Court Opinion

ID: 6873324
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:04:19.441682+00
Date Added: 2024-06-11T16:05:26.935946
License: Public Domain

LEWIS, Circuit Judge.
This case presents the issue whether appellee’s railroad, on the procedure taken before the Interstate Commerce Commission prior to the institution of this suit or independently on the facts, was brought under and subjected to the Railway Labor Act of May 20, 1926, 44 Stat. 577, as amended by the Act of June 21, 1934, 48 Stat. 1185, 45 U.S.C.A. § 151 et seq., in its relations to and its dealings with its employes. Heretofore its employes have never been members of railway brotherhoods on steam railroad lines. They have had their own labor organizations on appellee railroad and through them they have dealt with appellee as to wages, hours and other conditions with which such organizations are usually concerned. That is true generally it seems with street, suburban and interurban railroads. Appellee company claims to be an interurban electric railway company, and it and its predecessor have operated as such for approximately 20 years. It is a Delaware corporation. The termini of its railway are Ogden, Utah, on the south and Preston, Idaho, on the north. Its mainline between those points is about 95 miles. It has two short branches. It carries freight, baggage, express and passengers. It passes through about fourteen towns and cities between Ogden and Preston. The four larger cities have a total population of 60,000. None of the others exceed 2,000. It runs frequent and rapid trains, both passenger and freight. It has restrictive franchises for its right to pass through the different towns and also franchises to operate on public highways in places. It has short sidings and spur tracks. It is standard gauge. It was built to develop and serve two valleys, a part of the Great Salt Lake Valley and the Cache Valley in northern Utah. It passes over the Wasatch Mountains to reach the Cache Valley and extends seven miles into Idaho. It makes frequent stops in serving the public in freight and passenger service, about one and a half miles apart on the average. Its owners built it to develop the resources of those valleys. Its grades and rails are not suited to steam railway trains. It and its owners have assisted in obtaining fruit and vegetable packing plants and canneries along its line. It has encouraged the production of sugar beets. It hauls these products to the plants and their output to steam railway lines for transportation to the general market. In summer some of its cars provide refrigeration and in winter heat. Its freight trains average six to seven cars, and its passenger trains less than two cars. Two high schools have buildings adjacent to its line, and it transports the students to and from them for a considerable distance. In 1926 it went into receivership in the United States District Court for Utah. A few years later it was taken out by reorganization and has since been operated in the same manner and. in the same service that it had theretofore been operated. It was claimed and testified by those who have been closely connected with its operation for nrany years *913that it could not be operated as a steam railway without being reconstructed, and that it could not continue to operate as it had been operated with the additional burdens that would be placed upon it if it be made subject to the Railway Labor Act, because of those burdens. The record gives an exhaustive comparison between this road and steam railroads and expenses of operating them. Appellee’s general manager for the past 15 years, who had held a position with the Southern Pacific for eight years before that, testified in great detail to increase in labor cost to appellee if its road should be brought under the Railway Labor Act. He said:
“It would be unfair and impractical, and in addition to that, your honor, if applied would have produced an increase in the labor bill that would prohibit us from continuing in existence.”
 Congress has full power of regulation over appellee. It has been an interstate carrier since the completion and operation of its road to Preston, Idaho. In its exercise of that power Congress may in its own judgment make different regulations applicable to interurban electric carriers from those applicable to steam carriers, or because of other material differences. It has done so, and that intention was exemplified in section 1, first, of the Railway Labor Act, as amended, 45 U.S.C.A. § 151, subd. 1. That section first gives a general definition of carriers subject to the Act, which is broad enough to include appellee, followed by the exempting proviso and then a grant of power to the Interstate Commerce Commission, thus:
“Provided, however, That the term ‘carrier’ shall not include any street, interurban, or suburban electic railway, unless such railway is operating as a part of a general steam-railroad system of transportation, but shall not exclude any part of the general steam-railroad system of transportation now or hereafter operated by any other motive power. The Interstate Commerce Commission is hereby authorized and directed upon request of the Mediation Board or upon complaint of any party interested to determine after hearing whether any line operated by electric power falls within the terms of this proviso.”
