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STATE OF ILLINOIS v. UNITED STATES

October 31, 1951

STATE OF ILLINOIS ET AL.
v.
UNITED STATES ET AL.



Before Finnegan, Circuit Judge, and Campbell and Perry, District Judges.

The opinion of the court was delivered by: Perry, District Judge.

This action was brought by the State of Illinois and the Illinois Commerce Commission pursuant to U.S.C.A. §§ 1336, 1398, 2284, 2321, 2322, 2323, 2324 and 2325. The City of Chicago, Chicago Heights, Blue Island, Harvey, the villages of Flossmoor, Park Forest, Matteson, Homewood, Hazelcrest and Riverdale, and the Illinois Central Commuters' Committee intervened on behalf of the complainants and joined with them in their prayer for relief. The United States of America, the Interstate Commerce Commission and the Illinois Central Railroad, a corporation, are defendants.

The complainants and intervening petitioners all seek by this action to enjoin the Interstate Commerce Commission from carrying out its order granting increased suburban rates to the Illinois Central Railroad after full and extended hearings, findings and conclusions. The Interstate Commerce Commission's action was taken upon the petition of the Illinois Central Railroad, a carrier, pursuant to authority of 49 U.S.C.A. § 13, which provides as follows:

Sec. 13(4): "Whenever in any such investigation the commission, after full hearing, finds that any such rate, fare, charge, classification, regulation, or practice causes any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other hand, or any undue, unreasonable, or unjust discrimination against interstate or foreign commerce, which is * * * forbidden and declared to be unlawful, it shall prescribe the rate, fare, or charge, or the maximum or minimum, or maximum and minimum, thereafter to be charged, and the classification, regulation, or practice thereafter to be observed, in such manner as, in its judgment, will remove such advantage, preference, prejudice, or discrimination. Such rates, fares, charges, classifications, regulations, and practices shall be observed while in effect by the carriers parties to such proceeding affected thereby, the law of any State or the decision or order of any State authority to the contrary notwithstanding."

There are only two questions presented in this proceeding: (1) Did the Interstate Commerce Commission have the authority or power to enter an order on July 30, 1951, fixing suburban rates on the Illinois Central Railroad in Chicago and the vicinity thereof after a petition, notice and hearing pursuant to 49 U.S.C.A. § 13? (2) Did the Interstate Commerce Commission hold a full hearing and receive such substantial evidence as would support its findings, conclusions and order?

1. If the Interstate Commerce Commission had no such authority or power under the aforesaid section of the United States statute to hold such hearings, make such findings of fact and conclusions of law and enter such order for multiple and commutation fares as it did on July 30, 1951, then the prayer of the complainants for an injunction restraining the Interstate Commerce Commission and Illinois Central Railroad from putting the order into effect should be granted.

On the other hand, if the Interstate Commerce Commission is held to have such authority or power, then the prayer for such injunction should not be granted until it is determined whether the Interstate Commerce Commission held a full hearing upon the petition of a proper party, gave lawful notice, made findings and conclusions and entered an order based upon substantial evidence such as would support its findings, conclusions and order.

The record reveals that the petitioner is a carrier and that all legal notices were given. If it shall be determined that the Interstate Commerce Commission has authority or power to hold such hearing, make the findings and conclusions and enter the order that it did on July 30, 1951, the only remaining question is, did it hold a full hearing and base its findings, conclusions and order upon such substantial evidence as would support its final order?

Much has been said about the fact that multiple and commutation fares are largely if not wholly intrastate commerce and that the action of the Interstate Commerce Commission was invading the sovereign authority of the State of Illinois in holding hearings, making findings and conclusions and entering an order for multiple and commutation fares different and, in general, on a considerably increased basis as compared to the same fares in force pursuant to the action of the Illinois Commerce Commission, an intrastate body. The position of the complainants on that score is untenable, and has been so since the United States Supreme Court rendered its decision in the Shreveport case cited as Texas & Pacific Railway Co. v. U.S., 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341. That was six years before the passage of subsections (3) and (4) of section 13 of Title 49 U.S.C.A., commonly known as the National Transportation Act. It is generally conceded that the principles of the Shreveport case were codified by the National Transportation Act.

