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FLORIDA EAST COAST R. CO. v. U S, 234 U.S. 167 (1914)

U.S. Supreme Court

FLORIDA EAST COAST R. CO. v. U S, 234 U.S. 167 (1914)

234 U.S. 167

UNITED STATES, Interstate Commerce Commission, Railroad Commissioners of Florida, et al.
No. 383.

Argued January 15 and 16, 1913.
Decided June 8, 1914.

Messrs. Fred. C. Bryan and Alexander St. Clair-Abrams for appellant. [234 U.S. 167, 168]   Mr. Blackburn Esterline and Solicitor General Bullitt for the United states.

[234 U.S. 167, 171]   Mr. Charles W. Needham for the Interstate Commerce Commission. [234 U.S. 167, 172]   Mr. Frederick M. Hudson for the Railroad Commissioners of Florida.

[234 U.S. 167, 173]   Mr. A. A. Boggs for intervening appellees.

Mr. Chief Justice White delivered the opinion of the court:

The order of the Interstate Commerce Commission concerning which the appellant, hereafter called the East Coast Line, complained before the court below, and which that court refused to enjoin, was made on a second supplemental petition presented in controversies which had been long pending and twice before decided, such controversies involving many railroads, and being concerned with the rates as to pineapples, citrus fruits, and vegetables from places of production in Florida to exterior points of distribution or consumption. While the report here under consideration, made on the second supplemental petition, deals with only a few of the railroads concerned in the previous inquiries, and with only a part of the controversies involved in the previous cases, yet the reports in the previous cases and the reasons stated by the Commission for its action in those cases are so connected with its action complained of in this case that it is impossible to understand this controversy without recurring to and stating the previous reports of the Commission in the controversies to which we have referred. [234 U.S. 167, 174]   We observe before coming to make that statement that none of the testimony taken before the Commission in the cases prior to this one is in the record, it having been stipulated that the facts stated by the Commission in its reports in such previous cases should be taken as the facts of such controversies. For the purpose of the statement which we shall make, the record therefore consists of the reports in such previous cases, of the report in this case, and the testimony taken in this case before the Commission and in the court below. The future application of the facts which we shall state will be facilitated by giving a description of the East Coast Line as stated in the several reports of the Commission to which we shall immediately recur.

The East Coast Line is wholly within the state of Florida, the main line extending from Jacksonville south along the Atlantic coast to Miami, a distance of 366 miles, then to Homestead, 28 miles south, and thence across the Florida Keys to Key West. At the time of the final hearing before the Commission on March 2, 1911, the road was not fully constructed, and was only completed and being operated to Knight's Key, about 83 miles below Homestead. The total mileage of the road was about 583 miles, including 477 miles of main line from Jacksonville to Knight's Key and about 106 miles of branch line above Miami. The cost of the construction from Homestead on was enormous, amounting to nearly $175,000 per mile, and the total cost of the extension from Homestead to Knight's Key, 83 miles, nearly equalled the entire cost of the balance of the road, 500 miles. On July 3, 1907, a petition was filed by the Florida Fruit & Vegetable Shippers' Protective Association against the Atlantic Coast Line, the Seaboard Air Line and Southern Railway Companies and the East Coast Line, complaining of and asking a reduction in interstate rates on pineapples, citrus fruits, and vegetables. The East Coast Line was the only one [234 U.S. 167, 175]   of the defendant railroads whose traffic was confined to the producing regions in Florida because, while the other lines also undoubtedly penetrated to the area of production, their lines were not confined to Florida, but were trunk lines, carrying not only the product committed to them by producers in Florida, but also the products committed by producers to roads like the East Coast Line, which did not extend beyond Florida, and had therefore to be transshipped if destined to points beyond the state by other roads. In coming to make its report in the case thus referred to, the Commission thus stated the general situation of the railroad traffic of all the roads in Florida concerning the subjects under discussion (No. 1168, 14 Inters. Com. Rep. 483):

In the report by which the Commission disposed of this controversy ( No. 1168, 14 Inters. Com. Rep. 476) it divided the rates to be considered into two classes: (a) gathering charges from production points in Florida to base points of which Jacksonville was the only one on the East Coast Line, and (b) rates from base points to points of final [234 U.S. 167, 176]   destination in other states, the sum of the two rates being the joint through rate.

Considering the three products whose traffic charges were under consideration, the Commission said:

(a) Citrus fruits:

(b) Vegetables:

(c) Pineapples:

Presumably, deeming that the particular situation on the East Coast Line as to the character of its business, its [234 U.S. 167, 178]   location, its cost, etc., etc., required to be specially pointed out in addition to what was said in the passages quoted, the Commission said:

And concerning the earnings of the East Coast Line, it was said: [234 U.S. 167, 179]   'The total earnings of the Florida East Coast Railway for the same year [ending June 30, 1907] were $5,911 per mile, and its operating expenses $4,502. The greater part of the receipts of this railroad are from its passenger service. The evidence shows that a considerable portion of what little freight revenue it has comes from the transportation of fruits and vegetables. It has given in the past great attention to this service, and has apparently satisfied its patrons in this respect. It makes no through rates, but receives its full local in all cases up to Jacksonville.'

