CHICAGO, M., ST. P. & P. R. CO. v. U.S.
Legal provision: Interstate Commerce, as amended
Argument of Raymond K. Merrill
Chief Justice Earl Warren: Number 306, Chicago, Milwaukee, St. Paul and Pacific Railroad, Appellant, versus United States, et al., and Number 307, Ezra Taft Benson, Secretary of Agriculture, Appellant, versus United States, et al.
Mr. Raymond K. Merrill: Mr. Chief Justice and may it please the Court.
This litigation represents a quest for equal treatment in the matter of freight rates, equal treatment for shippers who use the Milwaukee Railroad between Spokane and the Twin Cities, the same as received by shippers who use the Great Northern and the Northern Pacific Railroads.
It also represents a quest for equal treatment to the Milwaukee Road, the same as is given to the Great Northern and the Northern Pacific in the way of joint rates.
The Milwaukee Railroad operates from Chicago and Indiana on the east by way of Milwaukee, the Twin Cities, Spokane to Seattle and Tacoma in the Pacific Northwest.
The S. P. & S. system is composed of the Spokane Portland in Seattle Railway, the Oregon Electric Railway, the Oregon Trunk Railway.
It operates from Spokane on the east to Vancouver Washington, Portland, Oregon and other points in Southern Washington and in Oregon.
It is owned jointly by the Great Northern and the Northern Pacific.
Great Northern operates from the Twin Cities on the east to the Pacific Northwest by way of Spokane including Seattle, Tacoma, Portland and other points.
The Northern Pacific operates partly north and partly south of the Milwaukee's route from the Twin Cities by way of Spokane to Seattle, Tacoma and Portland and other points.
At Spokane, Washington, the Great Northern and the Northern Pacific have a complete line of joint rates with the S. P. & S. system.
Now, the essential feature of a joint rate is that two railroads have agreed to transport merchandise or traffic from a point on one railroad to a point on another at a combined charge lower than the sum of their two local rates.
On the other end, the S. P. & S. system will enter into only a limited line of joint rates with the Milwaukee.
On the other traffic which could be interchanged at Spokane, combination rates would apply which because they are higher than the joint rates applicable if the traffic moves over the Northern Pacific or the Great Northern effectively would prevent any large amount or any fair amount of traffic to move by the Milwaukee.
Now, a combination rate, of course, is the sum of the local rate or one carrier to the junction point was the rate of the other carrier from the junction point to destination.
As a result of this refusal by the S. P. & S. system to enter into a complete line of joint rates with the Milwaukee, the Milwaukee is short hold on 92% of the S. P. & S. system traffic, which it is now endowing at a lost and revenue to the Milwaukee of over $2.5 million per year.
Now, that works this way.
The Milwaukee, if it has traffic going to the S. P. & S. system originating in the midwest or in the east or in the south can take it as far as the Twin Cities.
And there is compelled to surrender the traffic to either the Great Northern or the Northern Pacific who then take under Spokane and give it to the S. P. & S. system.
In coming the other way, the Milwaukee is not permitted to solicit the traffic at Spokane at joint rates but must wait until the traffic reaches the Twin Cities in order to participate in the hall at the joint rates, which are sought in this case.
Now, this deprives the shippers the use of the Milwaukee's route between Spokane and the Twin Cities except for the rate penalty in many shipments and it does deprive the Milwaukee with its right to solicit this traffic.
Accordingly back in 1954, the Milwaukee filed a complaint with the Interstate Commerce Commission and it charged that the S. P. & S. system was in violation of Section 1 (4), which requires that every common carrier subject to the Act to establish reasonable through routes with other such carriers and just and reasonable rates, charges and so forth applicable thereto.
It also charged the S. P. & S. with the violation of Section 3 (1) of the Act and it shall be unlawful for any common carrier to make, give or cause any undo or unreasonable preference or advantage to any particular person, locality, or to subject any particular person, firm, locality and so forth to any undo or unreasonable precedence or advantage.
It charged the S. P. & S. with a violation of Section 3 for the interstate commerce that requires that all carriers shall not discriminate in their rates, fares and charges between connecting lines.
The Milwaukee and both the powers of the Interstate Commerce Commission under Section 15 (1) of the Interstate Commerce Act which gives the Commission the power and the duty to correct violations of the Act and invoked the power of the Commission under Section 15 (3), which requires the Commission when it finds it desirable and the public interest to establish through routes and joint rates applicable thereto.
As soon as the complaint was filed, the Northern Pacific and the Great Northern promptly intervened and claimed that under Section 15 (4), the Interstate Commerce Act, the Commission cannot require through routes by any carrier or in connection with any carrier which requires that railroad without its consent to embrace in such routes substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith which lies between the termini of the proposed through route.
And the Great Northern said, We are under common management or control with the S. P. & S. system and are entitled to the protection of the long-haul over our line as well as over the S. P. & S. system.
And the Northern Pacific filed their petition for intervention and they said, Well, we are entitled to the protection of 15 (4) because we are under common management or control with the S. P. & S. system, and they both then asserted the same claim each claiming to be under common management or control with the S. P. & S. system.
And the S. P. & S. system resolved that if I move by answering that they were under common management or control with both the Great Northern and the Northern Pacific.
So the Milwaukee denied the affirmative allegations of common management or control and put the defendants and their intervenors upon proof with respect thereto.
At the hearing before the Interstate Commerce Commission, the Secretary of Agriculture of the United States intervened on behalf of the Milwaukee along with the Western Forest Industries and National Livestock Producers Association, the American National Cattlemen's Association, the National Wool Growers Association and the Chicago Producers Commission Association representing thousands of livestock, growers, cattlemen, wool growers and livestock producers in the western states, also appearing in behalf of the railroad as an intervenor.
In behalf of the Milwaukee was the Traffic Bureau of Sioux Falls, South Dakota and Association of Shippers and Receivers of great at that point.
The Milwaukee had to name about 300 railroads as defendants in order that there would be no question of the Commission's jurisdiction to prescribe joint rates and through routes in this case if through routes were necessary.
Out of these 300 railroads only five, the Chicago Burlington in Quincy which is a subsidiary of the Great Northern and Northern Pacific and the Northwestern and the Minneapolis in St. Louis which is now one railroad and the Chicago Rock Island in Pacific opposed the granting of the relief sought.
Intervenors on behalf of the great Northern, Northern Pacific and S. P. & S. consisted of some labor groups of the Great Northern and Northern Pacific.
Hearings were held.
Many railroad witnesses testified and many shipper witnesses testified on both sides.
And two years later in 1956, the examiner issued a proposed report finding that the S. P. & S. system is under common management or control with each of the Northern Lines.
His proposed report found that there are no through routes presently existing except for a joint rates supply and found that, however, the present rates on lumber and fresh fruits, and vegetables and livestock moving from points on the S. P. & S. to points on the Milwaukee and its connections were unreasonable, unjust, unduly preferential and prejudicial and the same pointing was made with respect to Westbound Traffic terminating on the S. P. & S. from points on the Milwaukee and its connections of coal, agricultural implements, iron, steel, grain, beans, grain and hogs.
The examiner also proposed the finding that through routes were necessary and desirable in order to provide adequate and more economic transportation to establish through routes and joint rates for these commodities in the directions indicated.
The following year 1957, the Commission came out with its report and it adopted almost verbatim the examiner's language especially as discussion of the evidence but ended enough saying that we disagree and find that the conclusions of the examiner, the present rates, cost, undue preference of prejudice or unjust and unreasonable is not correct and they found that there were not -- there was no such violation of the Act as indicated by the examiner, and they found that there was no need in order to provide adequate more economic transportation to establish through routes and joint rates.
In due time, a petition for reconsideration was denied by the Commission, the litigation moved to the District Court for the Eastern District to Wisconsin and four issues were brought before the Court and they were stipulated by the parties as issues to be decided by the Court.
Number one, whether the S. P. & S. system is or is not under common management or control with each of the competing Northern Lines, the Great Northern and Northern Pacific within the meaning of Section 15 (4) for the Interstate Commerce Act whether through routes presently exist in any case except where the presently limited line of joint rates apply.
Next, whether their -- the present rates constitute a violation of Section 3 of the interstate Commerce Act with respect to preference and prejudice against localities and shippers and with respect to discrimination against the Milwaukee.
And fourth whether, the evidence required the finding that the routes are needed to provide adequate and more economic transportation.
In the District Court, the Secretary of Agriculture intervened as a plaintiff as did the National Livestock Producers, the American National Cattlemen, the National Wool Growers, and the Chicago Producers Commission.
It took two years to get an opinion in this proceeding in the District Court and in 1960, the District Court opinion discussed the first issue only held that the evidence was sufficient to support the findings or provision to the second, third and fourth issue.
Now, the first issue was a question of common management or control.
And the District Court said that the S. P. & S. system is under common management or control within the meaning of Section 15 (4) of the Interstate Commerce Act.
Whereupon, an appeal is taken to this Court by the Milwaukee and by the Secretary of Agriculture and again, the same four issues are presented for determination.
After the briefs were field and discussion was held by myself with the attorneys, with the Department of Agriculture, it was determined that since the parties rely upon the same points that their position is in a sense identical that one argument could be presented and I am undertaking to do so.
The argument, however, represents the views of the Department of Agriculture that incurs therein.
And so --
Chief Justice Earl Warren: Do you challenge the findings of the Commission?
Mr. Raymond K. Merrill: Yes, sir.
Chief Justice Earl Warren: You do?
Mr. Raymond K. Merrill: Yes, sir.
Chief Justice Earl Warren: Yes, you have come to that --
Mr. Raymond K. Merrill: Yes, sir.
We are coming to that right now.
Chief Justice Earl Warren: Right.
Mr. Raymond K. Merrill: Now, as in the recent through route joint rate cases, the question of whether Section 15 (4) which puts restrictions on the power of the Interstate Commerce Commission to prescribe through routes is a very important feature in this litigation.
Of course, Section 15 (4) has no application if the S. P. & S. system is not under common management or control with each of the Northern Lines if through routes already exists by which additional joint rates are now sought, if the refusal of the S. P. & S. system to enter in the joint rates and through routes with the Milwaukee Railroad is a violation of Section 3 of the Act.
And even if 15 (4) does apply, if the routes are needed to provide adequate, more economic and efficient transportation, then the Commission should establish those routes.
