Texas Company v. Northside Belt Railway Company/Opinion of the Court

Under the laws of Texas, Cullinan secured a charter for the Northside Belt Railway Company with power to build and operate, as a common carrier, a terminal railway from a private plant to another local railroad. The line was to be about five miles long and wholly within that state. The Northside Company instituted proceedings in a Texas court to acquire by condemnation a right of way, for a short distance, over unused land owned by the Texas & New Orleans Railroad Company, an interstate carrier. Thereupon, the latter brought, under paragraphs 18 to 22 of section 1 of the Act to Regulate Commerce, as amended by Transportation Act 1920, c. 91, § 402, 41 Stat. 456, 477, 478 (49 USCA § 1; Comp. St. § 8563), this suit in the federal court for Southern Texas. The prayer was to enjoin the Northside Company from continuing the condemnation proceedings and also from constructing, maintaining or operating the railroad over the plaintiff's land, This relief was sought solely on the ground that the defendant had not obtained from the Interstate Commerce Commission the certificate of public convenience and necessity prescribed in those paragraphs of the Transportation Act.

A restraining order applied for upon the filing of the bill was denied. No application was made for an interlocutory injunction. The defendant answered that it was exclusively an intrastate carrier and as such was not subject to the Interstate Commerce Act. The case was fully heard on the merits by the District Court. It appeared that, before this suit was begun, judgment had been entered in the condemnation proceedings; that the amount of the compensation awarded had been paid into court (as provided by the law of the state); and that the Northside Company had entered into possession of the premises taken. It appeared that, before process was served upon the defendants, the line had been constructed over the strip of land in question. And it also appeared that, at the time of the hearing, the line had not yet been completed; that the defendant had not engaged or offered to engage in interstate commerce; and that it could not possibly engage in such commerce until the completion of its line.

The District Court found and held that the Northside Company was an intrastate carrier only; that its construction would not burden interstate commerce directly or indirectly; and that paragraphs 18 to 22 were not applicable to the construction of an intrastate railroad not yet engaging in interstate commerce. On that ground, the trial court denied the injunction and ordered the bill dismissed without prejudice to the right of the plaintiff 'to hereafter apply for an injunction against the respondent if its activities in the future shall bring it properly within the purview' of those paragraphs. 8 F.(2d) 153.

The Circuit Court of Appeals affirmed the decree of the District Court, without passing upon the merits of the case. It held that the cause had become moot, because 'the only relief prayed for was action by the court restraining the doing of things which have been done since the suit was brought.' This conclusion was based on its own finding that 'before the decree appealed from was entered, a judgment condeming said land was rendered in said condemnation suit, and appellee had constructed its railroad over said land and was operating the same.' 16 F.(2d) 782. This court granted a writ of certiorari. 274 U.S. 734, 47 S.C.t. 768, 71 L. Ed. 1335.

The finding of fact upon which the Court of Appeals rested its judgment was clearly erroneous. There is no basis in the record for the finding that the railroad was in operation. The part of the railroad over the plaintiff's land had been constructed; but the railroad had not been completed. No part of it had been operated; and apparently it was physically impossible to operate it in interstate commerce until completed. Paragraph 20 of section 402 specifically provides that unauthorized operation as well as construction may be enjoined. Moreover, the facts erroneously found would not, if true, have rendered the case moot. For where a defendant, with notice of the filing of a bill for an injunction, proceeds to complete the acts sought to be enjoined, the court may, by mandatory injunction, compel a restoration of the status quo. Tucker v. Howard, 128 Mass. 361, 363; Town of Platteville v. Galena & Southern Wisconsin R. Co., 43 Wis. 493, 506-507.

The decree of the District Court was, however, properly affirmed for the reason indicated by that court. The purpose of paragraphs 18 to 22 is to prevent interstate carriers from weakening themselves by constructing or operating superfluous lines, and to protect them from being weakened by another carrier's operating in interstate commerce a competing line not required in the public interest. See Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 U.S. 563, 42 S.C.t. 232, 66 L. Ed. 371, 22 A. L. R. 1086; The Chicago Junction Case, 264 U.S. 258, 44 S.C.t. 317, 68 L. Ed. 667; Railroad Commission of California v. Southern Pacific Co., 264 U.S. 331, 44 S.C.t. 376, 68 L. Ed. 713; Texas & Pacific R. Co. v. Gulf, Colorado & Santa Fe R. Co., 270 U.S. 266, 46 S.C.t. 263, 70 L. Ed. 578; Alabama & Vicksburg R. Co. v. Jackson & Eastern R. Co., 271 U.S. 244, 46 S.C.t. 535, 70 L. Ed. 928. Compare Colorado v. United States, 271 U.S. 153, 46 S.C.t. 452, 70 L. Ed. 878. The mere fact that a railroad lies wholly within one state, and is to be built by an independent corporation, does not, of course, prevent the application of paragraphs 18 to 22. If it undertakes to engage in interstate commerce, its operation becomes immediately a matter of national concern and it comes within the purview of those paragraphs. But Congress did not in terms prohibit wholly intrastate carriers from building lines to be used wholly in intrastate commerce. As long as the Northside Company confines its operations to intrastate commerce, it will not violate the federal law. Compare Texas v. Eastern Texas R. Co., 258 U.S. 204, 42 S.C.t. 281, 66 L. Ed. 566; Railroad Commission of Texas v. Eastern Texas R. R. Co., 264 U.S. 79, 44 S.C.t. 247, 68 L. Ed. 569.

The plaintiff admits that operation of the Northside line has not begun. But it insists that under the laws of Texas every common carrier not only may, but must, if requested, engage also in interstate business, and it argues that this makes the Northside Company subject to the Interstate Commerce Act. Texas Rev. Stat. 1925, art. 6407. Obviously, the law of Texas could not require the Northside Company to engage in interstate commerce, if by doing so it violated any law of the United States. Compare Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. United States, 275 U.S. 404, 48 S.C.t. 189, 72 L. Ed. 338. Here, there was as yet no threat to use the line in interstate commerce; and it was shown that the line could not possibly be so used until completed. There was clearly no imminent danger that irreparable injury would result from its mere construction. Under these circumstances, to deny the injunction and dismiss the bill without prejudice was, at least, a permissible exercise of the court's discretion.

Affirmed.