Atlantic Coast Line Company v. United States/Opinion of the Court

This suit, under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220 (28 USCA § 47) was brought in the federal court for Western South Carolina, to set aside an order of the Interstate Commerce Commission dated June 9, 1930. Restriction in Routing in Connection with the Georgia & Florida Railroad, 165 I. C. C. 3. The plaintiffs are the Atlantic Coast Line Railroad, the Louisville & Nashville Railroad, and the Charleston & Western Railroad. The defendants are the United States, and, by intervention, the Commission, the Piedmont & Northern Railway, and the Georgia & Florida Railroad. The order assailed was entered under section 15(7) of the Interstate Commerce Act, 49 USCA § 15(7). It requires the cancellation of provisions in tariff schedules by which the plaintiffs seek to exclude the Georgia & Florida from participating as connecting carrier in through routes established over the Carolina, Clinchfield & Ohio Railway. The Commission held that the restrictive schedules violated the conditions under which that railroad had been leased to the Atlantic Coast Line and the Louisville & Nashville. Clinchfield Railway Lease, 90 I. C. C. 113. The District Court, three judges sitting, sustained the validity of the order and dismissed the bill. 48 F.(2d) 239. The case is here on direct appeal. We are of opinion that the decree should be affirmed.

The Clinchfield Railway extends in a southerly direction from Elkhorn City, Ky., to Spartanburg, S.C.., a distance of 276.85 miles. The Atlantic Coast Line system lies to the east and south. To the west and south lies the Louisville & Nashville, of whose stock 51 per cent, is owned by the Coast Line. The Clinchfield is a link in many possible routes between points in the Southeastern States and the North, in addition to those routes which are over the Atlantic Coast Line or the Louisville & Nashville. At Elkhorn City, the Clinchfield connects with the Chesapeake & Ohio Railway, whose system extends east, north, and west. At Spartanburg, the Clinchfield connects with the Piedmont & Northern, which extends in a southerly direction to Greenwood, S.C.. And, at Greenwood, the Piedmont & Northern connects with a recently built extension of the Georgia & Florida, which now has 464 miles of line in the three Southeastern States. The restrictive schedules excluded from the joint rates traffic over the Clinchfield if routed via the Georgia & Florida. Such traffic was thereby subjected to the applicable combination of higher local rates. The effect of this was to prevent not only the Georgia & Florida, but also the Piedmont & Northern, the intermediate carrier, from participating in such business, with the result that the traffic would be secured for the Charleston & Western, which the Atlantic Coast Line controls through stock ownership.

In 1923 the Atlantic Coast Line and the Louisville & Nashville applied to the Commission for leave jointly to lease the Clinchfield. The extension of the Georgia & Florida to Greenwood was then in contemplation. The Piedmont & Northern and the Georgia & Florida opposed authorization of an unconditional lease, on the ground that, if joint rates on traffic moving over the Clinchfield should be closed to them, they would be deprived of much traffic which might otherwise move over their lines or future extensions thereof. In order to preserve, among other things, the existing and possible though routes via the Clinchfield on railroads other than the Atlantic Coast Line and the Louisville & Nashville, the Commission, in authorizing the lease, made it subject to five conditions which the lessees accepted. Condition 1 requires the maintenance of a separate organization for the Clinchfield so that the road 'shall constitute a separate operating unit.' Condition 3 requires the continuance of existing routes and channels of trade, existing gateways for the interchange of traffic, and 'the present neutrality of handling the traffic inbound and outbound' so as to permit equal service, routing, and movement of competitive traffic to and from all connecting lines reached by the Clinchfield. Condition 4 requires the lessees to permit carriers then connecting with the line of the Clinchfield, or which may thereafter connect with it, to participate, without discrimination, in through routes and joint rates on traffic moving over the Clinchfield as an intermediate road between points at and beyond the Ohio river, on the one hand, and points in Southeastern and Carolina territory, on the other; and that to this end the Clinchfield shall be maintained as an open route for traffic available to all carriers connecting with it. The order of June 9, 1930, here assailed, canceled the restrictive schedules on the ground that they violated conditions 3 and 4. The plaintiffs deny that the restrictive schedules are inconsistent with conditions 3 and 4, and claim that, if the schedules are inconsistent with the conditions, it is the conditions which are void.

First. The plaintiffs contend that the restrictive schedules are consistent with the conditions because the Georgia & Florida is not a carrier 'connecting with the Clinchfield.' The argument is that the Georgia & Florida does not connect, since its own rails do not physically abut on the Clinchfield's rails; the connection being made over the Piedmont & Northern, an intermediate carrier. There is no warrant for limiting the meaning of 'connecting lines' to those having a direct physical connection with the Clinchfield. The term is commonly used as referring to all the lines making up a through route.

Second. The plaintiffs contend that the restrictive schedules are consistent with the conditions, because these assure equality of treatment only to connections existing at the time the order was entered authorizing the lease, and the Greenwood extension by means of which the Georgia & Florida connects with the Piedmont & Northern, was not built until several years thereafter. But the open route guaranteed by the conditions is not so limited. Condition 4 prescribes that the lessees 'shall permit the line of the Clinchfield and its subsidiaries to be used as a link for through traffic, * *  * equally available to such other carriers, now connecting, or which may hereafter connect, with the line of the Clinchfield and its subsidiaries, as may desire to participate in through routes and joint rates between points in territory north and west of the line of the Clinchfield and points at and beyond the Ohio River, on the one hand, and points in the Southeastern and Carolina territory, on the other.'

Third. The plaintiffs contend that, as construed, conditions 3 and 4 conflict with the provisions of section 15(4) of the act which prohibits the Commission from requiring a carrier to establish 'without its consent' any through route which does not embrace substantially the entire length of its line (including lines of controlled carriers) between the termini of the proposed route. The argument is that the order short-hauls traffic which would otherwise pass over the Charleston & Western, and that this road is a part of the Atlantic Coast Line System. The Commission's order of June 3, 1924, which prescribed the conditions, did not require the lessees to abandon any protection given by section 15(4) in respect to their then existing lines. It was not an order establishing a through route within the meaning of section 15(3). In respect to the Clinchfield, which the carriers sought to acquire, the Commission gave them the option of either consenting to certain through routing over that road or abandoning their plan to lease the road. In effect, the Commission found that without such a condition the proposed lease was not in the public interest. With that condition it was. Compare Chicago Junction Case, 264 U.S. 258, 265, 44 S.C.t. 317, 68 L. Ed. 667. It was within the powers of the Commission to make such a condition. Obviously the condition was not arbitrary. The provision was requested by the carriers interested; and it was required in order that competition, which the Commission deemed to be in the public interest, be preserved. Compare Chesapeake & Ohio Ry. Co. v. United States, 283 U.S. 35, 42, 51 S.C.t. 337, 75 L. Ed. 824. The limitation imposed by section 15(4) of the act upon the Commission's power under section 15(3) to establish through routes is designed to protect the existing long-haul routes of carriers. Compare United States v. Missouri Pacific R. Co., 278 U.S. 269, 277, 49 S.C.t. 133, 73 L. Ed. 322. It applies only when the Commission is exercising the power conferred by that paragraph. It is not a limitation upon the power of the Commission to approve new combinations of carriers.

Affirmed.