And so, we come to the first question as found by the Commission that the S. P. & S. system is under common management or control with each of the Great Northern and the Northern Pacific Railroad.
Justice William J. Brennan: Have we agreed with your position to that question?
Do we reach the other questions?
Mr. Raymond K. Merrill: Alright sir, the next question then is --
Justice William J. Brennan: Well, I say, do we reach the other ones that we agree with you with 15 (4)?
Mr. Raymond K. Merrill: I'm sorry I thought you wanted me to proceed to the next question.
If you agree with our position, there is no need to consider the other questions.
A matter should be remanded to the Commission because in that event, the S. P. & S. system is discriminating against the Milwaukee Railroad by refusing to enter into the same rates with it, and it does with the Great Northern and the Northern Pacific and the restrictions which the Commission said applied to its power to prescribe joint rates or through routes under Section 15 (4) would have no application.
So it should go back to the Commission with the idea that they would then proceed to consider the case free and clear from the limitations of Section 15 (4).
Justice John M. Harlan: Am I right in taking, Mr. Merrill that the questions you're addressing yourself to now is the only question of laws before as the others as sufficiency -- sufficiency of the evidence --
Mr. Raymond K. Merrill: We contend --
Justice John M. Harlan: -- of findings?
Mr. Raymond K. Merrill: We do contend that with respect to through routes? there -- there are, as a matter of law, through routes on the basis of decisions which say that joint rates as a matter of law presuppose through routes and we argue that the existing joint rates established those through routes.
Also, we argue that a finding made by the Commission as a matter of law necessitates a final finding that through routes exist and I will come to that and try to develop, sir.
Chief Justice Earl Warren: If we don't agree with you on your first issue, then are all the other -- other things in the case?
Mr. Raymond K. Merrill: I would say this, Your Honor.
If any of the first three issues are found in our favor, there is a requirement that it'd be remanded to the Commission because 15 (4) would have no application if any of those three as we argue were true in this case.
The statutory language of 15 (4) is as noted by the District Court below, cast in the singular.
It says in establishing any through route that the Commission shall not, and I'm omitting this -- an immaterial part of it.
Require any carrier by railroad without its consent to embrace in such route substantially less than the entire length of this railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith which -- which lies between the termini as such proposed route.
Now, right away, the question is a railroad and any intermediate railroad operated in conjunction and under a common management or control therewith, the question is what meaning did Congress intend?
Do they mean any railroad and an intermediate railroad operated under a joint control?
Or does the owning railroad have to be the sole owner or the dominating owner?
This Court said in the United States versus American Railway Express 265 U.S. of 431, that this language aptly describes a single railroad system.
And I presume the best -- one of the best sources of determining the meaning of the Act is to look at the legislation from which it emerges.
This language of common management or control was added to the Interstate Commerce Act by the Mann-Elkins Act in the year 1910.
And in Section 12 of the Mann-Elkins Act which contains this language and which -- also modifies other sections of the Interstate Commerce Act, the Congress had no -- no problem at all about making itself clear when it meant to refer to more than the single railroad system.
It used the term carrier or carrier seven different times and the term line or lines two different times.
And if we look at Section 15 (3) which has many subparagraphs, we find that congress again had no trouble in expressing itself when it wanted to refer to more than a single railroad system.
In paragraph (1), it refers to carrier or carriers and to individual or joint class -- classifications, regulations or practices.
On a paragraph (3), in paragraph (7), paragraph (8), in paragraph (13), they referred to carriers or carriers connecting line or lines, individual or joint rates and so forth.
Then when they deal specifically with the question of control, which is Section 15 (2) of the Interstate Commerce Act, they again spelled it out by saying that it shall be lawful with the consent of the Commission or any carrier or two or more carriers jointly to acquire control of another.
All -- I think it is also proper to look to whatever explanation the Senate Committee which recommended the enactment of this legislation had to say about the meaning of this short-haul protection.
And this Senate Committee had this to say, It would seem to be unreasonable to empower the Commission to require a railroad having a line of its own between two designated termini to allow a portion only of that line to be taken and linked up with other lines for the purpose of creating another through route in competition with it.
And I think the emphasis can well be laid on the words having a line of its own.
The another way of determining the meaning of Congress is to look at the Sections of the Act most closely related to the -- the Section in which the language in question appears.
And for that purpose, we can turn to Section 1 and Section 3, which the Commission has said, Are the Sections most closely related to Section 15?
Section 1 and particular paragraph (4), the Commission says that the theory of this provision is a carrier should freely interchange rate between their respective lines to the end that Interstate Commerce may move without interruption or delay.
And referring to paragraph (3), the Commission -- or Section 3, the Commission says that this provision brought in Section 1 and makes the intent of the Congress claim that every reasonable and proper facility shall be extended equally by a carrier to all of its connections and at no discrimination in its charges shall be made in favor of or against any connecting line.
Well, actually we have to wait for 30 years to go by to get confirmation that Congress did not intend to include joint control but intended only that control by one carrier of another as what was intended by the term common management or control.
And in the year 1940, Congress enacted Section 1 (3) (b) of the Interstate Commerce Act.
And in that Section, they provided that in various sections of the Interstate Commerce Act, when the word control was encountered, it was to be given a broad interpretation.
It was to include actual as well as legal control and direct as well indirect control no matter how exercised.
But the Commission very carefully omitted Section 15 (4) as a section in which the word control should be given that broad connotation.
The -- it might have been due to oversight that the Joint Conference Committee that reported out the legislation made it plain that this was deliberate.
And they said, The reason that it is not included is that the Congress is -- does not desire and that it is not desirable rather that any change be made in the present interpretation of Section 15 (4).
So, then it is very important and the apellees concede, it important that we look at and see how the Commission had been decided these questions under Section 15 (4) prior to 1940.
And the search of the Commission cases, I find that there were 11 occasions in which the Commission ruled on whether or not a carrier was under common management or control with another within the meaning of 15 (4) and in every case one railroad was in control by virtue of majority stock ownership.
During that same period, there were three cases which arose in which the question of joint control was contended by the parties as constituting common management or control.
In the first case, the (Inaudible) case back in 1910, cited -- or 1914, four years after this law was enacted embracing the words common management or control and cited on page 26 of our brief.
Two railroads jointly owned eight-ninths of the stock of a -- of a third railroad and together, they elected the majority of the Board of Directors of this railroad.
And it was contented that this joint control placed one of the owners and the subsidiary under common management or control within the meaning of Section 15 (4).
This notion, the Interstate Commerce Commission rejected and said they were not under common management or control within the meaning of that Section.
The case itself involved -- included evidence, however, that the owning railroads although they had obviously the power of control do not see fit to exercise, they gave a free hand to the subsidiary railroad to run its own affairs.
The -- to the extent that that evidence is in the record, the appellees here would contend that that distinguishes the case from the present case, that if the railroads in that case had exercised a control actively as the Northern Lines claimed to jointly control the S. P. & S. system, that would have been a different matter.
Well now, that means that the railroad can turn on and off the power of the Interstate Commerce Commission to prescribe through routes or joint rates simply one month telling the subsidiary to go ahead and run your own affairs in the next month say, Well, this month we'll tell you what to do.
I don't think that -- that power was ever vested in the railroads themselves.
And finally, just before that decision by the Interstate Commerce Commission, the federal court said that, You can't distinguish between this power control and not exercising it and actual joint control.
Because it's vain to say that the subsidiary railroad is not aware of the wishes of the two joint owners and that it's clear that because they are aware of those joint wishes, they are subject to their joint control.
But all that the Commission deciding them that such control does not fall within Section 15 (4) of the Interstate Commerce Act, the case is very significant.
The other two cases involved in the Terminal Railroad Association of St. Louis along by 15 railroads and as the Commission said, controlled by a majority of them.
In two cases in which it was contended, one -- that one of the owning railroads was under common management or control terminal and in the other case that all of the owning railroads were under common management or control of the terminal railroad.
The Commission said, No, that is not common management or control within the meaning of Section 15 (4).
Now, those are the only three cases in which the Commission definitely ruled that on the question whether joint control was common management or control within the meaning of Section 15 (4) prior to 1940.
There's another case that comes up later on involving the S. P. & S. system and the question of short-hauling and two cases that came up prior to 1940 involving the S. P. & S. system and the question of joint hauling.
This question -- these three cases are very enlightening.
In the first case, the S. P. & S. system cancelled its through routes with the Union Pacific whereby the S. P. & S. would haul traffic to Portland, Oregon and then turn it or to the Union Pacific to haul beyond.
Complaints were filed seeking the reinstatement of those through routes.
The S. P. & S. system came in and said, We are entitled to our full long haul to Spokane of 500 miles.
They did not claim they were entitled to a full long haul over their line and then the Great Northern over their line and then the Northern Pacific as far as the Twin Cities as they are claiming in this present case.
They said, As far as full can.
We point out in this case that the -- no contention was made that they were entitled to that longer haul and that the Commission made no finding they were and the railroad appellees in this case contend well, the Northern Lines weren't parties to that case.
But the report shows that the members of the Transcontinental Freight Bureau were represented at the hearing and that the Commission's file shows they filed a brief and the Great Northern and the Northern Pacific have always been members of the Transcontinental Freight Bureau.
In the second case, it involved the question or complaints seeking through routes from origins on the S. P. & S. and other railroads to Spokane and then via Canadian routes to destinations back in the United States.
And it was contended that the S. P. & S. system there was under common management or control and that they were entitled to this through routes -- to the protection of their through routes over the Northern Pacific and the Great Northern East to Spokane.
The ICC, however, avoided a decision whether or not the S. P. & S. and the Great Northern and the Northern Pacific were under common management or control within the meaning of Section 15 (4) by saying, We have no jurisdiction to prescribe through routes by its -- by its candidate.
And so, from the statutory language of Section 15 (4) from the law from which it emerged, from the statute with which it forms apart, from the laws with which it is to be read to most closely in connection with, and from the indication by Congress itself as to what it meant by approving the decisions of the Commission and by reference to those decisions of the Commission, we can come to only one conclusion that Congress intended to refer to a single railroad system.
Chief Justice Earl Warren: I -- I understood you that there is no case, however, where -- where each line owns half of the stock.
Mr. Raymond K. Merrill: There is a case where two lines owned eight-ninths of the stock, sir.
