Court Opinion

ID: 5258615
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:35:44.485332+00
Date Added: 2024-06-11T08:28:03.065710
License: Public Domain

John M. Kellogg, P. J. (dissenting):
The taking over of the railroads by the government during the war was a proper war measure and in effect superseded and annulled, for the time being at least, the State laws with respect to their operation. There can be no serious dispute but that the Federal Transportation Act of 1920 (41 U. S. Stat. at Large, 456, chap. 91), under which the railroads' were returned to the owners, contemplated that the rates *625which the government had established upon the roads should not be reduced prior to September 1, 1920, by any State authority and that existing rates should continue until.-they were thereafter changed by State or Federal authority, respectively, or pursuant to authority of law. Evidently the words " pursuant to authority of law ” were intended to be qualified by the preceding word “ thereafter.” (See 41 U. S. Stat. at Large, 464, § 208, subd. a.) The public records, the terms of the act itself and the situation existing and the general understanding in and outside of Congress, make it clear that such was the legislative intent. The Transportation Act recognized that by taking over and operating the roads the government had in effect demoralized them and their service and rendered it impracticable for their owners to operate them unless they had some government relief or assistance, and this act was intended to have that effect. The act, however, permitted the States and the local boar’ds to decrease the rates thereafter, but apparently upon the ground that they were excessive. Assuming, therefore, that Congress intended that rates should not be changed by any law or regulation in the State unless the law or regulation was thereafter made, the case turns upon the question of the legality of the Transportation Act.
The war measure by which the government took over the railroads was not complete by the taking; it involved the operation and the return, both of which were contemplated by and were a necessary part of ib. “ Assuming that the implied power to enact such a prohibition must depend not upon the existence of a technical state of war, terminable only with the ratification of a treaty of peace or a proclamation of peace (United States v. Anderson, 9 Wall. 56, 70; The Protector, 12 Wall. 700, 702; Hijo v. United States, 194 U. S. 315, 323), but upon some actual emergency or necessity arising out of the war or incident to it, still, as was said in Stewart v. Kahn (11 Wall. 493, 507): ‘ The power is not limited to victories in the field and the dispersion of the [insurgent] forces. It carries with it inherently the power to guard against the immediate renewal of the conflict, and to remedy the evils which have arisen from its'rise and progress.’ ” (Hamilton *626v. Kentucky Distilleries Co., 251 TJ. S. 146, 161. See Buppert v. Caffey, Id. 264, 282.)
Immediately upon taking over the railroads the government, in effect, operated the entire systems of railways in the country as one system, taking from certain Unes the business which had been built up by them in the previous years and diverting it to other lines as the interests of the government required. It had greatly increased the wages of railway employees and, as a consequence of the war, all expenses .of railroads as well as of others, were nearly doubled. It was obvious, and the legislative records show that it was deemed disastrous to the roads and injurious to the pubhc and the general good if they were to be returned to the owners without some relief from the conditions which the government had caused by its control and management — that unless relief was granted bankruptcy of many and perhaps of most of the roads would have followed.
Congress evidently considered that the rates in the various States fixed by the Commission and the statutes before government control were then of doubtful validity because of the changed condition. It evidently considered that a rate which was just before the war was unjust and unremunerative at the time the Transportation Law was passed. It had good reason to conclude that a return of the roads without some governmental protection meant chaos, and that there were no existing rates outside of those fixed under government control. It evidently had in view the rule laid down in Municipal Gas Co. v. Public Service Commission (225 N. Y. 89, 96), from which we quote: “ Into every statute of this kind, we are to read, therefore, an implied condition. The condition is that the rates shall remain in force at such times and at such only as their enforcement will not work denial of the right to a fair return. When the return falls below that level, the regulation is suspended. When the level is again attained, the duty of obedience revives. There would be no obscurity about this if the condition were expressed. It is no less binding because it is implied. The Constitution is the supreme law; and statutes are written and enforced in submission to its commands.”
The Transportation Act did not entirely return the roads *627to the owners and release the grip which the Federal government had upon them as a war measure. As we have seen, it provided, in effect, that the existing rates should continue until thereafter changed by it or the local authorities. It had a direct interest in further control. It warranted for six months the net earnings of all roads so desiring, reserving to itself the surplus if any. It retained supervision over the securities to be issued, and promised, in effect, financial assistance for the period of two years. By its terms, if upon the rates established by, or to be established under it, a carrier received a net railway operating income exceeding six per cent upon the value of the property used in the service, the excess of such income was controlled by the government. Evidently the rate of wages fixed by the Federal Railroad Administration cannot be changed by the companies at will, but by the terms of this law are intended to be controlled by the Federal government. If the New York Central Railroad Company becomes bankrupt, it not only interferes with intrastate business of the road but is also destructive of its interstate business. The same is true of every road. The provisions of this act were evidently intended to prevent bankruptcy of the various roads and to retain them for the purpose of interstate commerce and for carrying the mails and general public use. If the government substantially takes the control of wages into its hands, it is not unreasonable for it to take the control of rates, and by the act in question it has substantially done both. By the provisions under which the railroads were taken by the government, its good faith was pledged to maintain the condition of the roads and to return them to the owners in their integrity, unimpaired by the government use. As we have seen, the act of taking over the railroads as a war measure continues until they are returned. They are returned in a qualified sense and in a sense the Federal government keeps control of them. The extraordinary war powers and duties of the Federal government are not met until the evils arising from its forcible seizure and use have been remedied. They are returned only when they come back to their normal condition as going concerns and able to go. A thriving manufacturing plant, taken from an owner, is not restored to him by delivering to him its ruins. The legislation in question, so far as possible, *628has attempted to return the properties in such a way that the-owners may use them and the people benefit by them. The Federal government, which has a clear right to control interstate commerce, is a judge, in a way, of what acts are necessary for such control, and it may prevent, the States from destroying the instruments by which interstate commerce is to be carried on. It may prevent the establishment of rates prejudicial to or destructive of interstate commerce. (.Houston & Texas Ry. v. United States, 234 U. S. 342, 351, 352.) As a part of and to complete necessary war legislation and in the interest of interstate commerce I am satisfied the act is valid. I, therefore, favor affirmance.
H. T. Kellogg, J., concurs.
Order reversed, with costs. Judgment for the Commission in accordance with the petition, with costs.