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UNITED STATES EX REL. KANSAS CITY S. RY. CO. v. IC

February 9, 1937

UNITED STATES ex rel. KANSAS CITY SOUTHERN RY. CO.
v.
INTERSTATE COMMERCE COMMISSION



The opinion of the court was delivered by: LUHRING

This is a mandamus proceeding wherein the relator, the Kansas City Southern Railway Company, seeks a writ of mandamus to compel the respondent, Interstate Commerce Commission, to take jurisdiction of a complaint filed before it (docket No. 26876) and which the Commission dismissed for want of jurisdiction on November 11, 1935 ( Kansas City Southern Ry. Co. v. Kansas City Term. Ry. Co., 211 I.C.C. 291). By leave of court, certain other carriers, being the so-called large users of the Kansas City terminal facilities, intervened as respondents, as did also the Kansas City Terminal Railway Company.

The matter is now before the court upon the amended petition, the answer of the Commission, the answers of the interveners, and the relator's demurrer to said answers.

 The proceedings before the Commission, known as docket 26876, presented a situation arising out of the construction of the Kansas City Union Station and other terminal facilities in Kansas City, Missouri-Kansas.

 Prior to the year 1906 ten railroads entering Kansas City had used a union depot, and because of the inadequacy of that depot and the public demand for better facilities, these railroads organized the Kansas City Terminal Railway Company, one of the intervening respondents here, as a common carrier railroad with an authorized capitalization of $30,000,000, which was later increased to $50,000,000, and for which stock they subscribed in equal shares.

 The original and supplemental agreements comprise what is known as the operating agreement. As summarized by Mr. Justice Roberts in U.S. v. Interstate Commerce Commission, 294 U.S. 50, 53, 55 S. Ct. 326, 327, 79 L. Ed. 752, this operating agreement, among other things, provides "for the construction, maintenance, and operation of the terminal and its use by the proprietary companies throughout a term of two hundred years; equal ownership of the terminal company's stock; the admittance of other railroads, on equal terms as to ownership of stock and use of the property by consent of two-thirds of the participants not in default under the agreement; issuance and sale of the terminal company's bonds secured by mortgage on its property; payment by each proprietary road of an equal share of taxes and governmental charges of the company and of interest and principal of its mortgage indebtedness; payment of a defaulting railroad's share of these charges by the remaining proprietaries in equal shares; exclusion of any defaulting road from the use of the facilities; the sharing of expenses of maintenance and operation by the using companies in proportion to each one's use."

 Coincident with the execution of the operating agreement a stock-trust agreement was executed between the Terminal Company and the ten, now twelve, proprietary lines, and the Pioneer Trust Company of Kansas City. It provided for the transfer of the shares of the Terminal Company's stock and of such further shares as should be offered to and subscribed for by those lines from time to time to the Trust Company, in trust for the purpose of carrying out the provisions of the operating agreement and as security for their performance with provisions against acquisitions of such stock by outside interests.

 The new union station was completed and opened for business on November 1, 1914.

 Subsequently, the Missouri, Kansas & Texas Railway Company, one of the proprietary companies and a party to the agreements described, went into receivership and most of its railway lines were purchased at a judicial sale by the Missouri-Kansas-Texas Railroad Company. Pursuant to an order of court, allowing it the privilege, the purchasing Railroad Company elected not to become one of the proprietary companies of the Terminal Railway Company as its predecessor had been. On the 10th day of March, 1924, it filed its petition with the Interstate Commerce Commission under paragraph (4) of section 3 of the Interstate Commerce Act (49 U.S.C.A. § 3(4) wherein it sought an order authorizing it to use designated portions of the union passenger station and the freight terminals of the Terminal Railway Company at Kansas City, Missouri-Kansas.

 The petition alleged that the terms imposed upon the petitioner for its use of the terminals were unjust, inequitable, and burdensome in that by the operating agreement each of the proprietary lines parties to said agreement is required to pay one-twelfth of the interest and of the taxes, without regard to the extent of the use of the terminal by each such company. That as a small user of the terminal facilities, its payment for interest and taxes is out of proportion to its use.

 In that proceeding all the other users of the terminal filed petitions in intervention. Five of these, known as the larger users, opposed the relief sought; the others, small users, in which group the relator here belongs, sought the same relief that the Missouri-Kansas-Texas Railroad Company sought, and also urged that to grant the relief to that company alone would aggravate the situation and unlawfully discriminate against the other users.

 After extensive hearings the Commission made and issued its report, dated November 10, 1925 ( Missouri-Kansas-Texas R. Co. v. Kansas City Term. Ry. Co., 104 I.C.C. 203), dismissing the petition of the so-called small users, which included the petition of the relator here, on the ground of lack of jurisdiction. Subsequently, a petition for rehearing was denied. Thereafter, the Kansas City Southern Railway Company, who is the relator here, and the Chicago Great Western Railroad Company filed a petition in this court for a writ of mandamus to compel the Commission to assume jurisdiction. This petition was denied, and, on appeal to the Court of Appeals for the District of Columbia, the judgment of the lower court was affirmed. U.S. v. Interstate Commerce Commission, 63 App.D.C. 215, 71 F.2d 336. The judgment of the Court of Appeals was affirmed by the Supreme Court of the United States January 7th, 1935. U.S. v. Interstate Commerce Commission, 294 U.S. 50, 55 S. Ct. 326, 79 L. Ed. 752.

 Shortly following the decision in U.S. v. Interstate Commerce Commission, supra, and on February 18, 1935, the Kansas City Southern Railway Company, the relator here, filed its complaint with the Interstate Commerce Commission against the Kansas City Terminal Railway Company, an intervening respondent here, and eleven other railroads which, with the Kansas City Souther, use the station and other terminal facilities at Kansas City, Missouri-Kansas. In this complaint it is alleged in substance that the payment by the complainant of its equal share of annual interest and taxes pursuant to the terms of the operating agreement is unjust, inequitable, and discriminatory in view of the comparatively small use it makes of the terminal facilities, and constitutes an undue prejudice to and burden upon its ...


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