Chief Justice Earl Warren: Yes, quite well, either -- either of them would be minority owners, there --
Mr. Raymond K. Merrill: Either would be minority and so with two lines so each owned 50% being minority owner.
Chief Justice Earl Warren: Okay.
Mr. Raymond K. Merrill: Webster defines a minority owner is having the both so less than the amount necessary to control and that requires something over at 50% as I interpret the language.
Chief Justice Earl Warren: Do you think there would be no difference at all between the case where two owned 50% and the case where, let's say, two of them together owned 51%.
Mr. Raymond K. Merrill: As long as the two owning the 51% can and do elect the majority of the Board of Directors, I would say they have the power jointly to control the corporation.
Chief Justice Earl Warren: So you would say there would be no difference at all between the two cases.
Mr. Raymond K. Merrill: I would go further sir, I would say that if in this case there were two carriers, so each owned 49% of the corporation of the subsidiary and one carrier who owned only 2%, the carrier with 2% would have just as much power as those two with 49.
Because all that carrier need to do would be to join with one of the other two carriers and by that way assert as well as to what would happen and hence two carriers with 50% who completely neutralize each other so that the other cannot move neither have control.
Justice Charles E. Whittaker: Mr. Merrill --
Mr. Raymond K. Merrill: Yes, sir.
Justice Charles E. Whittaker: -- suppose we dispense with the corporate form and two competing independent railroads as partners build a line or buy one that extends as a connecting line, their lines onto the State of West Coast.
Would in that case this new line be under joint control or common management of either?
Mr. Raymond K. Merrill: There would not be a separate railroad, as I understand your question, sir.
They would each be jointly operating over jointly owned property.
They each would be operating in their own name under as in their own right and in the instant case, they have created a carrier subject to all the requirements of the Interstate Commerce Act, a carrier who cannot, under the Interstate Commerce Act, discriminate against other railroads and who cannot charge rates with their preferential or prejudicial.
Those to me the -- the situation is entirely different.
The Great Northern and the Northern Pacific are neither obligated to nor are authorized to serve the points which are reached by the Spokane impartment in Seattle Railroad except in a few limited places where they are as common points with the Great Northern and the Northern Pacific.
And so having created a railroad which is subject to all the terms and conditions of the Interstate Commerce Act then they are in a different position than have they elected to operate themselves either in a partnership or individually.
Now, the appellees in this case, however, are not very anxious to be bound by what the Commission has done in through route cases, and they find more to their liking what the Commission has done in so-called rate making cases.
But the railroad appellees in their brief of themselves point out that these rate making cases arise under Section 15, paragraph (1) of the Interstate Commerce Act.
And under that paragraph, there is no reference to the term common management or control whatever.
The rulings of the Commission under that Section therefore, have no occasion to interpret the meaning of Congress as intended by the words common management or control.
The Commission for its own convenience, however, in prescribing rates sometimes will set up within a limited area distant scale rates where every five miles the rate steps up.
And for two railroads, they will permit a higher rate to be charged and the reason is that there's an interchange of traffic between the two railroads requiring a little extra terminal cost and they reflect that by giving the joint lines a higher rate.
And appellee say in those cases, the Commission where there is common management or control, the two railroads have said you must charge a single higher rate.
And that the Commission has extended that to a situation where two jointly -- where a railroad jointly owned by two other carriers participates in the hall.
Now, I can only point out that that is not the type of a case which involves interpretation of common management or control as intended by Congress.
And we can also point out what the Commission isn't even consistent in those kind of cases.
And in a case in which the Southern Pacific owned 50% of its subsidiary railroad, the other 50% was controlled by a State that the Southern Pacific elected two of the directors and the State elected two of the directors and two interest together appointed a fifth neutral director.
And the question arose whether or not a movement or traffic over the Southern Pacific in the subsidiary line was a joint line haul or a single line haul, the Commission permitted the charging of the joint line haul.
Now, the Commission says that seven times we have said that for rate making purposes, the S. P. & S.is a part of the Great Northern and the Northern Pacific.
Actually, two of those cases are through route cases.
I've already mentioned one, I'm saving one.
The other -- the other five, the Commission commented that -- I think in four of them, that for rate making purposes the S. P. & S. system is deemed a part of the Great Northern and Northern Pacific.
But I cannot determine after reading those cases a dozen times or something less than that, just what they meant by saying that they were a part of the Great Northern and Northern Pacific for rate making purposes except in one case in which they were fixing the valuation of the S. P. & S. system and the Commission said that in computing the cost of transporting material over the Northern lines that is used in the construction of the S. P. & S. system, you will use the company line haul rates rather than the commercial rates.
The other cases, the Commission was not prescribing joint line scales.
They were not granting arbitraries.
Just what importance the fact that the Commission said they should be regarded for rate making purposes as one line is certainly not clear.
And in this valuation pace, they neutralize that by an approximately the same time in another case involving the valuation of the Great Northern and Northern Pacific said that the Great Northern and Northern Pacific cannot include in their valuation about the cost of constructing the S. P. & S. system and therefore indicated by that decision that the S. P. & S. system was not to be deemed a part of the Great Northern or the Northern Pacific system.
Now, the lower court and the appellee say if you take away the protection of Section 15 (4) from a railroad which is under common management or control with two jointly owned railroads then they are not -- they're already prevented from getting arbitraries where hauls which the Commission awards to some short lines that are not under common management or control with two standard carriers.
And therefore, it would be utterly unfair in this case to hold that the S. P. & S. system is not entitled to the short-haul protection under Section 15 (4).
We point out in our brief that the Commission has never had any trouble about giving arbitraries and here, our own arbitrary is that -- is that some additional charge with -- which a railroad which is a weak railroad financially and generally less than 100 miles along the short line has permitted the charge in addition to the regular rate.
One railroad, the Camas Prairie jointly owned by the Union Pacific and Northern Pacific, arbitraries was approved -- were approved for that railroad, another railroad, the Oregon-California and Eastern Railroad jointly owned by the Great Northern and the Southern Pacific permitted to charge arbitraries.
Another one the Sunset Railway jointly owned by the Atchison, Topeka, Santa Fe and the Southern Pacific jointly allowed to charge was allowed to charge arbitraries.
And the contour is that the S. P. & S. system itself according to the Commission in a case which we have cited in our brief here charges arbitraries on traffic moving over its own branch lines.
So how there would be any discrimination or any ill results as far as the S. P. & S. system is concerned is not and all clear if they were bound not to be under common management or control with the S. P. & S. system with the Great Northern and Northern Pacific Railroad, excuse me.
As far as joint line rates are concern, there's no evidence that anywhere ever prescribed in the S. P. & S. territory but the S. P. & S. system doesn't need joint line rates in 14 different tariffs where the rates are figured on a distant scale and the traffic moves over the S. P. & S. and then the Great Northern for the S. P. & S. in the Northern Pacific while they compute the distance over their own line up to the junction point, charge the rate for that movement and then compute the distance over the Northern Pacific and the Great Northern charge the rate for that movement.
And they say we'll collect the aggregate charge which is higher, of course, and which they treated themselves as a single line in-charge the rates over the combined distance.
And here is that case that I was saving.
It happens to be Helix Milling Company case in 1952.
In that case, the complainant --
Justice William O. Douglas: What is that case?
Mr. Raymond K. Merrill: Helix Milling Company case You Honor.
It's referred to on page 55 of our brief and it's 287 ICC 77.
In that case, joint rates were sought on wheat and wheat products from certain points in Montana on the Great Northern to go to Spokane and then to be hauled by the Northern Pacific from Spokane to Pasco, Washington and to receive milling in transit, and then from Pasco, Washington onto Portland, Oregon.
Already existing were through routes over which the shipment can move to Spokane or over the Great Northern and then the Spokane Portland in Seattle railroad on to destination.
Now, the Northern Pacific was not adverse to joining in these rates and routes but the Great Northern and the southern -- and the S. P. & S. both came in and contended that they were entitled to the short-haul protection of 15 (4).
And if these routes were prescribed, the S. P. & S. system would be short-hauled by the Northern Pacific Railroad.
Justice William O. Douglas: Is this before Great Northern had an interest in S. P. & S.
Mr. Raymond K. Merrill: This is the Great Northern and the Northern Pacific have always joined owned the S. P. & S.
Justice William O. Douglas: They did own part of it at that time?
Mr. Raymond K. Merrill: Oh yes, sir, since 1910, and this was 42 years later.
And so the Great Northern and S. P. & S. contended that the S. P. & S. would get a short-hauling in this case if the routes were established.
The Commission recognized that there was a short-hauling issue because they went -- had to make all the findings.
They quoted Section 15 (4) and then they made the findings that these routes were necessary to provide adequate and more economic transportation and ordered the routes installed.
And certainly, we failed to understand how if the S. P. & S. system is to be treated separately from the Great Northern or the Northern Pacific and again, invoke Section 15 (4) to require the Commission to make the additional findings with short-haul, how they can in this case contend that they are actually only one in the same part of the Great Northern, one in the same with the Northern Pacific and try to invoke the short-haul protection for both the S. P. & S., the Great Northern, and the Northern Pacific.
That takes us to the second point of the through routes.
Through routes is a rather troublesome subject.
The definition is simple enough.
It's an arrangement express or implied between two or more carriers for the continuous carriage to goods from a point on one railroad to a point on the other.
The form of the rate whether it's a combination rate, whether it's a joint rate, makes no difference that was so held by Thompson versus United States, 343 U.S., 549.
The fact that the route is not commercially opened because the level of the rate is too high to permit a movement does not matter said this Court in Virginian Railroad versus United States 272 U.S., 658, and in a more recent case, Great Northern versus United States, 81 F.Supp.921, which was affirmed by this Court.
The Commission itself argued that if a route is commercially closed, it does not necessarily mean there is not a through route and the District Court affirmed position of the Commission and the decision of the District Court was affirmed by this Court.
Now in this case, the Milwaukee Railroad enters into a complete line of joint rates with the S. P. & S. system over the Milwaukee's lines from the Twin Cities and east.
At the Twin Cities, the Milwaukee can take any commodity that originates on the S. P. & S. Railroad, take it anywhere on its system or to points on its connections.
And coming from the other direction, traffic going to the S. P. & S. , the Milwaukee can take any commodity over its lines east of the Twin Cities, but would -- in most cases, they're under it to the Great Northern nor the Northern Pacific at the Twin Cities to take on the Spokane.