The last sentence just quoted, conferring power on the Commission, was not in the original Act of May 20, 1926. It was added by amendment in 1934. It is plain that before the amendment appellee was exempt from the Railway Labor Act, because it was not engaged in doing either of the things that would have made it subject to the Act. It continued after amendment to be a “line operated by electric power” and was not “operating as a part of a general steam-railroad system of transportation” etc. The Interstate Commerce Commission so found in its report on the hearing which it granted on the request of the Mediation Board. Among other things it said (Utah Idaho Central R. Co., 214 I.C.C. 707, 708): “This railway is operated by electric power, and none of its stocks or bonds are owned by any steam railroad. The only issue therefore is whether it is a street, interurban, or suburban railway within the meaning of the proviso.” It further said: “It [appellee’s railway] does not perform any intermediate service between other lines.” This exhausted its power. Specifically, its only power was to determine “whether any line operated by electric power falls within the terms of this proviso.” The proviso was not changed by the amendment, except, if at all, by enlargement of the words “any street, interurban, or suburban electric railway” to “any line operated by electric power.” But the Commission misconceived, we think, the extent of its power by proceeding further. It closed its report by this finding: “that The Utah Idaho Central Railroad Company’s lines do not constitute a street, interurban, or suburban electric railway within the meaning of the exemption proviso in the first paragraph of section 1 of the Railway Labor Act, as amended June 21, 1934.” It did this on the proof before it that in the later years appellee’s revenues for freight transportation had greatly exceeded its revenues for passenger transportation, and the Mediation Board accepted that finding as conclusive that appellee was thereupon brought under the Railway Labor Act in its relation with its employes. The Commission arrived at its conclusion solely on its own estimate of the facts and not because of any direct testimony that the line was not in fact an interurban electric railway. There was none, but there was direct, positive proof by at least one competent, qualified witness that it was and at all times has been an interurban electric railway.
Thereafter appellee filed its bill in the court below against Dan B. Shields, United States Attorney for the District of Utah, in which it sought among other things a writ enjoining Shields from prosecuting it *914and its officers for claimed commission of crimes defined by the Railway Labor Act. The bill alleged that appellee brought the suit to prevent irreparable injury and damage to it and its business and property used in the transportation of persons and property and to restrain Shields individually and in his official capacity from threatened enforcement of fines and penalties under the Railway Labor Act; that appellee is engaged in the business of operating as a common carrier an electric interurban line of railway between Ogden City, Utah, and Preston, Idaho, for the transportation of passengers, baggage, freight and express between those points and intermediate points. There are allegations as to the construction of the road, first as street car lines in some of the cities through which it now passes and thereafter their acquisition, consolidation and extension northward over the Wasatch Range to Preston, Idaho.
Those who undertook the venture were of that section. They also planned the location of canneries, processing plants for preserving vegetables and fruits for the market, and other developments of the two valleys.
Shields answered denying that the road is an interurban 'electric railway. He alleged that the Railway Labor Act creates a board known as the National Mediation Board and gives it certain powers, among them the power and duty to prescribe the form of notice to carrier employes as set out in section 2, eighth, of the Act, as amended, 45 U.S.C.A. § 152, subd. 8, and that the board has prescribed the form of notice thus provided for, ordered that it be posted, and that if plaintiff-appellee fails to comply with said order and with certain other provisions of the Act it will be subject to prosecution for the penalties provided in the Act; that upon the request of that board proceedings were instituted before the Interstate Commerce Commission to determine whether appellee came within the proviso found in section 1 of said Act; that the Commission had held a hearing on that request. Appellee was there represented and introduced evidence, and on March 18, 1936, the Commission handed down its decision in which it held that appellee’s lines do not constitute a street, interurban, or suburban electric railway within the meaning of the exemption proviso”; that the Commission’s determination is controlling unless made arbitrarily, is unreasonable or not based upon substantial evidence, and that the bill does not so allege; wherefore, he asked that injunctive relief be denied and the bill dismissed.