Giving effect to the foregoing, the Commission held that the complaint as to gathering charges was wholly unfounded, and they were maintained. A different conclusion, however, was reached as to charges from the base points to points of distribution or consumption, as to which some reduction was made. It consequently follows that all the other roads who were defendants were subjected to some reduction as to their rates, while the East Coast Line, because of its being a purely gathering road, was subjected to no reduction whatever.

Within a year after this action by the Commission the same complainant commenced a new proceeding (No. 2566) against two hundred railroads, including, among others, the East Coast Line, to establish carload rates from base points in Florida to interstate points. At the same time in No. 1168, which, as we have seen, had been previously passed upon by the Commission and decided in favor of the East Coast Line, a supplemental petition was filed against that road, the sole complaint against the East Coast Line in such petitions being as to its gathering rates on pineapples from points of production to Jacksonville. And it is to be presumed that the complaint as to pineapple-gathering rates was made only against the East Coast Line, because, as we have seen, as stated by the Commission, that road was almost the exclusive carrier of such [234 U.S. 167, 180]   product, and in fact had virtually built up that industry. The controversy, while it involved a claim of reduction, in its broad aspect presented only a controversy as to whether there should be put in force carload and less- than-carload instead of anyquantity rates in the performance of its duty of gathering pineapples. On the filing of the new and original as well as of the supplemental petition, the Commission directed the rescinding of its previous order concerning the reasonableness of gathering rates, as well as its finding on the subject of rates from base points, and directed the matter to be reheard. Without referring to the conclusion of the Commission concerning the controversy as to the many railroads who were before it as to their interstate rates, we come to state the ruling of the Commission as to the East Coast Line (17 Inters. Com. Rep. 552):

The order of the Commission which gave effect to these views entered February 8, 1910, changed gathering charges on pineapples and citrus fruits on the East Coast Line from any-quantity to carload and less-than- carload rates, and modified the mileage basis. On attention being directed to the fact that the complaint related only to pineapples, while the order applied to that product and to citrus fruits, the order was modified and restricted to the subject complained of,-pineapples. The East Coast Line conformed to the order, and, indeed, shortly after doing so, also voluntarily put into effect carload and less-than-carload gathering rates on citrus fruits and vegetables, and although the rates thus fixed were somewhat higher than the rates on pineapples which the Commission had established, they were lower than the citrus fruit and vegetable rates which had been expressly sustained by the Commission.

Some months after this was done the same complainant who had filed the previous petitions presented in No. 1168 a second supplemental complaint against the East Coast Line, and new petitions against the Seaboard Air Line and Atlantic Coast Line Railways (No. 3808). So far as the East Coast Line was concerned, the complaint was against the citrus fruit and vegetablegathering rates, and asked that they be equalized with or made the same as the pineapple rate. The Florida Railroad Commission intervened and asked the same relief. The Commission in effect granted the prayer of this second supplemental complaint, found the rates of the East Coast Line on [234 U.S. 167, 183]   citrus fruits and vegetables to be unjust and unreasonable, and directed the putting into operation of a lower stated schedule of gathering rates which was made applicable not only to the East Coast Line, but also to the other roads which were parties to the proceeding. And it is this order which the railroad refused to obey, and to enjoin the enforcement of which this suit was brought.

Without going into detail, it suffices to say that the report of the Commission concerning the action just stated did not purport to question the correctness of its previous findings sustaining the citrus fruit and vegetable rates of the East Coast Line, but was based upon what was deemed to be a change in conditions since the previous decisions. After pointing out that it had previously ordered a change from any-quantity to carload and less-than-carload rates on pineapples from gathering points to the base point on the East Coast Line, and on all fruits and vegetables from base points outward, and that on both the Atlantic Coast Line and the Seaboard Air Line anyquantity rates yet remained from gathering points as to all fruits and vegetables, although such was not the case as to the East Coast Line, because of the change which it had voluntarily made, it was said (22 Inters. Com. Rep. 11, 14-16):

... * *

And upon that changed circumstance an order was awarded directing the change from any-quantity to carload and less-than-carload, and fixing a rate which was the same as that previously fixed for pineapples. Of course, as the East Coast Line had voluntarily put in carload and less-than- carload rates, it was only affected by this order to the extent that it lowered the traffic charge as contained in the schedule which had been previously voluntarily established.

It is insisted that the order of the Commission was wrongful, and that the court below erred in not restraining its enforcement for the following reasons: (a) because the order complained of was rendered without any evidence [234 U.S. 167, 185]   whatever to sustain it; (b) because it confiscated the property of the railway in a twofold aspect; first, by fixing a rate so unreasonably low as to afford no remuneration to the corporation for the use of its property; and second, because, although the Commission, in order to justify the rate which it fixed, took into account the revenue derived from the extended road, it nevertheless declined to at all consider the value of the extended road and the right to earn a return thereon. We come as briefly as possible to consider these contentions separately.