So the east of the Twin Cities, the Milwaukee is not seeking through routes.
They're already there or seeking through routes over our line from Spokane to the Twin Cities.
Over the route from Spokane to the Twin Cities, joint rates presently apply on lumber and forest products from all S. P. & S. origins to all local points on the Milwaukee Railroad not only along our line from Spokane to the Twin Cities but east of the Twin Cities as far as the point just short of Chicago.
And finally, there are joint rates on all commodities over our lines all the way from Spokane, all the way to Chicago and other points on traffic moving in export and import traffic, and that embraces any conceivable commodity that can move by railroad and the same is true on the westbound traffic.
The Milwaukee already has through routes than on every commodity which can move over its line between Spokane and the Twin Cities and points beyond.
Now, these routes, of course, do not apply except in connection, as I say, with lumber and forest products to points on the Milwaukee short to Chicago, or they only apply to traffic roaming in export or import traffic via six port cities of the S. P. & S. system, port cities on the western and of the S. P. & S. railroad.
Justice Charles E. Whittaker: Does that what you mean, Mr. Merrill, to argue that through routes exist in all (Inaudible)
Mr. Raymond K. Merrill: I am arguing up to this point, sir, that where there are joint rates on all commodities over a certain route, that is our line in this case from the Twin Cities to Spokane that through routes exist for those commodities because joint rates, this Court has held, of a necessity presuppose through routes.
The arrangement there is an express arrangement.
The two railroads published a tariff.
They named joint rates.
They hold themselves out then to the public as offering a true service.
Justice Charles E. Whittaker: The joint rates, as I understand you, apply through forest products and to export-import goods.
Mr. Raymond K. Merrill: Yes.
And export-import goods cover all conceivable commodities that can move in export and import traffic which are the same commodities that can move in domestic traffic.
Now, we come to that next point, sir, with this observation that the Commission then went further and they said between all points where you don't have the joint rates, routes are available but the shipper will have to pay a combination rate which causes a higher charge and therefore the shippers are not generally inclined to use that kind of a route.
Now, if the Commission says that a route is available, it can only mean one thing, that if the shipper wants the ship that way, he can ship that way.
And if he can ship that way, the route is there.
Now, if that -- does that mean then that wherever there is a connection that a shipper can move a shipment from a point of one railroad to the line on another and claim there is a through route?
Section 15 (a) of the Interstate Commerce Act says that a shipper -- that a carrier is bound to accept the shipper's routing where the through route is available and if the through route is not available, then that Section imposes no obligation upon the carrier to accept the shipment.
And so when this Commission in this case said through routes are available, excuse me, routes are available, if a -- where the joint rates do not apply and to all points from the S. P. & S. to all points on the Milwaukee and its connections, and if you tie that together with the joint rates that are applicable, at least the only one conclusion that through routes now exist over the Milwaukee's entire line in Spokane to the Twin Cities and beyond, and that all the Milwaukee is seeking here is not the establishment of through routes but the establishment of joint rates applicable thereto.
And if our position is sound, Section 15 (4) no longer applies because Section 15 (4) applies only to the establishment of through routes.
The two principle cases which our opposition raised, as disputing our position, is the Thompson case.
In that case, they sought routes from points on the Missouri Pacific out in Kansas to Omaha and grain and grain products.
They wanted the traffic to move from the Missouri Pacific Origins to Concordia, Kansas and then go in Omaha or the Chicago Burlington in Quincy Railroad.
The evidence did not show that there was any traffic currently being interchanged to Concordia.
In the present case, the record shows that 513 cars a year are interchanged by the Milwaukee Railroad and this S. P. & S. at Spokane indicating that the arrangement for the interchanged of grade at that point is very much in existence.
In the Thompson case, there were no joint rates applicable over the CBMQ's line to Omaha.
In our case, I have outlined the joint rates which do apply all the way from Spokane to the Twin Cities, to points beyond the Twin Cities and also to points on the connections of the Milwaukee Railroad.
Finally, there was no finding in the Thompson case that routes were avail -- available to a shipper, a combination rate should he wish to ship to Omaha.
And the most recent through route case which was the Ogden Gateway case, the Rio Grande versus the Union Pacific Railroad involved a request for through routes to be established in connection with the Union Pacific from the Northwest to Ogden, Utah then to Rio Grande to points in Colorado and ends connections beyond and in the reverse direction.
In that case, only 55 carloads a traffic a year were moving via the Ogden Gateway.
And the Commission, they move at combination rates.
The Commission said that those are in the nature of isolated shipments and cannot be construed as indicating a holding out by the parties to offer through transportation.
Here, the interchanges, 513 cars or 10 times as much.
The Court in the Union Pacific, Rio Grande case pointed out that the Union Pacific and the Rio Grande had -- had engaged in a long struggle to keep close at Ogden Gateway and the Rio Grande was trying to get it open.
In this case, that struggle hasn't manifested itself.
The S. P. & S. has entered into us -- into joint rates with us voluntarily as I have pointed out by Spokane, and the traffic does move via that gateway.
The Rio Grande case -- this Court and the Commission found that because joint rates presently existed on sheep and goats over the Rio Grande's route that there were therefore through routes in existence on sheep and goats.
Here, we show the joint rates existing on all commodities moving an export-import traffic and on lumber and forest products in particular over the length of our lines, Spokane to the Twin Cities and to certain points beyond.
So, we point out that our case offers an entirely different situation and involved into the Thompson or the Rio Grande case.
And in the Virginia Railroad case, which I pointed out earlier, says that even if the rates are too high a level to move the traffic, if the shipper can ship that way and these carriers offer service that way, if the shipper wants to use it, there are through routes available.
And in that case, the combination rate was not only admitted by the carrier to be too high to move the traffic, the counsel for the carrier said, "We not only say they're too high, we admit they're impossible."
And still, the Court was able to find that the through routes existed.
And so here, with the showing where you made of the joint rates applicable, the combination rates that are applicable, we feel strongly that the through routes are presently there.
The remainder of my time, if I have any, I'd like to save for rebuttal.
Chief Justice Earl Warren: You may, Mr. Merrill.
Argument of Robert W. Ginnane
Mr. Robert W. Ginnane: Mr. Chief Justice, may it please the Court.
I am sharing the appellees' time with Mr. Rockwood, the counsel for the appellee Railroads.
We have attempted to divide the argument in such a way as to avoid repetition.
So, I would devote myself to the question of whether 15 (4) of the Interstate Commerce Act provides protection against short-hauling to Great Northern and Northern Pacific in the circumstances of this case.
Generally, this case is very much like the Denver & Rio Grande case decided by this Court in 1956.
In fact, we think the Denver & Rio Grande decision of this Court is dispositive as too much of this case.
Justice William O. Douglas: Was the 15 (4) was involved in that, isn't it?
Mr. Robert W. Ginnane: Yes, short-hauling but this --
Justice William O. Douglas: I mean the management and control.
Mr. Robert W. Ginnane: The joint control product we have here -- joint control of S. P. & S. by the two Northern Lines that was not present in the Denver & Rio Grande case.
Justice William O. Douglas: What -- what is the inter -- in terms of the precedent, what is the closest Commission decision on the construction of joint -- of control and management?
Mr. Robert W. Ginnane: Two cases were referred to by Mr. Merrill, in which the Commission some years ago held at the St. Louis Terminal Railroad Association, which is owned jointly by 14 or 15 trunk line railroads, that that joint ownership was not joint ownership and control for the purposes of Section 15 (4).
Justice William O. Douglas: That's the closest one?
Mr. Robert W. Ginnane: That's the closest on.
Justice William O. Douglas: And you -- you will distinguish that?
Mr. Robert W. Ginnane: Yes, sir.
This short-haul exception had its origin as counsel has stated, the Mann-Elkins Act of 1910.
Sergeant Alton explained its purpose as follows on the Florida Senate.
He said, "The second exception to the grant of this power is one of which has always been recognized in the transportation business of the country.
The role that initiates the freight and starts it on its movement in interstate commerce should not be required where it is a line not unreasonably long.
The transports business from its own road of that of a competitor especially when the commerce initiated by it can be as promptly and safely transported by its road as by the line of a competitor."
Specifically, it's the initiating carrier to whom shippers look for car supply, rate information, tracing lost cars and so on.
At the same time as this Court long ago held in the Missouri Pacific case, protection against short-hauling is not restricted to the initiating carriers.
The Commission -- the Interstate Commerce Commission has repeatedly recommended to Congress elimination or drastic modification of a short-hauling restriction and its power to establish through rates.
The various committee reports, which congressional committees have issued on the subject, have not articulated specific reasons as to why Congress persist in maintaining short-haul protection.
To find those reasons at least the only way we can find them is to look to the testimony of the object -- of the -- of the objecting railroads before the congressional committees objecting to the -- the elimination of short-haul protection and that's where we find it we think.
For example, in 1938, an officer of the appellant Milwaukee testified before House Interstate Commerce Subcommittee against the bill which would have repealed the short-haul clause of Section 15 (4).
And he justified this short-haul protection on the following grounds.
I like to quote in briefly.
The Milwaukee road operates from Indiana to the North Pacific Coast.
It has many mainline secondary mainlines, branch lines, and sub branch lines, all welded into one system to serve the territory traverse.
In other words, it is a complete unit in itself from the territory service, built for the purpose of handling the traffic between all points on its lines where the routes are not unreasonably long compared with other routes.
Investments made with that purchase in view -- that purpose in view, equipment purchase and terminal facilities built to provide a complete transportation facility.
And it is unclear, said Milwaukee in 1938 to enact him to law a requirement that will permit the breaking up of this complete unit by the insertion of other route which would deprive it of its long haul.
And the Milwaukee officer went on to say, "There are but few branch lines that are self-sustainable and unless the traffic originating or terminating on branch lines produces long main line hauls."
It is only a question of time when their burdens on other parts of the line are so great that abandonment becomes necessary.
This protection against short-hauling is available not only to a single carrier, to a single railroad but also to any intermediate railroad operated in conjunction and under a common management and control railway.
For example in this case, through routes between S. P. & S. and Milwaukee via -- via Spokane could not short-haul S. P. & S. because S. P. & S. Eastern Terminal is at Spokane.
However, the Commission found that S. P. & S. is operated in conjunction with and under common management and control Great Northern and Northern Pacific.
