Court Opinion

ID: 8829856
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:59:58.168873+00
Date Added: 2024-06-11T17:04:53.685559
License: Public Domain

KENNEDY, District Judge
(dissenting). It is with regret that I find myself unable to accede tó the views of the majority in the disposition of this case, although I have joined with the other Judges in signing the order carrying into effect their decision so that there may be no question as to its validity. I have been accorded the privilege of expressing my views as to the manner in which the case should be disposed of and herein express in a general way the reasons for my conclusion.
This is a proceeding involving the application of thirteen plaintiff carriers for a permanent writ of injunction restraining the enforcement of an order of the Interstate Commerce Commission made August 9, 1922, providing for an increased division of joint rates to the Kansas City, Mexico & Orient Railroad as’ against the plaintiff carriers.
After analyzing the case of the plaintiffs in the light of the points of attack carried in the arguments and briefs of counsel, I am constrained to eliminate from consideration as not having sufficient weight or bearing upon the controversy to entitle plaintiffs to relief, the following:
(a) It seems to me that there could be no question of confiscation generally, where the Commission has made a division of joint rates. Such a division would not prohibit the carriers affected in establishing a new joint rate which would bring to them a greater amount of money for the service tendered. If the Commission should refuse to recognize such increased rate it might form the basis of an action in the courts that the established joint rate was confiscatory. In other words, until relief is denied by the Commission itself, which is not the situation in this case, the question of a rate being confiscatory could not be raised.
(b) I am not in accord with the views of the plaintiffs that the order of the Commission is invalid because of failure to join other carriers who participated in the joint rates affected by the order, for the rea*116son that the connecting carriers will simply be required to distribute the burden cast upon them among other connecting carriers, and so on among all carriers between or among which there is a joint rate established embracing the Orient Railway. It is the same as though these railroads had not yet but were now called upon to first establish joint rates as among all carriers.
(c) As to the questions decided by the Commission as reflected in the ■order attacked, not being within the issues raised by the pleadings before the Commission, I dó not consider that the objection is well founded. As long as the Transportation Act gives the Commission the right to make investigations upon its own initiative as well as upon the complaint of one road as against another, coupled with the fact that in the first instance the Orient, with little attempt at formality of pleading or statement of ground for relief, simply ask the Commission to investigate the question of joint rates and the Commission thereupon proceeded to make such investigation, that we cannot well take the narrow view that the Commission did not have full power and authority upon the hearing to go into every phase of joint rates in which the Orient was interested.
(d) As to the point that the Commission arrived at its conclusions upon statistical data and information not introduced in evidence, I am inclined to believe that this is fully covered by the admitted procedure before the Commission that it is a quasijudicial body and not to be governed by the strict rules of evidence. The notice by the Commission to these carriers that it was investigating joint rates with the Orient was sufficient to bring to their attention that all matters incident to the changing of those rates was before the Commission. The chief ■criticism is that the Commission considered the annual reports of the carriers themselves in arriving at their conclusions. These reports are filed with the Commission, and so far as the carrier is concerned .are authentic and binding upon it. The carrier was fully cognizant of the contents of the report and could not very well be heard to deny the truth of its contents. It is an admission against interest. In aii investigation of this character instituted by the Commission upon the suggestion of a carrier concerned in joint rates, I consider it to be incumbent upon each carrier summoned to give the Commission a full, fair and frank statement and proof of how any diminution in joint rates then under consideration would affect it. This the plaintiffs in this case did not consider it to be their duty to do, as they offered no ■evidence. The very establishment of the Commission itself carries the conclusion that it was the idea of Congress to establish a flexible tribunal consisting of experts to pass upon those questions which manifestly could not be effectively handled by the courts. A kindred thought arises in this connection, that such tribunal must be allowed the greatest possible latitude within only constitutional limitations in. working out the problems before it without interference from the courts.
As a matter of fact, the record discloses that the respondent carriers had notice that annual reports would be referred to and considered in the proceeding (Printed Record, p. 74). It was earnestly argued by •counsel for plaintiffs that this could not be done without the formal *117introduction of the reports in evidence or such portions of them as the parties .before the Commission desired to have considered in their behalf. In one of the rules of the Commission, however, appears this paragraph:
“The Commission will take notice of items in tariffs and annual, and other periodical reports of carriers properly filed with it. * * * ”
It is true that the same rule provides how the parties before the Commission may direct the Commission’s attention to such reports by specifying and identifying the particular portions desired to be considered. It would seem that a liberal construction of this rule might be that the Commission could under this rule, upon its own initiative, consider annual reports of the carriers filed with the Commission, whether formally introduced by the litigants or not. Certainly it has probative force in connection with the statement of the examiner, the official representative of the Commission, that these reports were going to be used, of which the carriers had notice early in the proceeding. This, in connection with the admitted competency of the reports as evidence would seem to me to be sufficient as to the form of introduction in a proceeding before the Commission, if not in strict accordance with court procedure.