(a) That there was no evidence whatever tending to sustain the reduction of the rates on citrus fruits and vegetables as to the East Coast Line which the Commission ordered.

While a finding of fact made by the Commission concerning a matter within the scope of the authority delegated to it is binding, and may not be re-examined in the courts, it is undoubted that where it is contended that an order whose enforcement is resisted was rendered without any evidence whatever to support it, the consideration of such a question involves not an issue of fact, but one of law, which it is the duty of the courts to examine and decide. Interstate Commerce Commission v. Louisville & N. R. Co. 227 U.S. 88, 91 , 92 S., 57 L. ed. 431, 433, 434, 33 Sup. Ct. Rep. 185, and cases cited.

In view of what we have said concerning the state of the record, the solution of the question must depend upon an examination and analysis of two subjects: the one, the reports of the Commission in the previous cases, and the other, the testimony which was before it and the report made in this case. As to the first, in view of the statements made by the Commission in its report in the original case (No. 1168, 14 Inters. Com. Rep. 476) as to the earning power of the road, the nature of its business, and the reasonableness of its rates, and the express finding that the citrus fruit and vegetable rates were just and reasonable and should not be changed, and the further fact that they were not called in question in the second proceeding, it [234 U.S. 167, 186]   follows that the inquiry narrows itself to the mere consideration of the testimony taken in this proceeding, and the report of the Commission in such proceeding, and the testimony taken before the court below in so far as it is proper to consider it in connection with the particular question under consideration. But, coming to make a review of the testimony before the Commission on the issue raised by the second supplemental petition, we fail to find the slightest proof tending to sustain the reduction in rates as to the East Coast Line, which was made.

There are only three subjects referred to in the testimony which can in any view be considered as having any possible tendency to show such a change as would cause the rate which was found by the Commission in the past reasonable, and not to justify a change, to be unreasonable and therefore require reduction. The three subjects are these: (a) testimony by the chairman of the Florida Railroad Commission that there had been a considerable increase in the volume of traffic in citrus fruits and vegetables since the previous finding; (b) a further statement or admission made by an officer of the East Coast Line in a colloquy which took place at the hearing in this case, to the effect that, as shippers under carload rates loaded their own cars, there was some difference in cost, to the advantage of the road over the cost of loading when the any- quantity rates prevailed; (c) testimony with reference to the Atlantic Coast Line and the Seaboard Air Line (but none as to the East Coast Line), to the effect that on those roads it had come to pass that there was a saving in expense and an increase in earning capacity because, even under the any-quantity rates, carload shipments had greatly increased, and cars so shipped were much more heavily loaded and moved from the point of production through the base point to their ultimate destination, when such was not the case at the time the previous order was made. Testimony which, as we have seen, was expressly [234 U.S. 167, 187]   declared by the Commission to be in effect the cause which gave rise to the reduction. But at once it is to be observed that, so far as any inference alone from the difference between carload and less-than-carload rates and any-quantity rates is concerned, it had no application to the East Coast Line, since that road had put in the carload and less-than- carload rates while the other two roads had not. And so far as the consideration of the increased loading is concerned, as stated by the Commission, whatever may have been the proof as to the Seaboard Air Line and the Atlantic Coast Line, it is beyond controversy that no such proof can be found in the record as to the East Coast Line except the vague intimation to which we have referred.

Thus, by analysis, the case comes to this: Did the facts as to the increased loading which the Commission found to exist in the case of the Seaboard Air Line and the Atlantic Coast Line support or tend to support the order as to the East Coast Line in the absence of all testimony in the record concerning the existence of such fact as to the traffic on that road? In other words, the question is, Because there was testimony as to the traffic of those roads, can such testimony be said to tend to establish the same condition on the East Coast Line? Conceding that, from an abstract point of view, an affirmative answer would have to be given to such question, we think such is not the case here for the following reasons: (a) because of the difference in business carried on by the two roads named and the East Coast Line, they being not only gatherers of the local product, but trunk line carriers; (b) because of the difference in the situation and traffic of the two trunk lines named and the East Coast Line, as deduced solely from the peculiar environment and movement of business on that road so aptly stated in the passages from the reports of the Commission which we have quoted. Differences which presumably gave rise to [234 U.S. 167, 188]   separate statements in the previous reports in considering that road. While we do not say that the conclusion is affirmatively sustained, nevertheless we think the state of the record at least tends to give some support to the suggestion in the argument that the greater magnitude and importance of the consideration of the business and rates of the two trunk line carriers concentrated attention in that direction, and therefore caused the inquiry on that subject and the facts concerning the same to eclipse the distinctions between those lines and the East Coast Line,- distinctions which, if otherwise taken under consideration, should have produced a different result.

As it follows from these views that the order in question as to the East Coast Line and its enforcement should have been enjoined by the court below, our duty is to reverse the action of that court, and to remand the case to the proper district court, with directions to grant the prayer of the East Coast Line, and restrain the enforcement of the order in question; and it is so ordered.


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