The part is referred to for convenience as the Northern Lines.
And accordingly, it concluded that Great Northern and Northern Pacific were entitled to short-haul protection against the establishment of through routes between S. P. & S. points and Milwaukee via Spokane, routes which with short-haul the Northern Lines by the entire distance between Spokane and Minneapolis, St. Paul.
The following facts and they are essentially undisputed, support the Commission's conclusion that S. P. & S. is operated in conjunction with an under common management and control with Great Northern and Northern Pacific.
The Northern Lines built S. P. & S. about 1909 and 1910 for the purpose of relieving congestion, avoiding double tracking over the Cascade Mountains and providing a road of low grades along the Snake and Columbia Rivers to the West Coast.
They have owned from the beginning in equal shares the stock and the bounds of S. P. & S.
Their presidents take turns alternating as president and vice president of S. P. & S. , and they personally act upon the more important matters involved in S. P. & S. S. P. & S. depends substantially upon the Northern Lines for its cursive line.
The freight traffic practices and policies of S. P. & S. are directed and controlled jointly by the traffic departments of Northern Lines, while S. P. & S. enjoys consultable autonomy in local rate matters.
Its rates and practices relating to the long haul transcontinental traffic, which is what this intercarrier fight is about, are handled for it by representatives of the two Northern Lines and it has always for the 50 years that -- that S. P. & S. has been in existence.
It has --
Justice Felix Frankfurter: Handled -- handled by the representatives as a -- as a duality, the two of them together or --
Mr. Robert W. Ginnane: Yes, sir.
And in effect as partners.
They don't always agree as the Helix case shows, but the one thing they have agreed at --
Justice Felix Frankfurter: What happens then?
Mr. Robert W. Ginnane: (Inaudible)
Justice Felix Frankfurter: What?
Mr. Robert W. Ginnane: (Inaudible)
But one thing that's --
Justice Felix Frankfurter: (Inaudible) can do it on its own.
Mr. Robert W. Ginnane: In one category of rate matters, I forgot how to describe it.
So, intermediate between local rates and transcontinental, if the -- the partners disagree S. P. & S. can go ahead on its own.
But one thing that the partners -- the Northern Lines had always agreed on since 1910 is to preserve for themselves the long hauls on traffic originating or terminating on S. P. & S. points.
In this policy, the result of this policy is shown in the fact that in 1952, Milwaukee interchanged 513 carloads at Spokane with S. P. & S., while in Northern Lines were interchanging 54,000 cars.
That's the policy since 1910 and that's how effective it has -- it has been.
So with that, the Commission's finding that the traffic policy of S. P. & S. is controlled by its joint parents, the Northern Lines is supported by ample evidence.
It's scarcely disputed in view of the figures as to interchange.
Now, we suggest that the Great Northern alone owned S. P. & S. and controlled its traffic policy that will be admitted that the two carriers would be operating in conjunction under common management and control, so that both will be treated as a unit for the purpose of short-haul protection under Section 15 (4).
That would be same thing if Northern Pacific alone owned and controlled S. P. & S.
In our principle contention here, is that the purposes of Section 15 (4) requires that Great Northern and Northern Pacific as joint owners and jointly controlling S. -- S. P. & S. traffic policy are likewise entitled to -- to protection against short-hauling, the same protection against short-hauling that a single owner admittedly would get.
Well again, that purpose is to provide protection against short-hauling for railroad facilities which even have owned by different carrier corporations are operated as a unit in performing transportation service.
Again, if each of the Northern Lines had financed, built and control as separate railroad from Spokane to the coast, each would be entitled a short-haul protection and traffic to and from points on its separately owned and separately controlled route.
Here, it seems to us clear from the history of the whole matter.
For obvious reasons of economy, the two Northern Lines jointly built the S. P. & S. to enable them to provide better transportation service.
Then we submit that they are entitled to the protection of that investment for their reasons which were so well stated by Milwaukee's officer testifying in -- in favor of short-haul protection in 1938.
Now, the briefs of the rail -- of the railroad parties, appellants and appellees have contained some dispute as to the amount of the Northern Lines investment in S. P. & S.
I don't propose to go into that because by any measurement, the investment is substantial millions.
That investment has not paid off in cash.
It has paid off substantially in traffic originating on or destined two points on the S. P. & S. traffic which in 1953 produced $22 million in freight revenues for the Northern Lines.
Now, as Milwaukee testified in 1938 before the House Committee, unless the short branch lines produce long mainline hauls.
Their abandonment may become necessary.
It's obvious that only a parent or parents will get the long haul generated by branch lines, that will they willing will have an interest in continuing to absorb the loses on the branch line operations as such.
Here, the Northern Lines built S. P. & S. They have absorbed its losses.
Their pay off in this investment as in any carriers' investment in branch lines lies only in the protection of their long haul and traffic which originates on -- on S. P. & S.
Again, we think that this principle question in the case whether the Northern Lines are entitled protection against short-hauling should be determined not in terms of a grammatical construction of a statute but in terms of a congressional purpose in providing the short-haul protection.
Now, the appellants contend that the short-haul provision of Section 15 (4) should be given a narrow construction as an exception to remedial legislation by this 15 (3), which empowers the Commission to establish through routes for carriers which have not voluntarily done so.
Well, historically that will be an -- an appealing position to the -- to the Interstate Commerce Commission but every -- but this Court has re -- through the years has rejected every attempt by the Commission to place such a restrictive interpretation on the short-haul provisions of Section 15 (4).
Whenever the Commission has moved toward requiring open ruling as between carriers, this Court has regularly compelled to the Commission to comply the congressional view that the national interest requires the protection of railroads against being short-hauled.
Historically, as I say, the Commission at times has been implying to take about the same position of this -- of these appellants, hostility to a short-haul protection favoring open routing.
Congress -- and this -- Congress has refused to go along with repeated recommendations, relax the short-haul protection or to eliminate it and this Court has insisted that the Commission honor the congressional purposes.
Justice Charles E. Whittaker: Mr. Ginnane, you take time valid but before you leave this discussion on 15 (4), would you please tell us what is meant by this phrase through routes may be exist independently of joint rates.
Mr. Robert W. Ginnane: Yes.
Justice Charles E. Whittaker: Just what does it mean as used in 15 (4), the phrase ?through routes?.
Mr. Robert W. Ginnane: Let me start back a little bit.
To the extent that through routes exist, shippers have a statutory right to select which route shall be used for their tracking.
And when shippers have that right, that means all carriers participating in any available route are in a position to solicit shippers to route the traffic via the particular carrier.
In my absence of a through route, say as in this case from S. P. & S. points through Spokane to the east, there's no point in Milwaukee trying to solicit the shippers and the S. P. & S. to route the traffic via Milwaukee, they can't --
Justice Charles E. Whittaker: Why not?
Mr. Robert W. Ginnane: They can't.
Because they can't.
Justice Charles E. Whittaker: Well, that's because the rate so.
Mr. Robert W. Ginnane: Except -- except that they're profitably high combination rates.
Justice Charles E. Whittaker: And isn't because there may not be a through route but it's because there's no joint rate.
Mr. Robert W. Ginnane: That's right.
The Commission found that the rates are commercially closed in the sense of which have found the routes commercially closed in the Ogden Gateway case, the Rio Grande case.
Through routes in the sense that they are perfectly adequate facilities at Spokane for the physical interchange of cars between S. P. & S. and Milwaukee, no question about it.
That's used for many carloads, say of number of year, which moved through Spokane to local points on Milwaukee.
That is the points which are served only by Milwaukee.
Justice Charles E. Whittaker: But evidently, this phrase through routes means something more than physical connections.
Mr. Robert W. Ginnane: As this Court so held in the Thompson case, which is one of the -- which is one the Commission's ventures toward open routing and the Commission on effect was taking the position.
Well, there are some routes on a few commodities to a few points and their good interchanged facilities.
Therefore, the interchange point is open.
Justice Charles E. Whittaker: Mr. Merrill says that through routes exist because derived the physical connections and because joint rates do apply as to some commodities.
Is he right about that?
Mr. Robert W. Ginnane: Oh yes on some commodities.
Joint rates exist on export and import traffic and of course, the principal item is lumber.
That's what this fight is over, is lumber eastbound primarily and their joint rates on lumbar moving eastbound to point served by Milwaukee.
Justice Charles E. Whittaker: Well now, do you agree with him that through rates -- through routes do exist?
Mr. Robert W. Ginnane: Only on certain movements of certain commodities.
Justice Charles E. Whittaker: Well, does -- if -- is 15 (4) limited in any way?
It just says, In establishing any set through route.
It deals only with through routes doesn't it, 15 (4)?
Mr. Robert W. Ginnane: That's right sir.
Justice Charles E. Whittaker: Well now then, what does that mean, on all commodities or on some commodities in order for a through route to exist?
I just don't believe I quite understand.
Mr. Robert W. Ginnane: We think the law is clear under the Thompson case and the Rio Grande case that through routes exist as to particular commodities, not as the commodities as a whole necessarily.
There are cases, for example, in which the Commission has established a through route and joint rates over that route for a single commodity such as grain, wheat or corn.
In the Ogden Gateway case, the Commission found that there were an existence through routes on one or two commodities such as goats and it found a need for establishing through routes on a few other commodities.
But apart from that, through routes did not exist, only theoretically.
Justice Charles E. Whittaker: Then it's only commodity basis, is it?
Mr. Robert W. Ginnane: A commodity basis and an origin on destination basis.
In the Thompson case --
Justice Charles E. Whittaker: It's a not a physical thing at all.
Mr. Robert W. Ginnane: No, sir, it's a commercial thing.
We're talking about commercial routes, not physical routes.
The appellants rely strongly upon two commission decisions as holding that joint control by two or more railroads.
It cannot constitute control within the meaning of Section 15 (4).
These cases are discussed in all three briefs.
There's absorption of switching charges and manufacturers railway company.
In both cases, the Commission held that the Terminal Railroad Association of St. Louis, which is owned by 15 trunk lines which served St. Louis, was not operated in conjunction of under a common management and control for the purposes of Section 15 (4).
I feel obliged to concede with the court below that these two decisions as the court below put it due to their very short treatment of the issue of common management and control and because of the very large number of participants are not persuasive this issue.
But we think there's -- that there's a clear practical distinction in terms of the purposes of Section 15 (4), between the affirmative type of control of S. P. & S. traffic policy which is exercised by Great Northern and Northern Pacific as it joint owners.
