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March 27, 1958

Charles A. WAITE and Elmer J. Carroll, a partnership doing business as C. A. Waite Company, Pittsburgh, Pennsylvania; and Harold T. Henry and Eugene Brandeis, sole stockholders in a former corporation known as American Swedo Iron Corporation, Danville, Pennsylvania, Plaintiffs,
UNITED STATES of America, Defendant and Interstate Commerce Commission, Chicago, Burlington & Quincy Railroad Company, et al., Intervening Defendants

The opinion of the court was delivered by: WILLSON

This action is brought by plaintiffs under Section 17(9) of the Interstate Commerce Act, 49 U.S.C.A. § 17(9), to set aside orders of the Interstate Commerce Commission entered June 24, 1955 and December 19, 1955 in its Docket No. 31478, American Swedo Iron Corporation, et al. v. Chicago, Burlington & Quincy Railroad Company, et al., insofar as the orders dismissed plaintiffs' reparation claim for alleged unreasonable rates paid on carload shipments of steel billets shipped during 1951 and 1952 from Minnequa, Colorado, to destinations in Pennsylvania.

Plaintiffs Charles A. Waite and Elmer J. Carroll are partners, doing business under the name of C. A. Waite Company, having their principal place of business in the City of Pittsburgh, Pennsylvania, and are engaged in the business of marketing various iron and steel products, principally billets and other semi-finished steel. Plaintiff's Harold T. Henry and Eugene Brandeis during the years 1950-1955 were the sole stockholders in a former corporation named American Swedo Iron Corporation, having its principal place of business in Danville, Pennsylvania. This corporation was engaged in the manufacture and distribution of steel products of various types for a number of years, including the years 1951 and 1952. It was dissolved by action of the named stockholders in 1955, and all rights of the corporation and causes of action of said corporation have inured to the stockholders named.

 The United States of America is the defendant, as provided by statute. By order of the court, the Interstate Commerce Commission and the following named railroads were permitted to intervene as party defendants: Chicago, Burlington & Quincy Railroad Company; The Colorado and Southern Railway Company; The Colorado & Wyoming Railway Company; the Denver and Rio Grande Western Railroad Company; Missouri Pacific Railroad Company, Guy A. Thompson, Trustee; New York Central Railroad Company; The Pennsylvania Railroad Company; The Pittsburgh & Lake Erie Railroad Company; Terminal Railroad Association of St. Louis; and Litchfield and Madison Railway Company.

 Before the Commission plaintiffs alleged that the rates charged on the steel billets were unjust and unreasonable and in violation of Section 1 of the Interstate Commerce Act. The railroads denied the allegations, and the Interstate Commerce Commission ordered modified procedure so that the evidence was presented through verified statements by Harold T. Henry, President, American Swedo Iron Company, C. A. Waite, Partner, C. A. Waite Company and C. Peyton Collins, Transportation Specialist. Defendants' reply to the Commission presented testimony of C. E. Larsen, General Freight Agent of the Chicago, Burlington & Quincy Railroad Company. Plaintiffs filed a reply, presenting rebuttal testimony through Mr. Collins and Mr. Waite.

 The factual evidence before the Commission on the part of the defendants was presented in Mr. Larsen's affidavit. The Commission's record in the case has been certified as part of the record in this court.

 In accordance with Commission procedure, the case was assigned to an examiner. In his report, the examiner proposed that the Commission find that the rates were unreasonable to the extent they exceeded rates on coiled rods, minimum weight per carload 56,000 pounds. He further proposed that the plaintiffs were damaged by the amount of difference between the charges paid and those which would be accrued at the basis found reasonable and that the plaintiffs were entitled to reparation because of the unreasonable rates charged for billets.

 Exceptions were filed by defendants to the examiner's report. Division 2 of the Commission reversed the examiner and dismissed the complaint by an order served July 11, 1955 upon a finding that the rates assessed were not shown to be unjust or unreasonable. Plaintiffs petitioned the entire Commission for reconsideration of this decision, but their petition was denied by an order entered December 19, 1955; so that plaintiffs have exhausted their remedies before the Commission.

 Plaintiffs' position before this court is that the Commission decision should be annulled and set aside, since it is not supported by substantial evidence and is, in fact, contrary to the evidence and the applicable law. It is noticed that when the instant proceeding was first filed, a three-judge court was requested. It appeared, however, that plaintiffs challenged only the report and orders of the Commission insofar as they dismissed plaintiffs' reparation claim and that plaintiffs were no longer concerned about future rates. In their answers to the complaint, the Commission and intervening defendants denied that a three-judge court is required to set aside a Commission order denying reparations only and referred to United States v. Interstate Commerce Commission, 337 U.S. 426, 69 S. Ct. 1410, 93 L. Ed. 1451. Subsequently, plaintiffs amended their complaint, striking out any reference to a three-judge court and the case therefore is regularly before this court as a one-judge court.

 The parties are in agreement as to the scope of judicial review in an action of this kind. The Administrative Procedure Act, 5 U.S.C.A. § 1009(b) et seq., provides that the decision of the Commission in this case is part of the record before this court, including the findings and conclusions as well as the reasons or basis therefor upon all the material issues of fact and law or discretion presented on the record; and that the court is to hold unlawful and set aside the Commission findings and conclusions which are arbitrary, capricious, an abuse of discretion and which are unsupported by substantial evidence. Plaintiffs assert that their claim for reparation falls in the latter category in the sense that the Commission order is not supported by substantial evidence.

 In their complaint before the Commission, plaintiffs requested that they be given relief by reducing the level of the billet rates to the level of the pig iron rates. However, after the examiner recommended that plaintiffs be given relief only to the level of coiled rod rate which was somewhat higher than the pig iron rate, plaintiffs were satisfied and in their petition for reconsideration they sought relief on the basis suggested by the examiner. This is the relief also which they now seek in this court.

 From Minnequa, Colorado to Pittsburgh and Avis, Pennsylvania, the rate on coiled rods established September 1, 1949 and April 4, 1951, expressed in dollars and cents a gross ton runs from a minimum of $ 6.40 to $ 6.90 less than is the billet rate from Minnequa to Pittsburgh and Avis. This lower rate applies to coiled rods shipped from Minnequa to Buffalo, New York or Palmer, Massachusetts over the carrier lines. At $ 6.40 a ton, assuming the cars carry 100 tons each, on the sixty-seven cars shipped plaintiffs' claim for reparation, if allowed, amounts to approximately $ 43,180. Before the Commission and in this court, plaintiffs submit that it is unreasonable to apply higher rates on billets than on coiled rods since the former are in a less advanced stage of manufacture, are less valuable and possess more desirable transportation characteristics.

 Plaintiffs say that the only part of the Commission decision which makes specific findings on the actual issues raised are those set forth as follows, together with the conclusion dismissing the complaint:

 'The sixth-class rating on billets has been in effect between points here concerned for about 25 years. The rates on coiled rods to Palmer and Buffalo were published to enable the shipper to distribute its excess production in eastern markets. At the time these rates were established the rail carriers anticipated a continuing and expanding movement, and the defendants claim that the rates are accomplishing their mission. In contrast, the considered shipments moved for the most part between February and August 1951; only three moved thereafter, and none after October 1952. The fact that reparation was awarded in two special-docket proceedings on ...

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