The Interstate Commerce Commission appeared in the District Court and filed petition to intervene as a defendant in the cause and to file answer and participate in the defense as fully as if named as a defendant. It was permitted to do so. The Commission alleged that pursuant, to request of the Mediation Board made in accordance with the authority conferred on it by section 1 of the Act as amended it instituted a proceeding for the purpose of determining whether the Utah Idaho Central Railroad Company was either a street, interurban, or suburban electric railway; that it accorded appellee a full hearing and a large volume of testimony was taken; that it determined the matter and served copy of its report on appellee; that its report contains its findings that appellee’s line of railway does not constitute a street, interurban, or suburban electric railway within the meaning of the exemption; that its finding is supported by evidence; that it was not arbitrary,'unjust or contrary to the evidence or without evidence to support it; and that it did not exceed its authority. It denies certain allegations of unconstitutionality of the Act found in the bill.
The case went to trial in the District Court. At the close of the testimony, which was in substance a duplication of the testimony before the Commission, the Court made its findings of fact. A transcript of the testimony before the Commission was admitted in evidence before the Court. The Court reviewed the history of the road. It found that the resources of the territory traversed in the two valleys were wholly agricultural in character, and the only industrial development of which the territory has been and is capable is the construction and operation of processing plants to enable the products to reach the outside market, such as beet sugar factories, vegetable packing plants, milk condensing plants, pea canning plants, etc., and from the time of the construction of the interurban electric railway this industrial development has been fostered by collecting the raw products from the fields and delivering them to the processing plants located on its line, and delivering to those plants the necessary materials for such processing *915from outside the territory served by the plaintiff, such as' coal, lime, etc., by transporting by means of its interurban the processed products from the processing plants and delivering them to the steam railroads for transportation to the outside markets; that by means of its interchange with steam railroads wholly as an initiating or receiving carrier without discrimination as to preference as to which steam railroad is used, plaintiff has also fostered the agricultural development of the territory by delivering to the farms such needed merchandise from the outside, and delivering from said farms to the outside market such agricultural products as could be marketed without being processed; that it has likewise fostered the social development of tfie territory by the transportation to and from the farms to the larger communities of peopie inhabiting the territory and especially in the transportation of the school children; that to meet these needs of the people appellee operates short, rapid trains run at frequent intervals and making frequent stops, in many instances where no agents are maintained, for the transportation of both passengers and freight, practically to and from the individual farms and to and from the processing plants and community centers to enable the products to reach the market either as raw or processed products; that the physical elements of plaintiff’s railway, its motive power, its equipment, track construction, length of spurs and sidings, and its curvature and grades require operation peculiar to interurban electric railways, and that without a complete change of its physical elements and structures it could not be operated as steam railroads are commonly operated; that it is operated by electric power, known. as an interurban railway, and ever since its construction it has been known as such; that it is not now and never has been operated as a part of a general steam railroad system of transportation, and never has been any part of the general steam system of transportation operated by any other motive power; that none of its stocks or securities are owned by any steam railroad system of transportation or steam railroad company, nor do any of the officers or agents of such a company have any control or voice whatever in its management or operation; that the Mediation Board has prescribed the form of notice provided for in the eighth paragraph of section 2 of the Railway Labor Act, as amended, 45 U.S.C. A. § 152, subd. 8, and ordered that it be posted as therein specified thereby demanding that all employes be thereby notified that all disputes between the carrier and them will be handled in accordance with the provisions of said Railway Labor Act; that plaintiff has not complied with said order and if plaintiff continues to fail to comply with said order and otherwise fails to comply with the provisions of said Act it will subject itself to prosecution for the penalties therein fixed, notwithstanding it is not as an electric interurban railway subject thereto; that if it does not comply it