And control diluted between 14 or 15 owners of a terminal railroad from which in reality, they have no right to expect nothing more than -- anything more than neutrality and treatment.
That's what the owners of the terminal railroad by enlarge expect, neutrality in the handling of the cars in the terminal district.
Justice Felix Frankfurter: Did the Commission make that point?
Mr. Robert W. Ginnane: No.
I regret to say the Commission did not discuss these two cases in its report in this case.
Justice Hugo L. Black: What are those two cases, the names of them again?
Mr. Robert W. Ginnane: (Voice Overlap) --
Justice Hugo L. Black: -- are in the brief.
Well, don't bother then, as I'll get later.
I didn't have them mark down, the two to which you referred to this.
Mr. Robert W. Ginnane: At the top of page 47 --
Justice Hugo L. Black: What's the name of them?
Are they in your brief or the Government's brief.
Mr. Robert W. Ginnane: They're in everybody's brief.
Justice Hugo L. Black: Everybody's brief.
Mr. Robert W. Ginnane: Absorption of Switching Charges in 157 I.C.C. and Manufacturer's Railway Company.
Justice Hugo L. Black: Oh, wait a minute.
(Inaudible) is not here.
Mr. Robert W. Ginnane: At the top of page 47 of the appellee railroad's brief.
Justice Hugo L. Black: Yes, at page 47.
Mr. Robert W. Ginnane: That's the blue brief.
Justice Hugo L. Black: Thank you, sir.
Mr. Robert W. Ginnane: Now, the appellant's attached great weight to a grammatical analysis of Section 15 (4).
And they urged that the language against short-hauling is in the singular and it applies only to a railroad and to a railroad operated in conjunction and under common management and control of the first railroad.
And we think that argument is fully answered by this Court's decision in Louisville and Nashville Railroad v. United States in 242 U.S. decided by this Court in 1960.
That case involves the former Section 3, paragraph (3) of the Interstate Commerce Act which then provided that every common carrier shall not discriminate in their rates and charges between such connecting lines, but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business.
Well, you see such carrier, its tracks that that in -- in the old Section 13 (3) that imported the singular too.
Now, that provision is rather germane to Section 15 (4) because both deal with the competitive relationships between railroad carriers.
In that case, the Louisville and Nashville case, the question that -- Louisville and Nashville, and Nashville, Chattanooga and St. Louis Railroad, which jointly owned the Nashville Terminal Railroad whether they were discriminating against Tennessee Central by requiring their terminal company to switch cars for them, but -- by prohibiting their terminal company from switching cars for Tennessee Central.
The Commission had found that difference in treatment toward Tennessee Central to be unjust discrimination.
This Court disagreed, setting aside the Commission's order.
This Court stated that what one carrier admittedly can do by refusing to switch for another over its terminal fact, said the Court, "We can see that what is true of one owner would be equally true of two joint owners."
So we submit that the L.& N. decision stands for the same proposition which indeed we find in the first section of the United States Code, Section 1 -- Section 1 of Title 1 that whether statutory language phrased in a singular should be read to include the plural, it depends upon the purpose of the particular statute involved.
But we think the L.& N. case stands for a bit more than that.
We think it stands for the principle that two joint owners of a railroad can invoke the same protection against the competition of other carriers which the Act provides for a single owner.
In the L.& N. case, two joint owners of a terminal were entitled to the protection of the former Section 3 (3) against allowing use of their terminal facilities by another carrier.
And here, by what we think is the closest of analogies, the two northern lines which owned S. P. & S. and control its traffic policy should we submit the entitle to the protection against short-hauling, which a single owner admittedly would enjoy.
Argument of Fletcher Rockwood
Mr. Fletcher Rockwood: Mr. Chief Justice and may it please the Court.
Chief Justice Earl Warren: Mr. Rockwood.
Mr. Fletcher Rockwood: I -- I appear here for the appellee railroad companies who were dependents or intervening dependents in the lower court.
And the carriers principally involved are the S. P. & S., Spokane and Portland & Seattle Railway and its two wholly owned subsidiaries, Oregon Trunk and Oregon Electric and the Great Northern and Northern Pacific, which equally owned all the bonds and stock of the S. P. & S. The major issue in this case of course arises under Section 15 (4).
That is, whether within the meaning of that Section, two joint owners can sole exercise control over a jointly owned subsidiary to entitle both to the protection against short-hauling.
Mr. Ginnane has argued that.
I am not going to repeat or elaborate to any extent on the argument that we have on our brief.
I do want to simply say to the Court that when Congress reenacted the Section 15 (4) in the Transportation Act of 1940, the legislative history shows that they desire to make no change in the interpretation then given to the word control in Section 15 (4).
And so in our brief, we have made or rather elaborate statement of the history of the interpretation of the words common management or control in Section 15 (4) and in Section 15 (1) cases wherein the Commission was prescribing reasonable rates and we have asserted that the interpretation should be uniformed in the administration of all courses of Section 15 to prevent inconsistency.
The principal issue that I want to talk about is the existence of through routes and Mr. Justice Whittaker asked what a through route was.
A through route is an arrangement expressed or implied between two carriers whereby they will join in the transportation of a property from point A on railroad A to point B on railroad B.
Now, that maybe subject to a joint through writ published by the term -- parties in their tariffs.
Or, a through route may exist where the rate applicable over the through route for the through transportation is a combination of the local routes, local rates of each of the two carriers to and from the junction point.
In the usual case of the through routes exist by reason of a publication by carriers in their tariffs of a specific statement of what commodity will be carried from where to where at what rate.
Justice Charles E. Whittaker: Is that what makes it through route?
Mr. Fletcher Rockwood: That is a through route.
That is a holding out, if they so publish the tariff.
That's a holding out.
Justice Charles E. Whittaker: Otherwise, if all there was required as what you said first, namely, a physical connection, then (Voice overlap) --
Mr. Fletcher Rockwood: No, I don't say it.
I didn't say a physical connection would establish a through route.
A through route may exist over a route where the applicable rates are a combination of locals and that comes into existence by reason of a practice of the carriers in holding themselves out as this Court has said in two cases as being prepared to give the through transportation service.
But if there is no such holding out, the mere physical track connections do not create a through route.
In this case, Mr. Merrill points to the language of the Commission where the Commission did say that routes are available via the Milwaukee from S. -- to and from S. P. & S. points via Spokane, but they are not used because the combination of rate is too high and they are commercially closed.
The Commission did say that, but in the very next paragraph, Commission went on to say, But these are not through routes, within the meaning of Section 15 (3) and Section 15 (4).
They are physical routes, but not through routes because there was no evidence that the carriers held themselves out as being prepared to give through service over that route, S. P. & S. Milwaukee via Spokane.
Justice Felix Frankfurter: Well, that's the volume of thing, giving the service so that the shippers who delivers through -- the initial carrier doesn't have to bother about the rest of the (Voice Overlap) --
Mr. Fletcher Rockwood: Well, that's right.
Holding themselves out and being prepared to give the through service.
Now in this case, the carriers, the S. P. & S. and the Milwaukee did join in several joint through rates.
The one which carried the most traffic was a joint through rate on petroleum products from a point on the S. P. & S. East Pasco, Washington, which incidentally is the terminal of Salt Lake Pipeline where petroleum products originate for rail movement to seven main stations on the Milwaukee in Idaho and Washington.
Now, those are through routes on petroleum products from East Pasco to those particular points.
But those petroleum rates are not evidence of existence of through rates on any other commodities or between any other points on the S. P. & S. system.
And that follows, if Your Honors please from the decision of this Court in the Thompson case.
There, there were physical track connections between the Burlington and the Missouri Pacific at Concordia, Kansas and there were through routes.
The carriers held themselves out as being prepared to give through transportation service from points on the Missouri Pacific, west of their junction to the junction and to points on the Burlington, short of Omaha.
And the Court specifically held that the evidence -- that the existence of though routes to point short of Omaha was not evidence of the existence of through routes to Omaha.
And that is the situation here with respect to every one of these through routes which do exist by reason of tariffs published and contained in the Appendix B of the Commission's report.
Lumber, yes, we have through routes on lumber from S. P. & S. origins to local points on the Milwaukee, east of Spokane, but not two points on connections to Milwaukee.
They have to stop at local points on the -- on the Milwaukee.
Now, that's exactly the same situation which existed in the Denver and Rio Grande case where in this Court affirmed the order of the Commission which was based on the finding that through routes did not exist.
There were in the Rio Grande case, through routes published on lumber from Union Pacific origins in the northwest via Ogden to local points on the Rio Grande, but not to the eastern termini of the Rio Grande or not beyond the eastern termini of the Rio Grande of so-called common points, Colorado common points.
And not -- they did not apply to destinations on connections of the Rio Grande, east of Colorado common points and the Commission found that there were no through routes except on sheep and goats and that lumber.
And this Court affirmed the finding on the basis of the Thompson case and reiterated the test in the Thompson case of holding out as being prepared to give transportation.
Now, the Milwaukee relies on the Virginian case.
In the Virginian case, the Court -- the Commission found that through routes existed.
How they came into existence or what they were, I don't know, except that only combination rates applied over the Virginian and its connections to the west.
But through routes existed and relief was not sought under Section 15 (3) of the Act under which the Commission has a power to establish new routes because as the Court said, Through routes to the west were already in existence and there were through rates by combination.
Now, the Virginian case is not applicable here as was pointed out by the Court in the Thompson case where they said in a footnote, Virginian Railroad against United States is in opposite since through routes were found to be in existence but commercially closed solely because the unreasonable discriminatory charges charged by the Virginian over its portion of the route.
So that the Virginian case is not authority for a finding -- to support a finding that any through routes exist except those which are subject to the published through rates in which the S. P. & S. and the Milwaukee already joined of which petroleum is the outstanding example and the lumber is probably the next important.
I want to comment just for a moment on these export and import rates.
Yes, we have a full line of export and import rates with the Milwaukee, but they apply only to and from six Tidewater ports on the Willamette and Columbia Rivers of -- stations of the S. P. & S. and do not apply to or from any other points.
Furthermore, they apply only on commodities which are to be exported-imported having the -- those traffic characteristics.
It's exactly the same thing as the Thompson case.
