The opinion of the court was delivered by: GRONER
Pacific Electric Railway Company owns and operates electric railroads and motor bus and truck lines in and near the City of Los Angeles, California. It is a wholly owned subsidiary of Southern Pacific Railroad Company, with the lines of which it connects at numerous points. Southern owns all of its capital stock and a substantial portion of its bonds. The companies are operated separately in both interstate and intrastate commerce. In November, 1939, Pacific applied to the Interstate Commerce Commission for a certificate of public convenience and necessity, authorizing it to abandon certain of its lines of railroad in Los Angeles, Orange, and Riverside Counties, California. The application involved approximately 90 miles of trackage. The plan contemplated the abandonment of certain rail lines, the rehabilitation of others, and the substitution of motor bus and motor truck service as a means "of increasing operating revenues, reducing expenses, and rendering a more adequate service to the public". The Commission accepted jurisdiction, and the railway brotherhoods, who are plaintiffs in this action, were permitted to intervene to protect the interests of Pacific's employees. After a hearing in March, 1940, Division 4 issued an order granting Pacific's application in principal part. The Division refused, however, any conditions for the protection of displaced employees, on the ground that the Commission had no authority to do this under the applicable provisions of the Interstate Commerce Act.
Reargument before the full Commission, requested by the brotherhoods, was denied; whereupon this action was begun.
Questions of venue are waived, and the jurisdiction of this court is conceded under 28 U.S.C.A. § 41 (28) et seq.
The question is whether the order, to the extent that it denies the requested conditions for want of power to impose them, is erroneous in law. Admittedly, we have power to annul or suspend an order of the Commission in whole or in part. 28 U.S.C.A. § 41 (28). The answer requires -- for reasons which follow -- a comparison of two sections of the Interstate Commerce Act.
Section 5, as amended in 1920, provided for the adoption of a general plan for the consolidation of the country's railroads into a limited number of systems and required, inter alia, the Commission's approval of any consolidation or lease of railroad facilities. Section 5(4) (b)
authorized the Commission, if it found that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed consolidation will be in harmony with and in furtherance of the adopted general plan and " will promote the public interest ", to give its approval, "upon the terms and conditions and with the modifications so found to be just and reasonable " (italics supplied). This section was rewritten in 1940
and there is no longer any requirement that particular transactions shall be in harmony with any general plan. Only the previous language is pertinent here, however, because of analogies arising out of its interpretation by the Supreme Court in United States v. Lowden, 308 U.S. 225, 60 S. Ct. 248, 84 L. Ed. 208.
The important difference in the language used by Congress in the respective sections is that in the abandonment section the Commission was and is authorized to issue the certificate if the public convenience and necessity permit, and to impose such terms and conditions as the public convenience and necessity require, whereas under the consolidation section the certificate issued only if the proposal was in harmony with the general plan of consolidations and would promote the public interest. Upon such a finding, the Commission might apply just and reasonable conditions. In neither section had there been any specific authorization to include in the required terms any provision for compensation to employees affected by the change in structure or operation of the railroad, but the Commission construed the Consolidation section as granting such authority and the abandonment section as denying it. Plaintiffs insist that the congressional language does not warrant this difference of construction.
In Chicago G.W.R. Co. Trackage, 207 I.C.C. 315, 321 (a proceeding under the abandonment section), the Commission said:
"It will be noted that the power to attach terms and conditions to certificates is restricted to such as may be required by the public convenience and necessity. In Wisconsin Telephone Co. v. Railroad Commission, 162 Wis. 383 [156 N.W. 614, L.R.A. 1916E, 748], 'Public convenience and necessity' was defined as 'a strong or urgent public need.' Public-Convenience Application of Uath Terminal Ry., 72 I.C.C. 89.
"In the present case the conditions sought [provisions for payment of wages, etc.] have no relation to the public convenience and necessity; they are offered for the purpose of maintaining a private benefit, the benefit of continued employment. From the standpoint of effect this case is similar to cases involving the abandonment of lines of railroad with resulting unemployment. We have consistently held that the effect of abandonment upon employment cannot be controlling in the disposition of such cases. To hold otherwise would place us in the position of attempting to insure employment to the personnel of carriers whether or not the affected employees were needed."
Then, referring to its earlier report in St. Paul Bridge & Terminal Railway Co. Control, 199 I.C.C. 588, a proceeding in consolidation, the Commission said: "The present proceeding differs from that one in that it is brought under the provisions of section 1(18-20). Our power to impose conditions is stated in different terms in the two sections. Whatever may be the extent of our right to attach conditions in section 5(4) proceedings we are of the view that under section 1(20) the terms and conditions we may attach must be such as in our judgment public convenience and necessity require. We may not properly borrow from section 5(4) and read into section 1(20) the power to impose such terms and conditions as we may find to be just and reasonable. Our sympathy for employees and full realization of the hardship that may and often does result to them in the administration of the abandonment and other provisions of section 1(18-20) do not enlarge our statutory power or enable us to attach any conditions except those required by public convenience and necessity."
In the St. Paul Bridge case, the Commission had said the term public interest as used in the consolidation section was broad enough to comprehend every public interest and the interest of every group or element of the public, and accordingly had held it applicable to the welfare of employees. And this view was adhered to and followed in Associated Railways, 228 I.C.C. 227, 335, 336, in Louisiana & Arkansas Railway Co., 230 I.C.C. 156, 164, in Chicago Rock Island & Gulf R. Co. Trustee's Lease, 230 I.C.C. 181, 186, 187, and again on rehearing, 233 I.C.C. 21. The order in the last mentioned case, to the extent that it imposed the conditions, was set aside by a three-judge District Court. Lowden v. United States, D.C., 29 F.Supp. 9. On appeal, the Supreme Court reversed. United States v. Lowden, 308 U.S. 225, 60 S. Ct. 248, 84 L. Ed. 208. Mr. Justice Stone, who wrote the opinion, upheld the exercise of power, not on the ground, relied on by the Commission, that the term was broad enough to include every public interest, including that of the employees, but on the narrower ground that the welfare of the dismissed employees was a part of the public interest in the adequacy of a public transportation system. Referring to New York Central Securities Corp. v. United States, 287 U.S. 12, 53 S. Ct. 45, 77 L. Ed. 138, and to Texas v. United States, 292 U.S. 522, 54 S. Ct. 819, 78 L. Ed. 1402, where it was held that public interest "is not a mere general reference to public welfare" but "has direct relation to adequacy of transportation service, to its essential conditions of economy and efficiency, and to appropriate provision and best use of transportation facilities" [ 308 U.S. 225, 60 S. Ct. 251, 84 L. Ed. 208], he said the single question is whether: "the granting or withholding of the protection afforded to the employees by the prescribed conditions can have no influence or effect upon the maintenance of an adequate and efficient transportation system which the statute recognizes as a matter of public concern."
Then holding that it had such relation, he said: "In the light of this record of practical experience and Congressional legislation [in relation to railway labor], we cannot say that the just and reasonable conditions imposed on appellees in this case will not promote the public interest in its statutory meaning by facilitating the national policy of railroad consolidation; that it will not tend to prevent interruption of interstate commerce through labor disputes growing out of labor grievances, or that it will not ...