(e) I do not agree with the contention of counsel for the plaintiffs that the matter before the Commission was disposed of solely upon the theory of taking from the stronger and giving to the weaker. However, a fair interpretation of section 15, subdivision 6, of the Transportation Act would seem to imply that the Commission may now take into consideration elements in determining the basis of joint rates which reflect in a degree the right of the Commission to have as one of. its chief purposes the building up of an effective transportation system throughout the country. In fact the Supreme Court has held this affirmatively in the Wisconsin case in construing the act before the recent amendment. R. R. Commission of Wisconsin v. C., B. & Q. R. R. Co., 257 U. S. 585, 42 Sup. Ct. 232, 66 L. Ed. 371, 22 A. L. R. 1086. Does it not therefore logically follow that where the carrier is operating under such conditions as to make its operation from the standpoint of a financial success extremely difficult, but that the carrier is necessary to the service of the country through which it runs, that in the broad light of giving effective service to the people it becomes necessary to adopt the very broadest policies in the treatment of such a carrier? As a concrete illustration, it is for the good of the people of Boston to .be able to ship goods to a point in Texas on the Orient Railway and so from any other portion of the United States. In the long run such a policy would not work as a hardship against the similar participation of other roads in a joint rate but would generally, at least eventually, mean a greater amount of business for those roads. They could not, therefore, complain unless the Interstate Commerce Commission should order that they conduct their joint traffic with the Orient upon a basis which was confiscatory, but that question is not in this case as the .Commission has not denied them relief growing out of the situation brought about by the lesser division to them of joint rates with the Orient.
*118As to a contribution by the stronger to the weaker, while not recognized as a .basis for the determination of property rights, yet as a principle it does exist in every activity of life. The strong absorb the deficiencies of the weak. One customer of a merchant fails to pay his honest debt and that merchant as a result must charge a higher rate upon his products for sale so that his loss is absorbed in the general business and this burden falls upon those who do pay their debts. I am not seeking, however, to justify and sustain the order of the Commission upon the basis that the Commission has adopted in this case, the theory of taking from-the stronger and giving to the weaker road, .but in the general plan of carrying out the purposes of the transportation problem of the country as contained in the Transportation Act and as interpretated by the courts, it becomes necessary in a measure to distribute the burden so that the entire country will have the benefit, as far as may be possible, of efficient transportation facilities. As soon as it may be determined that a common carrier is a necessary servant for the community in which it exists, in which determination the Commission is the sole arbiter, it then becomes necessary for the Interstate Commerce Commission to see that it does exist, which could not be brought about by the infliction of prohibitive high local rates not to be reasonably borne by the peoples and industries which the carrier immediately serves.
The principal ground upon which we all agree that enforcement of the order complained of must .be restrained, if at all, is, that there is a lack of sufficient substantial evidence in the record to sustain the order.
The main argument of counsel for plaintiffs upon this point is that without an introduction of division sheets showing what the divisions actually were, the Commission had no evidence to base its finding of fact as to the division of joint rates to the Orient being unjust, unreasonable or inequitable, and that in the absence of this or such a number of them for examples as would enable the Commission to determine with a degree of accuracy the general trend of divisions, that there was no evidence before the Commission upon this point. Counsel strongly rely upon the New England case in supporting this contention. It is true that the decision in the New England case .by the Commission was based upon evidence afforded through division sheets. It does not follow that the evidence in this or any other case must necessarily be based upon division sheets if the evidence can be presented to the Commission in another form.
It is contended by'counsel for the Commission that the evidence in this case while not in the form of division sheets, is much more complete and exhaustive than were division sheets relied upon, and I agree with counsel in this contention. Division sheets, unless tens of thousands were introduced in evidence, could only be used as samples in reflecting joint rates upon different commodities from which the Commission would be required to draw general conclusions as to the fairness of all joint rates. In the case at bar the proceeds from joint rates were themselves definitely and accurately determined. Printed Record Exhibits 25 and 26. By a process of computation the funds actually *119accruing from joint rates to the Orient and to its connections were determined, which as a problem gives the actual definite answer with relation to which the consideration of sample division sheets would only be an approximate guess.