Those rates certainly are not evidence to the existence of rates on -- routes on lumber from a point such as Eugene, Oregon, 125 miles away from Tidewater.
They are evidence only of through routes on traffic to and from those Tidewater ports and having those particular characteristics.
The Milwaukee has made quite a point of the fact that 513 cars were interchanged in the year 1952 at Spokane between the Milwaukee and the S. P. & S. of those substantially 500 cars were eastbound, lumber and petroleum products, livestock on which they are joint through rates as included in the appendix B.
There were less than 15 cars as I remember which moved westbound and there were a variety of commodities.
Now, except for few cars of livestock, I -- we can't identify as the record now stands.
What rates were charged on those 10 or 15 cars?
But even though they moved on combination rates and there's no evidence in the record that they did move on the combination rates, it's exactly similar to the 55 cars that trickled through and which the Commission in this Court found did not justify acclaiming of the existence of the through read -- route in the Rio Grande case.
The Commission specifically found the record indicates that the foregoing 513 shipments moved on joint through rates.
There is no indication of any traffic, has ever been solicited for routing via Spokane over a Milwaukee S. P. & S. route via which a higher combination rate applied or has ever moved over such a route.
Now, that finding was contained in the examiners' report and incidentally, the finding that the Commission made that no through routes existed were in the examiner's report.
The Milwaukee in its exemptions, the examiner's report did not accept either of those findings.
They did attempt in a reply to exemptions by other parties to raise the question of the existence of through routes, but the Commission sustained our motion to strike that portion of the reply as improper at that point.
They raised the point again of the existence of through routes on their petition for reconsideration, which was filed with the Commission and was denied, but never until the brief of the Milwaukee in this Court has had taken exemption to the finding that the 513 cars moved on joint through rates.
Now, they assert and the Secretary makes the same assertion that only 387 cars moved on joint through rates.
Consequentially, they say that 126 cars moved on a combination rate.
The witness who testified the 300 -- the particular 387 cars moved on joint through rates did not say that a single car moved to combination rates and there's nothing in the record to indicate where those 126 cars came from, what they cover or anything about them at all or what rates they moved under.
Furthermore, the inference that any cars moved at combination rates is rebutted by the Milwaukee's own witnesses.
I will not take the time of the Court to spell out that testimony in detail.
It's in our brief.
But, the conclusions that one must draw from the testimony of their witness Nichols who presented Exhibit 1 that Mr. Merrill talked about developing the 513 cars and the testimony of their witness Hettinger who presented their Exhibit 18, who developed this figure of two and a half million that Mr. Merrill talked about.
Inevitably, supports the conclusion that those cars moved at through rates for 513 cars.
Hettinger was attempting to develop what the increase in the Milwaukee Railway would have been, have they handled in long hauls Spokane all the cars in which they participated to any extent in line haul to and from S. P. & S. points.
There were 6300 of them, most of which they either received or delivered to another carrier at Minnesota Transport to Twin Cities after the Northern Lines got their long haul.
But there were these 513 cars which were interchanged at Spokane.
As to those, he said that he estimated that there would be no increase in revenue and his words were, As practically all of those traffic moved on through rates, the revenue picture would be unchanged.
Well now, he meant when he said, through rates.
He meant joint through rates.
He didn't mean combination rates.
Because if he admit the term through rates to include combination, then necessarily he would have said that all of them moved on through rates and he wouldn't have qualified the statement at all.
So he said that practically all of them moved on joint through rates.
The S. P. & S. traffic manager was asked whether a shipper could move traffic over the S. P. & S. , Milwaukee route via Spokane for which joint through rates were not in affair.
And he said, We have never had any traffic like that offered to us and I'm not going to speculate on what we would do.
Well, there is in this case no evidence that any of those 513 cars moved to combination rates.
There's no evidence that any of them moved other than at rates included in tariffs which are listed in the appendix via the Commission decision, the through routes and through rates actually existing admittedly.
Justice Charles E. Whittaker: What is the significance if it were a fact that 125 cars did move at combination rates?
Mr. Fletcher Rockwood: Well, the significant so far as the Milwaukee is concerned is -- they would argue that that indicated a holding out by the S. P. & S. and the Milwaukee to give through service on anything that want to move via the Spokane route.
Justice Charles E. Whittaker: But there would be no published tariff.
Mr. Fletcher Rockwood: There doesn't have to be a published tariff.
If there is a through route and they're holding out and if the applicable rates over the through route are combination rates, each carrier publishes its own tariff with its local rate from the origin to the junction, from the junction to the destination on the second period.
There can be through routes.
Instantly, there appears on this record that there are some shipments which have moved over portion of the S. P. & S. system over the S. P. & S. and the Oregon Trunk or over the Oregon Trunk, S. P. & S. and Oregon Electric or which there were no joint through rates published and combination rates were applied.
Well, I don't think anybody would ever content that the S. P. & S. system, the three lines composing the S. P. & S. system don't hold themselves out as being prepared to give through a service from any point on the system to any other point on the system.
Justice Felix Frankfurter: Well, Mr. Rockwood, wasn't there exampling on file that the I.C.C. that the combination rates may be used as a joint rate over the joint route?
Mr. Fletcher Rockwood: I don't believe -- no, I don't believe so Your Honor.
Justice Felix Frankfurter: You mean the --
Mr. Fletcher Rockwood: I think the mere publication of the through rates would make that the applicable rate under the tariff.
Justice Felix Frankfurter: If -- well --
Mr. Fletcher Rockwood: Under the tariffs, I should say plural.
Justice Felix Frankfurter: There is no indication that there is a joint route or does the shipper just go to the initial carrier and find out that there is one?
Mr. Fletcher Rockwood: The shipper just goes to the initial carrier and builds it out from A to B and sometimes he inserts the rates, sometimes he doesn't.
Justice Felix Frankfurter: Well, but the carrier wouldn't capriciously when they have a joint route and that makes (Inaudible)
Mr. Fletcher Rockwood: Not, no.
If you want to cut on the joint rate --
Justice Felix Frankfurter: (Inaudible) against that very thing.
Wasn't that of some notifications to the Commission?
Mr. Fletcher Rockwood: That is one of the most difficult things in the world.
And I remember you hearing the argument before Your Honors in the Rio Grande case and a great deal that are I think was devoted to the subject of how the Union Pacific ever got out from under the through routes and through rates which admittedly existed historically in the early days, and just how if you got a through route with applicable rates and combination rates.
How you get rid of that?
I'm not quite sure.
Justice Felix Frankfurter: What you're saying is that the through route is established through cutting custom.
Mr. Fletcher Rockwood: That's right, through holding themselves out as being prepared to new through transportation service.
Justice Felix Frankfurter: Doesn't even loophole for (Inaudible)
Mr. Fletcher Rockwood: That's right.
But if there is a through rate then you can publish a tariff canceling the joint through rate as it was done in the S. P. & S. case that Mr. Merrill cited where they canceled of the rate via Portland, the Union Pacific to the Denver and east territory.
Justice Felix Frankfurter: Because all events, I think if you're right or since you're right that in a hearing like this before the Commission, the existence or nonexistence of a through route to be established as a matter of traffic tariff?
Mr. Fletcher Rockwood: Absolutely.
And the Commission's finding that the through routes do not exist will be sustained by this Court as they were in the Rio Grande case as supported by substantial evidence.
The other --
Justice Hugo L. Black: But it was supported both ways in that case, wasn't it?
They did require some rate --
Mr. Fletcher Rockwood: Oh, yes.
They found that through routes did not exist but then in the Rio Grande case, they proceed to order in some additional through routes on livestock, fresh meat and vegetables --
Justice Hugo L. Black: That was (Voice Overlap) --
Mr. Fletcher Rockwood: (Inaudible) westbound, I remember.
Justice Hugo L. Black: That was sustained also?
Mr. Fletcher Rockwood: They -- yes sir.
The order that was made by the Commissioner was sustained, but the finding by the Commission that through routes did not then exist except on sheep and goats, and lumber were sustained.
Justice Charles E. Whittaker: I -- I rather gather Mr. Rockwood that what constitutes a through route within the sense here of 15 (4) is pretty much a conclusion of the Commission, how far wrong is that?
Mr. Fletcher Rockwood: Well, I think that is true.
In this case whether or not existing -- there are existing routes.
That's a question of fact to be decided by the Commission found by the Commission.
They can't do it capriciously.
They have to have substantial evidence to support their finding.
Justice Charles E. Whittaker: But neither does it seem to be any direct pinching hole into which you can categorize it either.
Mr. Fletcher Rockwood: The definition necessarily of a -- of a through route is in general language which this Court has placed shaking down to the phrase holding out.
They did that in the Thompson case and they reiterated them.
They adhered to the holding out test of the Thompson case in the decision of Rio Grande case.
Justice Charles E. Whittaker: And that maybe by a publish tariff but it need not be as you say.
Mr. Fletcher Rockwood: That's right.
There are instances with through routes where the applicable rates there over are combination rates.
Justice Charles E. Whittaker: There couldn't be any other.
There couldn't be any other then combination rates because if there were -- there were joint rates that would have to be (Inaudible)
Mr. Fletcher Rockwood: Well that's right that would have to be included in the tariff which would be published through the Commission.
I'm not going to talk about their findings under 15 (3) to 15 (4) as to necessity and desirability of additional through routes, and the question of whether the routes are needed in order for to provide more adequate transportation under the exception on 15 (4).
Because I believe those are purely questions of fact and we have summarized in a degree, the testimony before their witness -- before the Commission.
The Milwaukee and sector have not included any adequate summary of the evidence before the Commission which would enable this Court to say that there is no substantial evidence to support the Commission's finding in that respect.
Justice Felix Frankfurter: Did you take a minute to expand each for me, the difference in the application of the conception of control as this Court lies it down in the (Inaudible) case as a determination of fact and in legal interpretation (Inaudible) interpretation of control of (Inaudible)
Mr. Fletcher Rockwood: Common management or control.
Justice Felix Frankfurter: Yes.
Mr. Fletcher Rockwood: The common management or control, the definition as applied in 15 (4) cases comes from Blackshear Manufacturing Company which hasn't been mentioned here today.
That was a case wherein the Commission was prescribing two scales of rates.
One for application over a single line of railroad or over the lines of railroads under common management and control, and the other a higher scale for application where there was not common management and control.
