges for a through-routed shipment. But, as a practical matter, only one such method is feasible. That is for a single carrier — either the originating or the' destination carrier — to collect the entire fare, and then remit to the interline carriers their pro rata portions. This arrangement is apparently subscribed to by the entire industry, and is incorporated in the rules of the Association of American Railroads. A departure from this procedure — for example, insistence by each interline carrier upon immediate payment by the shipper —might well undermine the entire system of interline rail transportation. At a minimum, it would greatly impede the smooth and efficient functioning of the through-route network.
At least one other court has concluded that, since practical considerations militate so strongly in favor of collection by a single carrier, that carrier should be deemed a “trustee” for the interline railroads.7 Such a conclusion, when transposed to the scenario of a railroad reorganization case, requires that the interline carriers be granted a superior status vis-a-vis the trustee-railroad’s other creditors. Conveniently, there are present in this case enough of the common indicia of a fiduciary relationship to support the majority’s conclusion that here, too, the Penn Central holds the interlines’ freight and passenger revenues in “trust.” Consequently, and I believe correctly, the majority grants the interlines the preferred position that “beneficiary” status merits under the relevant reorganization principles.
What the majority does not appear to consider, and what I suggest may be of critical importance, is the possibility that, in another case, the absence of any of the traditional indicators of a trust relationship would, under their view, re*533quire a contrary holding.8 Exclusive reliance upon the precepts and terminology of trust law would seem, in such a ease, to dictate that a court deny the interlines any priority over other creditors. Stripped of that priority, the interlines might well insist upon immediate payment from shippers for each segment of a long-distance haul. Such insistence, with the attendant dislocation of the through-route system, would be especially likely where, as here, the originating or destination carrier was on the vérge of going into reorganization.
The disruption of interline transportation that might result from application of the majority’s ratio decidendi to another case would seriously thwart the policy expressed in the Interstate Commerce Act. Moreover, it would tend to impede promotion of an “adequate, economical, and efficient” transportation system, thus hampering effectuation of our National Transportation Policy.9 The majority does not grapple with these considerations. Its approach, while leading to a salutary result in the case sub judice, overlooks these broader ramifications by focusing too narrowly upon the situation at hand.
Rather than merely invoke the hoary principles of trust law to settle this case, I would treat the problem of interline freight and passenger accounts as a sui generis matter. Having perceived Congress’ interest in creating and maintaining a viable interline rail system, it would be appropriate to hold that, even in the absence of anything formally resembling a “trust,” the interlines are entitled to a preferred position with respect to freight and passenger revenues owed them by a railroad in reorganization.
This is not to suggest that venerated legal doctrines can never provide guidance to a court confronted with novel questions of transportation law. But where Congress has, by statute and articulation of a national policy, prompted the judiciary to consider the effects of its decisions upon the nation’s entire transportation system, there does not seem to be justification for exclusive reliance upon the narrow principles of private law.10 The demands in treating a matter of national transportation policy are best met by a candid and informed weighing of competing interests, within the compass of the judicial process, rather than by use of dogmas or labels that may prove too inflexible to solve the non-Euclidean problems that are presented.
The majority also concludes that, unlike freight and passenger revenues, other interline monies — those relating to ear repairs, overcharges, freight loss and damage, per diem car rentals, and switching charges — are not held in “trust.” Since this holding would not appear to work any substantial disruption of the interline rail schema, I concur in this aspect of the result as well.
WEIS, Circuit Judge, joins in this concurring opinion.

. See, e. g., sections 1(4), 15(3), 15(4) and 15(6) of the Interstate Commerce Act, 49 U.S.C. §§ 1(4), 15(3), 15(4) and 15(6).

. The National Transportation Policy, 54 Stat. 899, 49 U.S.C. preceding § 1.

. 49 U.S.C. § 1(4).

. A “through route” is an arrangement between interconnecting railroads for the continuous carriage of goods or passengers from the originating point on the line of one *532carrier to a destination on the line of another. See St. Louis Southwestern Ry. Co. v. United States, 245 U.S. 136, 139, 38 S.Ct. 49, 62 L.Ed. 199 (1917).

. 49 U.S.C. § 15(3).

. See generally Thompson v. United States, 343 U.S. 549, 72 S.Ct. 978, 96 L.Ed. 1134 (1952). Section 15(4) of the Act, 49 U.S.C. § 15(4), limits the power of the Commission to order a through route where to do so would force a railroad to “short haul” itself.

. Atlantic Coast Line R. Co. v. Pennsylvania R. Co., 12 F.Supp. 720, 722-723 (E.D.Pa. 1935). In a related case, the same court described a typical interline shipment:
“[t]he service performed was a haul of citrous fruits from Florida to delivery points in the Northern States. A number of railroads, which we shall call five, participated in order in the carriage, making of it one continuous haul .... The last link at the delivery end was the Pennsylvania Railroad. Because of a convenience so great as to be imperative, the Pennsylvania Company collected for the whole haul.” Atlantic Coast Line R. Co. v. Pennsylvania R. Co., 12 F.Supp. at 726 (E.D.Pa.1935).

. Considering the turbulent, changing situation in the railroad industry, this does not seem a remote possibility.

. See Note 2, supra, and accompanying text.

. Cf. New Haven Inclusion Cases, 399 U.S. 392, 431, 90 S.Ct. 2054, 26 L.Ed.2d 691 (1970).