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UNITED STATES v. PENNSYLVANIA R. CO.

June 19, 1952

UNITED STATES
v.
PENNSYLVANIA R. CO.



The opinion of the court was delivered by: CLARY

This is an action by the United States for a preliminary and permanent injunction against The Pennsylvania Railroad Company to compel the railroad to reduce charges for toilet and washroom facilities in its passenger stations and terminals to prices fixed by the Director, Office of Price Stabilization. It is brought under Sections 409 and 706 of the Defense Production Act of 1950, as amended, 50 U.S.C.A.Appendix, §§ 2109, 2156. In addition, the Government requests a money judgment in the sum of $ 385,244.82, representing three times the amount charged by the defendant over the applicable ceiling prices established under General Ceiling Price Regulations, 16 F.R. 808, as amended, and Ceiling Price Regulation 34, 16 F.R. 4446, as amended. The matter is presently before the Court on defendant's motion to dismiss.

Defendant's contention is that the Defense Production Act by its terms exempts the charges here involved. The Government, on the other hand, contends that the exemption in question is limited in scope and applies only to charges made by the railroad for the actual transportation of either passengers or goods or for services performed in connection with transportation upon goods, wares, or merchandise in transit. It contends that pay toilet facilities are not an integral part of the service of common carriers and that charges made by the defendant for such facilities are not exempt from price control.

 The applicable exemption which the defendant contends exempts it from the operation of the Act is Section 402(e) of the Defense Production Act of 1950, as amended, 50 U.S.C.Appendix, § 2102(e), and reads as follows:

 '(e) The authority conferred by this title shall not be exercised with respect to the following:

 '(v) Rates charged by any common carrier or other public utility * * * .'

 An identical exemption was contained in the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq. The construction of that exemption was before the Courts on many occasions. The case probably most nearly analogous to the instant case, in principle, but not in facts, is the case of Fleming v. Railway Express Agency, Inc., 1947, 161 F.2d 659. It involved charges made by the railway agency for over-the-road motor vehicle transportation of less that carload lots and store-door pickup and delivery services at prices higher than those set by the General Maximum Price Regulation established under the 1942 Act. The Court there pointed out very forcibly that it was the intention of Congress to exempt common carriers or other public utilities because they were subject to regulation either by the Interstate Commerce Commission or state regulatory commissions. The Court remarked that it seemed clear to it that it was not the intention of Congress to give authority to two rate or price-making bodies. A review of the cases decided under that Act shows that the Courts have been uniform in broadly construing the exemption. Fleming v. Railway Express Agency, Inc., supra. In re Rice, 83 U.S.App.D.C. 26, 165 F.2d 617; Fleming v. Chicago Cartage Co., 7 Cir., 160 F.2d 992; Dunham & Reid v. Porter, Em. App., 157 F.2d 1022; Bowles v. Wieter, D.C., 65 F.Supp. 359; State of Alabama v. United States, D.C., 56 F.Supp. 478 (reversed on other grounds) 325 U.S. 535, 65 S. Ct. 1274, 89 L. Ed. 1779.

 In Alabama v. United States, supra, the Price Administrator under the Emergency Price Control Act attempted to have set aside and declared void an order of the Interstate Commerce Commission fixing intrastate rates. The Court held that by the provision of the 1942 Act providing (as does the present Act) that in any general increase in rates or charges, the carrier or utility must give notice to the President or such Agency as he may designate, Congress did not intend in any way to limit the existing power of the Interstate Commerce Commission over that field or to give the Price Administrator any standing to make mandatory demands upon it or to take from it any part of its existing discretion, citing Vinson v. Washington Gas Light Company, 321 U.S. 489, 64 S. Ct. 731, 88 L. Ed. 883; Interstate Commerce Commission v. Jersey City, 322 U.S. 503, 64 S. Ct. 1129, 88 L. Ed. 1420. As noted, the case was reversed in the Supreme Court because of lack of sufficient evidence to support the finding involved, but no question was raised as to the absolute power of the Interstate Commerce Commission.

 In the Case of Dunham & Reid v. Porter, supra, Chief Judge Maris of the Emergency Court of Appeals construed the exemption provisions as not being limited to common carriers whose rates are regulated by other federal or state authorities.

 In re Rice, supra, held that where a statute constituted a business of common carrier, it was not subject to the provisions of the Emergency Price Control Act. That case involved rentals charged for the use of taxicabs by an owner who rented taxicabs to others for operation in the District of Columbia. He performed no services himself. The Court held that though the rentals charged were not actually controlled by the Public Utilities Commission, the exemption governed.