Therefore all the evidence which would have been before the Commission by the introduction of so-called sample division sheets, the Commission had before it in the form of evidence determining the actual results in dollars and cents based upon joint rates between the Orient and its connections. This in my opinion would give a more substantial basis upon which to predicate any action by the Commission than would division sheets, for the reason that the method reflects the concrete result of all divisions of the joint rates in controversy. These amounts received were analyzed in connection with the tonnage and the ton-miles which the joint fund divided between the several carriers represented and afforded a basis of determining the revenue per ton-mile of all carriers concerned. A further analysis probably demonstrated that the Orient was receiving more for its service on the basis of per ton-mile than the majority of its carriers, which might be taken superficially to prove that the present divisions in force before the order of the Commission went into effect were then just and equitable so far as the Orient was concerned. It is admitted, however, by both sides to this controversy that the per ton-mile basis is not a fair one for sole use in determining divisions. So many different elements enter into the determination of the cost of service' that the ner ton-mile should only be considered as one element This was evidently the idea of the Commission because it proceeded to go further in its investigation as to the elements entering into the service required in carrying on joint traffic. Many' pages of tire record are used in ascertaining the physical facts surrounding the operation of the carriers. With the Orient it was found that it operated under many conditions which were not common to railroads. The fact that it runs through a comparatively sparsely settled portion of the country, affecting its local traffic, that it does not have fuel and building material upon or in proximity to its line and thereby being compelled to pay tonnage to other lines in order to secure these necessary supplies, and that in the shipment of live stock, cement, etc., in proximity to its lines, it must undergo a long haul of empty cars on account of there being only a one-way tonnage available, as well as other elements of difference in situation, compared with that of its connecting carriers. All of this data and material were gathered from the evidence itself introduced or from facts of which the Commission should take judicial notice and were evidence in the case upon which the Commission had the right to base a decision, that all elements considered, the Orient was not receiving its fair and just proportion of joint rates. And so far as this court is concerned it is only incumbent upon the Commission to secure its order against attack in this proceeding, to demonstrate to this court that thére was substantial evidence to support the order.
As was said by the Supreme Court in the recent case of Akron, Canton & Youngstown Railway Co. et al. v. United States, 43 Sup. Ct. 270, 67 L. Ed. -, decided February 19, 1923:
*120“To consider the weight of the evidence, or the wisdom of the order entered,, is beyond our province.”
Particular criticism is made of the tabulation found on page 404 of the report in that it purports to have been made up by the Commission from the'annual reports of the railroads before the Commission in this hearing in that, first, the reports ought not to have been considered as evidence as heretofore suggested because not formally introduced in. evidence; and, second, that it purports to have been made up from the reve.nues of the railroads in their entirety and not from revenues accru.ing from divisions of joint rates, or even from freight as distinguished from passenger traffic. I consider that the latter criticism is in a way justified, but computations from these reports need only to be used in a sense as being persuasive that the division of joint rates to the Orient are inequitable. It must be admitted, I believe, that it would be absolutely impossible to determine with absolute accuracy the separate and distinct cost of carrying on joint traffic as distinguished from all other traffic which the road carriers on, whether that traffic be freight or passenger, with a single train carrying both joint and other traffic,, and otherwise subject to varying conditions. It would seem to me to be practically impossible to segregate the different classes of traffic and say with respect to joint traffic there were a profit or loss, or with respect to other traffic there were a profit or loss. It would be difficult for a merchant to say with a degree of accuracy that the carrying of a. specific bolt of cloth upon his shelves caused him to suffer a direct profit or a direct loss. It might be that the possession for sale of that particular bolt of cloth in itself might not reflect a profit, and yet its possession for the satisfaction of a single customer might bring a.large profit accruing from the sale of his other materials in stock.
The compilation therefore as referred to might not be conclusive, independent of all other evidence, as proving the unfairness of the joint rates to the Orient and yet itself an element which the Commission had the right to take into consideration; and in fact it may be the best available method of securing in its larger sense a reflection of the fairness of a division of joint rates among carriers. This compilation shows generally a greater net revenue, in relation to operating expense,, to plaintiff carriers than to the Orient.
If our conclusion be sound that there is in the record substantial evidence to sustain the order of the Commission, it seems to me we do-not arrive at the point of considering whether the percentage basis adopted by tire Commission with respect to the different roads were proper or otherwise. If that percentage should be unfair in some in-' stances the door of the Commission is open to those who consider themselves aggrieved thereby. It is not for this court, untrained in the technical proposition of rate-making, to presume to say that the divisions are too high or too low, especially until such time as hereinbe-fore intimated, that the Commission has established a rate which wili-work a confiscation of the property of the carrier. We can conceive that it might be found by the Commission, upon these carriers feeling themselves aggrieved by the order and presenting evidence sustaining their contention of unfairness, that the Commission might modify the *121•percentages to suit the facts then before them, or the Commission might upon application permit the joint carriers to profit by a raise in rate. This, however, is for the Commission to determine and not the •courts.