In that case, where the Interstate Commerce Commission found that intrastate rates established by the Texas commission were unduly and unjustly discriminatory to interstate commerce travelling over the same area, the court held that Congress through the Interstate Commerce Commission had the power to examine and to make determinations in order to resolve the conflict between the state and national authorities on such questions. The court cited the historical principle that, in order to avoid the problems which overwhelmed the Confederation, to relieve interstate trade from the impediments resulting from rival local governments and to provide a basis for national unity and an insurance against conflicting and discriminating state legislation, Congress was given a comprehensive grant of power over interstate commerce. The court emphasized the fact that this power reaches not only interstate commerce itself, but also such related matters as might affect the security, the efficiency and the maintenance of interstate commerce. In this Shreveport case the court, at page 351 of 234 U.S., at page 836 of 34 S.Ct., said: "The fact that carriers are instruments of intrastate commerce, as well as of interstate commerce, does not derogate from the complete and paramount authority of Congress over the latter, or preclude the Federal power from being exerted to prevent the intrastate operations of such carriers from being made a means of injury to that which has been confided to Federal care. Wherever the interstate and intrastate transactions of carriers are so related that the government of the one involves the control of the other, it is Congress, and not the state, that is entitled to prescribe the final and dominant rule, for otherwise Congress would be denied the exercise of its constitutional authority, and the state, and not the nation, would be supreme within the national field."

It is the view of this court that the facts of the instant case bring it clearly within the purview of the above principle enunciated by the Supreme Court, even if the National Transportation Act had never been passed. It is unnecessary for the court to do more than note that this principle was approved by two later cases before the passage of the National Transportation Act: American Express Co. v. State of S.D. ex rel. Caldwell, 244 U.S. 617, 37 S.Ct. 656, 61 L.Ed. 1352; and Illinois Central Railroad Company v. Public Utilities Commission of Illinois, 245 U.S. 493, 38 S.Ct. 170, 62 L.Ed. 425.

The leading United States Supreme Court case on the controversy between intrastate and interstate commerce that was heard after the passage of the National Transportation Act was the case of Railroad Commission of State of Wisconsin v. Chicago, Burlington & Quincy Railroad Co., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371. In that case the court had before it the question as to whether or not the Interstate Commerce Commission had the power or authority to examine the relationship between intrastate rates and interstate rates under the provisions of 49 U.S.C.A. § 13, subsections (3) and (4) and, further, the question as to whether or not the Interstate Commerce Commission had the power or authority to make determinations with respect to these intrastate rates after it had found that they constituted unlawful discrimination against interstate commerce. In upholding the proposition that the Interstate Commerce Commission did have such power and authority, Justice Taft, at page 588 of 257 U.S., at page 237 of 42 S.Ct., said: "It is objected here, as it was in the Shreveport Case, that orders of the Commission which raise the intrastate rates to a level of the interstate structure violate the specific proviso of the original Interstate Commerce Act repeated in the amending acts, that the Commission is not to regulate traffic wholly within a state. To this, the same answer must be made as was made in the Shreveport Case, 234 U.S. 342, 358, 34 S.Ct. 833, 58 L.Ed. 1341, that such orders as to intrastate traffic are merely incidental to the regulation of interstate commerce and necessary to its efficiency. Effective control of the one must embrace some control over the other in view of the blending of both in actual operation. The same rails and the same cars carry both. The same men conduct them. Commerce is a unit and does not regard state lines, and while under the Constitution, interstate and intrastate commerce are ordinarily subject to regulation by different sovereignties, yet when they are so mingled together that the supreme authority, the Nation, cannot exercise complete effective control over interstate commerce without incidental regulation of intrastate commerce, such incidental regulation is not an invasion of state authority or a violation of the proviso."

In the argument before this Court the case of Alabama Public Service Commission v. Southern Railway Co., 341 U.S. 341, 71 S.Ct. 762, 767, 95 L.Ed. 1002, was urged as a recent case showing a different viewpoint on the problem of federal authority over intrastate activities. That case was not brought under the Transportation Act. No hearing occurred before the Interstate Commerce Commission under 49 U.S.C.A. § 13. The suit was one in which the plaintiff sought to go into a federal district court and enjoin the action of the Public Service Commission of the State of Alabama, which had entered an order refusing to permit the Southern Railway to discontinue certain trains. The court in a special footnote specifically stated: "As the jurisdiction of the Interstate Commerce Commission under 49 U.S.C. § 13(4), 49 U.S.C.A. § 13(4), has not been invoked for decision as to whether the continuance of this intrastate service constitutes an undue discrimination against interstate commerce we cannot, in this proceeding, consider any impact the order of the Alabama Public Service Commission might have on interstate commerce."

