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JAMES MCWILLIAMS BLUE LINE, INC. v. UNITED STATES

September 24, 1951

JAMES McWILLIAMS BLUE LINE, Inc. et al.
v.
UNITED STATES et al.



The opinion of the court was delivered by: RYAN

This suit is filed under Sections 1336, 1398, 2321, 2322 and 2323 of the United States Code, Title 28, which provide for suits to enjoin, set aside, annul and suspend orders of the Interstate Commerce Commission. It came on to be heard before a specially constituted court, pursuant to the provisions of Title 28 U.S.C. §§ 2284 and 2321-2325. The complaint prays judgment setting aside, and enjoining enforcement, of an order of the Commission, entered June 5, 1950, *fn1" which, by a six-to-five vote of the Commission, dismissed the complaint in a proceeding before it, Docket No. 30122, James McWilliams Blue Line, Inc. et al. v. Campbell's Creek Railroad Company, et. al., 278 I.C.C. 312.

No material issue of fact has been raised by the pleadings.

 We find that this court has jurisdiction of the subject matter of this suit, that the amount in controversy exceeds the sum of $ 3,000 exclusive of interest and costs, and that venue is properly laid because plaintiff "Blue Line" has its principal office within this district. 28 U.S.C. § 1398.

 The complaint before the Commission assailed rates and practices affecting the transportation of rail-ocean-barge coal, by the so-called Pocahontas *fn2" Railroads from mines in Virginia, West Virginia and Kentucky to Hampton Roads ports, which coal is subsequently moved by ocean to New England ports and thence by barge to interior ports. The rates, which are proportional rates, are 45 cents per ton higher than proportional rates on like coal which is moved by ocean to New England ports, and thence by rail (rail-ocean-rail coal).

 In the proceeding before the Commission, the complainants (plaintiffs herein) contended that the rates so established are unlawful and in violation of the provisions of Sections 2, 3(1) and 3(4) of the Interstate Commerce Act, *fn3" particularly when read in light of the National Transportation Policy as set forth in the Transportation Act of 1940, which amended the Interstate Commerce Act, 49 U.S.C.A. notes preceding Sections 1, 301, 901 and 1001. *fn4"

 We have concluded that the order of the Commission dismissing the complaint filed before it by the plaintiffs herein was erroneous, that the rates complained of are discriminatory and unlawful, and that the continued establishment and enforcement of those rates must be enjoined.

 Plaintiff, James McWilliams Blue Line, Inc. ("Blue Line") is a New Jersey corporation, with its principal office at No. 1 Broadway, New York, N.Y. "Blue Line" is a common carrier by water in interstate commerce; it holds a certificate of convenience and necessity, issued to it by the Commission pursuant to Section 309 of the Interstate Commerce Act, 49 U.S.C.A. § 909, to engage, subject to said Act, as a common carrier by water in the interstate transportation of commodities generally by water. "Blue Line" is in competition with the New York, New Haven and Hartford Railroad for the movement of coal from New Haven to ultimate destinations in New England.

 Plaintiffs T.A.D. Jones & Co. Inc. and Wyatt, Inc. are Connecticut corporations with their principal offices at New Haven, Connecticut. They are engaged in buying and selling coal; each has at New Haven yards, docks and facilities which enable it to receive and transport coal for transportation to points beyond either by water or by rail. Both sell and ship coal to customers throughout New England; included among their customers are plaintiffs, the Hartford Electric Light Co. and United Illuminating Company, public service utility companies of Connecticut, which in their production and sale of electric energy use large quantities of coal.

 United States of America, named as defendant, joins in the prayer of the plaintiffs and asks that the relief sought in the complaint be granted.

 The Pocahontas railroads and a group of northern railroads were, on their petitions, granted permission to intervene in this suit. *fn5" The answers of the railroads, while putting in issue no material allegation of the complaint, do assert the legality of the assailed rates and ask for a dismissal of the complaint.

 The controversy before us had its genesis in petitions filed by the railroads with the Commission at various times since 1937 asking for authority to make general increases in their freight rates. *fn6" As an outgrowth of these ex parte proceedings, the Commission adopted and applied the "single increase rule" and used percentages, or graded increases, subject to maxima, or hold-downs. The Commission permitted the railroads to increase their rates by 90 cents per gross ton on coal destined for routing through a New England port city, and irrespective of whether the coal moved via a rail-ocean-rail route or via a rail-ocean-barge route. Such an increase would, of course, apply to coal moving through New Haven to a point of ultimate destination in New England from either the northern or southern coal fields. In application, the increase granted was restricted to, and divided among, the railroads involved. The factual situation which resulted is shown by taking the rate of $ 3.42 per gross ton, which, at the time of the complaint, was published by the Pocahontas railroads as their initial charge for transporting coal from certain mines to the Hampton Roads ports. This rate was collected in the first instance by the Pocahontas roads on all coal transported to Hampton Roads and destined to New Haven. The tariffs provided, however, that if the coal was subsequently moved by railroad from a New England port to the point of ultimate destination, the Pocahontas roads, upon receipt of certification to that effect, would refund 45 cents per ton, leaving them a net charge for their transportation from mines to Hampton Roads of $ 2.97 per ton. No refund is provided, however, if the coal was subsequently moved from a New England port to the same destination by water carrier. There was created a differential in charges for the rail transportation service from the mines to Hampton Roads ports dependent not upon any difference in rail service, but solely upon the method of subsequent movement to ultimate destination.

 Before the Commission, the Pocahontas railroads conceded that it does not cost them any more to transport coal from the mines to Hampton Roads when such coal reaches its final destination in New England by barge than when it reaches its final destination by rail. The services they furnish to shippers are the same in each instance.

 A large part of the coal dealt in by Jones & Co. and Wyatt, and purchased and used by Hartford Electric and United Illuminating, consists of bituminous coal originating at mines in the Pocahontas District. This coal is transported by the Pocahontas railroads by rail from the mines to the Hampton Roads ports. Thence, it is carried by ocean carriers to the New Haven docks of Jones & Co. and of Wyatt, from whence it is transhipped for movement to points of ultimate delivery in New England. The receipt and further shipment of coal by them by water is cheaper and more economical than by rail, and they have established facilities representing substantial investments designed to handle coal by water.

 We do not accept the finding of the Commission that "there are no parties subjected to unjust discrimination or undue prejudice as the complaining and intervening operator-dealers forward coal and the complaining and intervening public utilities receive coal, by both rail and barge, and are accorded the same proportional rates and refunds." *fn7" Such a finding seems to us clearly ...


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