And the Commission in defining its phrase in the Blackshear case said that the term common management and control is construed to mean control of traffic policy through ownership, lease or otherwise even though separate --
Justice Felix Frankfurter: (Inaudible)
Mr. Fletcher Rockwood: Yes.
Control of traffic policy by reason of ownership, lease or otherwise control of traffic policy is the important thing.
Now, ownership, mere ownership is not enough.
There's got to be exercise of control to traffic policy and we cite the case in our brief, where there was actual 100% ownership of stock but no control of traffic policy and common management and control within the meaning of the Blackshear case did not exist.
Now, when you come to cases such as the Rochester case, there the Commission wanted extensive powers so that it could exercise its functions under the Sections of the Act to which that definition was made applicable.
But they didn't want to extend that to 15 (4) because if they had extended to 15 (4), a definition of control as broad as it was contained in the Rochester case, that would have curtailed greatly the power of the Commission to establish joint through rate -- joint through routes by reason of the limitations of Section 15 (4).
Justice Felix Frankfurter: I don't quite understand that because in the Rochester exception was a de facto control.
Mr. Fletcher Rockwood: Well, it was de facto, that's true.
Justice Felix Frankfurter: Yes.
Mr. Fletcher Rockwood: And they --
Justice Felix Frankfurter: (Voice Overlap) -- de facto control, doesn't it have a de facto control one or by another (Inaudible)(4)?
Mr. Fletcher Rockwood: No, absolutely not.
Justice Felix Frankfurter: That's what I wanted to know.
Mr. Fletcher Rockwood: There's -- no, I should say no.
There is --
Justice Felix Frankfurter: There -- there has to be a legal relationship.
Mr. Fletcher Rockwood: It has to be controlled by ownership lease or otherwise and what otherwise means, heavens only knows.
But they have to be in the position to control the traffic policy.
The controlling carrier has to be in the position to control the traffic policy of the controlled carrier.
Mr. Fletcher Rockwood: That is the definition and that's what's been carried over in the 15 (4).
Justice Felix Frankfurter: Is that the management and control as against -- as against the power Rochester case, like physical control?
Mr. Fletcher Rockwood: Exercise of -- yes, controlled by traffic officials, responsible traffic officials over the traffic policy of the controlled carrier.
Justice Felix Frankfurter: In the Rochester case, we take care of the -- of the de facto financial (Inaudible) without any exercise.
Mr. Fletcher Rockwood: That's right.
And that's what the Commission wanted with respect to certain Section of the Act but did not want to have within with respect to 15 (4).
I'm going to comment only on --
Justice Hugo L. Black: Could you tell me in -- could you tell me in a word, if it bothers you, don't do it, what you understand would be the result if the meaning they give to management and control in 15 (4) should be accepted in this case?
Mr. Fletcher Rockwood: I don't go along with Mr. Merrill to say that that disposes of the case.
The Commission has still got to make a finding under 15 (3) that the additional routes are necessary or desirable in the public interest.
Even sides from all they may find under Section 15 (4), they've still got to make a finding that the additional routes are necessary or desirable on -- in a public interest under the -- within the meaning of Section 15 (3).
Furthermore, they got to make a finding different than they did with respect to a violation of Section 3 (1), they made a very positive finding that there was no undo prejudice or preference under 3 (1).
And furthermore, they've got to make a finding that there is a violation of Section 3 (4), and I -- that's discrimination between carriers.And I believe that the Commission will be justified in finding no violation of Section 3 (4) even though the Northern Lines and the S. P. & S. did not have a protection of Section 15 (4) against short-hauling in the light of the -- the Court held in the Louisville-Nashville case.
Justice Felix Frankfurter: Is this -- is this the situation of through routes having this respective ownership and that brings to the initial carrier, indeed with reference to your line of situation or others like it.
Mr. Fletcher Rockwood: I --
Justice Felix Frankfurter: You would -- the petitioners say such relationship takes it out of 15 (4), out of 15 -- 15 (4), doesn't it?
Mr. Fletcher Rockwood: Yes.
Justice Felix Frankfurter: Now, what I want to know is how many like situations are there, to the railroad --
Mr. Fletcher Rockwood: Not too many.
Justice Felix Frankfurter: Not too many.
Mr. Fletcher Rockwood: I don't know of any that are -- as large as this, where a carrier with a thousand miles of trackage such as the S. P. & S. is under common management and control of another.
There are small lines like the Northwestern Pacific usually owned by the Santa Fe and the Southern Pacific.
The Oregon, California and the Eastern, it's a logging railroad on Southern Oregon owned by the Great Northern and the Southern Pacific.
And there are few like that, but I don't know of any situation in the country.
There is one which is not mentioned on the record and that's the Burlington which Mr. Merrill says it's owned by the Northern Pacific and Great Northern.
The facts of that ownership are not shown in the record but no contention was ever made in this case but the Burlington was under common management and control of the Northern Lines.
The Burlington is a big railroad that runs its own routes.
Justice Hugo L. Black: I didn't quit get your plead answer to my question that I wanted.
You said the Commission would have to find, do you mean that if they're right on that interpretation, the case would have to be sent back to the Commission for further findings?Or do you contend that your view could be supported on the record as it is even though you are wrong on the control and management (Inaudible)
Mr. Fletcher Rockwood: I think I should say quite frankly that if the Commission is wrong and if the lower court were wrong in their interpretation of Section 15 (4), probably the case should go back to the Commission to reconsider further two points.
One, whether the routes are necessary or desirable public interest under 15 (3), whether the 15 (4) issue removed.
And second, whether there's been a violation of Section 3 (4) if we're not entitle too long haul protection under Section 15 (4).
Justice Felix Frankfurter: Couldn't we -- couldn't this Court dig out of the record sustaining the Commission even though 15 (4) goes out the way it didn't (Inaudible) railroad?
Mr. Fletcher Rockwood: Yes [Laughs] --
Justice Felix Frankfurter: (Voice Overlap) --
Mr. Fletcher Rockwood: -- because the Commission has found --
Justice Felix Frankfurter: I'm not soliciting your pressure.
I just want (Voice Overlap) --
Mr. Fletcher Rockwood: Well, the Commission has found that the routes are not necessary desirable of the public interest within the meaning of Section 15 (3).
The Commission has found that there is no violation of Section 3 (4).
Justice Felix Frankfurter: Well, why don't those two findings -- I asked you -- I'll ask you, it has to be likely -- it's a different question --
Mr. Fletcher Rockwood: I --
Justice Felix Frankfurter: -- why wasn't that (Voice Overlap) --
Mr. Fletcher Rockwood: -- in all frankness, Your Honor, I think that if we are wrong on 15 (4), and I don't believe we are, the Commission ought to have another chance to consider Section 3 (4).
Justice Felix Frankfurter: (Inaudible)
Mr. Fletcher Rockwood: No, I don't quite --
Justice Hugo L. Black: I don't think (Voice Overlap) --
Justice Felix Frankfurter: -- think so because there wasn't -- they were --they're -- frankly 15 (4) protection there because their --
Justice Felix Frankfurter: So --
Mr. Fletcher Rockwood: -- their --
Justice Felix Frankfurter: -- I don't mean (Inaudible)
Mr. Fletcher Rockwood: Yes.
Justice Felix Frankfurter: All I have to say is when would you know whether -- all I (Inaudible) -- when would you know, I think the (Inaudible) would know what they might do if the record has been different and has been found to be different --
Mr. Fletcher Rockwood: Well --
Justice Felix Frankfurter: -- and accept it?
Mr. Fletcher Rockwood: I --
Justice Felix Frankfurter: If that case (Inaudible) bigger as it were (Inaudible)?
Mr. Fletcher Rockwood: They're not the same as they were in the Rio Grande case, but I have read Your Honor's dissent in the Rio Grande case.
Justice Felix Frankfurter: I'm not -- I'm not urging that.
I'd like (Inaudible)
Mr. Fletcher Rockwood: Thank you.
Chief Justice Earl Warren: Thank you.
Mr. Merrill, you have about six minutes, will you finish with the case this afternoon?
Rebuttal of Raymond K. Merrill
Mr. Raymond K. Merrill: Thank you, sir.
In answer to some comments by Mr. Ginnane, I want to point out that the S. P. & S. Railroad, an old traffic which interchanges with the Milwaukee Railroad would get the long haul.
Now, neither the Great Northern nor the Northern Pacific now have any short-haul protection against each other.
Every car which the Great Northern handles of S. P. & S. traffic is competitive with the Northern Pacific and the Northern Pacific is now short-haul.
The question is, can you be half safe?
And I don't think that the law contemplates that a railroad can reserve only the right to be half protected by Section 15 (4).
Now, the S. P. & S. is now some little short line like Mr. Rockwood indicated that's a 950 mile long railroad.
It's a class one carrier.
Justice William J. Brennan: I thought he said it was a thousand miles.
Mr. Raymond K. Merrill: Well, in comparing to the Milwaukee, sir -- I mean to the Burlington, he indicated that I thought that the Burlington was a great big railroad, the S. P. & S. is just a little one.
Justice Charles E. Whittaker: I thought the Burlington is much longer than that.
Mr. Raymond K. Merrill: The Burlington is much longer but I'm saying the S. P. & S. is not just a branch line railroad, sir.
And it's a mainline type of an operation over which through passenger runs as well as free trade.
In the Rio Grande case, I would like to point out if I may, that there were through routes found on sheep and goats, both by the Commission and by this Court notwithstanding those through routes were commercially closed.
Joint rates supplied on those commodities but they were hire and the rates via the Union Pacific and the record show there was no movement as sheep and goats via the Rio Grande, and I will stand on that statement.
In the Louisville and Nashville case referred to by Mr. Ginnane, it was a 5-to-4 decision.
The four dissenters pointed out that if this decision stood, it would affect a grave miscarriage and injustice and Congress responded by repealing that Section of the law.
So I don't see any conflict between the laws that now exist and the interpretation which we request to Section 15 (4).
In the Rochester case referred to by Justice Frankfurter, the lower court went into the legislative history of the Act under which the joint management or control was brought up and determined from the legislative history that Congress there wanted a broad interpretation given to the meaning of the word "control".
Justice Felix Frankfurter: (Inaudible)
Mr. Raymond K. Merrill: That is right, sir.
And I stand on that argument, and we rely very heavily that Congress did not want to apply a liberal definition to the word "control" under 15 (4).
That's all, sir.
Thank you very much.