It is therefore clear that the court did not intend its decision in that case to alter or change in any way the principles that have been consistently followed in the interpretation of the National Transportation Act.

The plaintiffs and intervening petitioners have maintained that this court is without jurisdiction for the reason that the Illinois Commerce Commission reached a different conclusion upon the same facts and that there is now pending an appeal from its decision in the Circuit Court of Cook County.

It is sufficient for this court to point out that the result of that proceeding can in no way affect the jurisdiction of this court or the power and authority of the Interstate Commerce Commission. The Circuit Court of Cook County may sustain the Illinois Commerce Commission, but that makes no difference. The power and authority of the Illinois Commerce Commission and jurisdiction of the Circuit Court of Cook County are limited to interpreting and applying the statutes of the State of Illinois, creating and giving power to the Illinois Commerce Commission. It may very well be that, under the Illinois law, the Illinois Commerce Commission's report and findings are proper. Even if the Circuit Court of Cook County had already sustained the report of the Commission and the matter had been finally concluded the Interstate Commerce Commission would still have the power and authority under 49 U.S.C.A. § 13(4), to hear the petition in the instant case, and this court would have jurisdiction to determine whether or not the findings, conclusions and order of the Interstate Commerce Commission were founded upon and warranted by substantial evidence.

It is entirely possible that the Circuit Court of Cook County could reverse the Illinois Commerce Commission; and, the Illinois Commerce Commission might conceivably order higher rates than those ordered by the Interstate Commerce Commission. The Circuit Court of Cook County and the Supreme Court of Illinois might sustain the state administrative body in such action; in that case the railroad might obtain higher rates than those granted by the Interstate Commerce Commission herein. That would be legal and proper under our dual system of government unless and until a further action could be instituted under the provisions of 49 U.S.C.A. § 13(4), wherein a proper showing might be made that the new and higher rates interfered in a prejudicial manner with interstate commerce.

This court would not have the jurisdiction to determine the rates under the Illinois law or to set aside or alter the findings, conclusions or orders either of the Illinois Commerce Commission or of the Circuit Court of Cook County, if the petitioner relied upon diversity of citizenship or the due process clause of the Federal constitution as was done in the case of Alabama Public Service Commission v. Southern Railway Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002. There is no question of comity involved in the case at bar for the reason that the Interstate Commerce Commission has the power and authority to enter the order herein under 49 U.S.C.A. § 13(4) regardless of whether it is the state law or merely the administration of the state law that interferes with interstate commerce in a prejudicial manner.

Without reciting or repeating the findings of fact, the court emphasizes the fact that it has been found that the railroad's multiple and commutation fares are not producing their fair share of the earnings required to enable the railroad to meet its maintenance and operating costs and to yield a fair return on the value of the property devoted to the transportation service, both interstate and intrastate, and hence are discriminatory revenuewise against its interstate traffic. The provisions of 49 U.S.C.A. § 13(4), are especially designed to counteract just this type of situation; they prescribe the method whereby such unjust discrimination against interstate commerce shall be relieved, and that is the method used in the instant case.

This court concludes that the Interstate Commerce Commission had the power and authority under the provisions of 49 U.S.C.A. § 13(4), to entertain the petition, hold the hearings, make the findings and conclusions and enter the order which it did.

This court has carefully examined the voluminous transcript of testimony taken and the numerous exhibits examined and considered as evidence by the Interstate Commerce Commission, ever mindful of the decision in Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456. From such examination the court is convinced that the order of the Interstate Commerce Commission meets a high standard of certainty and is founded upon substantial evidence, and that the order as well as the findings and conclusions of the commission were warranted by the evidence. This court finds that the Interstate Commerce Commission was clearly justified in making the findings and conclusions and entering the order that it did. This court makes no attempt to weigh the evidence in this case, for to do so would be to substitute its judgment as to matters of fact for that of the Interstate Commerce Commission, which the Supreme Court has repeatedly held we cannot do.

Accordingly, this court finds the issues for the defendants and files herewith its findings of ...


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