thereby admits that it is subject to the provisions of the Railway Labor Act and thus voluntarily submits itself thereto, and it will thus suffer immediate and irreparable injury and damage; that such complianee will result in demands for increase of wages and demands for rules and working conditions with respect thereto which the ¡plaintiff is unable to grant because its financial condition will not permit it so to do without immediately impairing and ultimately destroying its ability to continue to operate and serve the public in the manner in which it has served it in the past; that plaintiff has never had any disputes with its employes which have not been amicably adjusted and notwithstanding it has continuously operated under contracts with organizations of its employes, which are independent of it and in no wise under its control, as to pay, rules and working comditions, because they will be influenced to abandon their present organizations and to join those organizations of employes on transcontinental steam railroads throughout the country on the promise that they will receive the higher or so-called steam railroad standard wages and the different or so-called rules and working conditions prevailing thereon; that on the uncontradieted evidence in this cause as well as on the evidence before the Commission in its hearing the Court finds that plaintiff’s railroad is operated by electric power, is known and is in fact now and ever since its construction has been an interurban electric railway as said term is used in and within the purview of said Railway Labor Act, and that the finding of the Commission that it is not such a railway is against and contrary to the law. The Court Con-eluded as a matter of law that decree should go for plaintiff and directed the issuance of its writ permanently enjoining and restraining defendant Shields, both individually and as United States Attorney for the District of Utah, from initiating *916or prosecuting any suit or suits against the plaintiff, its officers and agents based upon the alleged violation by them or any of them of any of the provisions of the said Railway Labor Act.
Paragraph eight of section 2, as amended, provides that the carrier shall notify its employes by printed notices in such form and posted at such times and places as shall be specified by the Mediation Board that all disputes between the carrier and its employes will be handled in accordance with this Act, and in such notices there shall be printed verbatim in large type the third, fourth and fifth paragraphs of section 2, thereby making them a part of the contract of employment between the carrier and its employes, and those paragraphs shall be a part of the agreement between employer and employes. The tenth paragraph of said section 2 makes it a misdemeanor on the part of the carrier, its officers and agents to refuse and willfully fail to comply with the terms of the third, fourth, fifth, seventh or eighth paragraphs of the section, and upon conviction the carrier, its officers or agents offending shall be subject to a fine of not less than $1,000 nor more than $20,000 or imprisonment for not more than six months, or both fine and imprisonment, and each day during which such carrier, its officers or agents shall willfully fail or refuse to comply with the terms of said paragraph shall constitute a separate offense. It also makes it the duty of the District Attorney of the United States to prosecute such offenses on the application of the carrier’s employes.
There is one other point to be noticed. When appellee’s predecessor came out of receivership a few years ago it was reorganized and transferred to appellee company. To satisfy the indebtedness of the old company the new company issued its mortgage bonds to the amount of $2,000,000 and 20,000 shares of stock. The old company had made periodic reports to the Com-, mission, and the new company informed it1 of its stock and bond issue. Correspondence! ensued, and directions were given to it by, the Commission as to the manner of keeping its accounts, particularly in readjusting them in the light of the accounts kept by the old company. The new securities were issued in the belief that it was an interurban; electric railway. Had they been issued un-' der section 20a of the Interstate Commerce} Act 49 U.S.C.A. § 20a without the approval of the Commission, they would have been1 void. Paragraph (1) of said section, 49 U.S.C.A. § 20a (1), provides: “As used in this section the term ‘carrier’ means a common carrier by railroad (except a street, suburban, or interurban electric railway which is not operated as a part of a general steam railroad system of transportation).” See United States v. Chicago N. S. & M. R. Co., 288 U.S. 1, 7, 13, 14, 53 S.Ct. 245, 246, 248, 249, 77 L.Ed. 583. Nothing was said by the Interstate Commerce Commission in their correspondence upon the subject as to whether or not the securities of the new company could only be issued with its approval without being void. The Commission must have then been of the opinion that appellee was an interurban electric railway. "The uncontradicted evidence shows that it has always been known as such by the public. In our opinion both law and equity are with appellee.
Affirmed.