 Mr. Justice Jackson in Davies Warehouse Co. v. Bowles, 321 U.S. 144, 150, 151, 152, 64 S. Ct. 474, 88 L. Ed. 635, also involving the exemption, precisely stated the problem involved in this case. He said that Congress may well have desired to avoid conflict or occasions for conflict between federal agencies and state authority which are detrimental to good administration and to public acceptance of an emergency system of price control that might flounder if friction with public authorities be added to the difficulties of bringing private self-interest under control. Further, that where Congress has not clearly indicated a purpose to precipitate conflict, the Courts should be reluctant to do so by decision.

 Congress in including the exemption of 'rates charges by any common carrier or other public utility' in the Defense Production Act of 1950 did so in light of existing law. The Amendment of June 18, 1910, 36 Stat. 545, c. 309, to the Interstate Commerce Act provided that 'all charges made for any service rendered or to be rendered in the transportation of passengers or property * * *, or in connection therewith, shall be just and reasonable, and every unjust and unreasonable charge for such service or any part thereof is prohibited and declared to be unlawful?. 49 U.S.C. § 1, par. (5). The duty of determining just and reasonable charges, since that Amendment, has reposed exclusively in the Interstate Commerce Commission. The reasons for the delegation of the powers of Congress over interstate carriers to the Commission become abundantly apparent from the historical analysis of the Interstate Commerce Commission Act by Chief Justice Taft in the case of Railroad Commission of Wisconsin v. Chicago, B. & Q. Railroad Company, 157 U.S. 563-582, 42 S. Ct. 232, 66 L. Ed. 371. The Chief Justice pointed out that the original purpose of the Act, passed in 1887, was to prevent carriers from charging unreasonable rates and from unjustly discriminating between persons and localities. Various amendments including the Hepburn Act of June 29, 1906, c. 3591, 34 Stat. 589, and the Amendment of June 18, 1910, 36 Stat. 539, c. 309, made the authority of the Commission to fix rates and in dealing with carriers summary and effectively complete. He pointed out the difficulties confronting the railroads between 1910 and 1917 because of the difficulty of securing investment capital. The World War I extraordinary demands for transportation forced Congress and the President to take over the operation of the railroads. From January 1, 1918 to March 1, 1920, the railroads were operated by the United States. Because of the rapid rise in labor and material costs in the intervening time, the operators of the railroads requested assistance from the Government before taking the railroads back under private management. After elaborate investigations by the Interstate Commerce Committees of both Houses, Congress acquiesced in the view of management and passed the Transportation Act of 1920. This Act constituted a radical departure in the viewpoint of Congressional regulation of railroads. Prior acts were designed primarily to prevent injustice by unreasonable or discriminatory rates against persons and localities. The only protection afforded the carriers was the requirement that rates fixed should be reasonable in the sense of furnishing adequate compensation for services rendered and the abolition of rebates. The new measure, on the contrary, imposed an affirmative duty upon the Interstate Commerce Commission to provide adequate railway service for the people of the United States. Under the powers conferred by this Act the Commission was authorized to require operation of facilities including terminals, even at a loss if those facilities were necessary in the overall requirement of an adequate railway service for the people of the United States. All phases of railway activity thus have come under the scrutiny of the Commission.

 The Supreme Court of Florida in the case of State of Florida ex rel. Burr v. Seaboard Air Line Railway Company, 89 Fla. 419, 104 S. 602, 604, 39 A.L.R. 1362, in reviewing the Interstate Commerce Act clearly stated the purpose of The Transportation Act of 1920 in the following language:

 'The Interstate Commerce Act (U.S.Comp.St. § 8563 et seq. (49 U.S.C.A. § 1 et seq.)) was passed for the purpose of regulating commerce throughout the nation, and, as amended by the Transportation Act of 1920, for purposes of interstate commerce place the transportation system of the country completely under the supervisory control of the Interstate Commerce Commission. Under this act the dictum of the Commission is the last word in such matters as through route and rate regulation, just division of joint rates, car and terminal service in the interchange of interstate freight and passengers between railroads, construction of new and extension of old lines, purchasing of equipment, safety devices, issuance of securities, safety and adequate facilities, and such others as tend to prompt and continuous service in interstate commerce.'

 Numerous cases of the Supreme Court, including the case of Board of Trade v. United States, 314 U.S. 534-546, 62 S. Ct. 366, 372, 86 L. Ed. 432, have recognized the plenary powers of the Interstate Commerce Commission over common carriers. In the Board of Trade v. United States case, supra, Mr. Justice Frankfurter comments rather fully upon the duties of the Interstate ...


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