TEXAS ET AL. v. UNITED STATES ET AL.

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF MISSOURI.

No. 920. Argued May 9, 1934-Decided June 4, 1934.

1. It is a primary aim in the new railroad policy inaugurated by the Transportation Act, 1920, to secure avoidance of waste; and the authority given to the Interstate Commerce Commission to permit consolidations, purchases, leases, etc., was given in aid of that policy. P. 530.

2. The criterion to be applied by the Commission in the exercise of its authority to approve such transactions-a criterion reaffirmed by the amendments of Emergency Railroad Transportation Act, 1933-is that of the controlling public interest. P. 531.

3. The term "public interest," as used in the statute, 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. P. 531.

4. Under § 5 of the Interstate Commerce Act, as amended by §§ 201 and 202 of Title II of the Emergency Railroad Transportation Act of 1933, the Interstate Commerce Commission has power to authorize a lease of one interstate railway to another permitting the lessee to abandon or remove general offices and shops of the lessor, the maintenance of which as found by the Commission would entail unnecessary and wasteful expenditures, even though such abandonment or removal be forbidden by the law of the State of the lessor's incorporation in which such offices and shops are located. P. 532.

5. By concession in this case, the lease and order do not affect the public" or principal office which the lessor is required to keep in Texas by the laws of that State, as distinguished from "general offices" required by the Texas "Office-Shops" Act; so that there can be no interference by the lease in question with the supervision of the State over the lessor company in matters essentially of state concern. P. 532.

6. Section 11 of Title I of the Emergency Railroad Transportation Act of 1933, providing that nothing in that Title (which deals with

the authority of the Federal Coördinator of Transportation and kindred matters) shall be construed to relieve any carrier from any contractual obligation which it may have assumed, prior to the enactment, with regard to the location or maintenance of its offices, shops, or roundhouses at any point, is not inconsistent with power in the Commission, when acting under § 5 of the Interstate Commerce Act, as amended by Title II of the Emergency Act, to relieve from like obligations imposed by state statute. P. 533. 7. Title II of the Emergency Railroad Transportation Act, supra, in amending § 5 (15) of the Interstate Commerce Act, relieves carriers from the operation of the antitrust laws and "of all other restraints or prohibitions by or imposed under authority of law, state or federal, insofar as may be necessary to enable them to do anything authorized or required by" any order under the foregoing provisions of that section. Held, that the scope of the immunity is not limited to laws of the same genus as antitrust legislation. P. 534.

6 F. Supp. 63, affirmed.

APPEAL from a decree of the District Court, consisting of three judges, which dismissed a bill brought by the State of Texas, and some of its officers and municipalities, to annul an order of the Interstate Commerce Commission.

Mr. A. R. Stout, Assistant Attorney General of Texas, with whom Mr. James V. Allred, Attorney General, Mr. Elbert Hooper, Assistant Attorney General, and Mr. Elmer L. Lincoln were on the brief, for appellants.

Assistant Attorney General Stephens, with whom Solicitor General Biggs and Messrs. Carl McFarland, Ashley Sellers, Daniel W. Knowlton, and E. M. Reidy were on the brief, for the United States and Interstate Commerce Commission, appellees.

Mr. Samuel W. Moore, with whom Messrs. Frank H. Moore and Cyrus Crane were on the brief, for the Kansas City Southern Ry. Co. et al., appellees.

Opinion of the Court.

292 U.S.

MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

The Interstate Commerce Commission, by its report and order of October 4, 1933, authorized the Kansas City Southern Railway Company, a corporation organized under the laws of Missouri, to acquire control by lease of the railroad and properties of the Texarkana & Fort Smith Railway Company, incorporated under the laws of Texas. 193 I.C.C. 521. In this suit, the State of Texas, and officers and municipalities of that State, assailed the order as transcending the authority granted to the Commission by the Congress. The order was sustained by the District Court, 6 F.Supp. 63, three judges sitting as required by statute, and from its decree this appeal is taken.

The single point in controversy is with respect to the authority of the Commission to approve the acquisition of control by a lease which permits the lessee to abandon, or to remove from the State, the general offices, shops, etc., of the lessor. The provision of § 5 of the lease, which has that effect, is set forth in the margin.1 The provi

166

"But the Southern Company (applicant) does not assume the performance of any corporate obligations on the part of the Texarkana Company independent of its obligations as a common carrier. The Southern Company does not assume any obligation to maintain, during the term of this lease, any general offices, machine shops or roundhouses for or belonging to the Texarkana Company at any particular place or places, regardless of present or previous locations thereof; but shall have the right to change any existing location of general offices, machine shops, roundhouses and terminal facilities, belonging to the Texarkana Company, and to relocate the same, and, from time to time, to change the same, during the full term of this lease, and shall have the right to make all such locations, changes and alterations as in the judgment of the Southern Company will enable it to operate the demised premises in the public interest and with the greatest economy and efficiency; and the Southern Company shall not be obligated or bound to perform any contractual,

sion is attacked as being in violation of the laws of Texas, which confine to Texas corporations the right to own or maintain any railways" within the State, which require every railroad company chartered by the State to "keep and maintain permanently its general offices within this State at the place named in its charter," and at that place also to maintain the offices of its principal officers, and which prohibit any railroad company from changing "the location of its general offices, machine shops, or roundhouses, save with the consent and approval of the Railroad Commission" of the State.2

statutory, or other obligations with reference to such matters which may now or hereafter rest upon the Texarkana Company; and any and all such changes may be made, from time to time, by the Southern Company as may be approved by the judgment of its officers or Board of Directors."

'These provisions of the Revised Civil Statutes of Texas, 1925, are as follows:

Art. 6260. "No corporation, except one chartered under the laws of Texas, shall be authorized or permitted to construct, build, operate, acquire, own or maintain any railways within State."

Art. 6275. "Every railroad company chartered by this State, or owning or operating any line of railway within this State, shall keep and maintain permanently its general offices within this State at the place named in its charter for the location of its general offices. If no certain place is named in its charter where its general offices shall be located and maintained, then said railroad company shall keep and maintain its general offices at such place within this State where it contracts or agrees to locate its general office for a valuable consideration."

Art. 6278. "Railroad companies shall keep and maintain at the place within this State where its general offices are located the office of its president, or vice-president, secretary, treasurer, loca treasurer, auditor, general freight agent, traffic manager, general manager, general superintendent, general passenger and ticket agent, chief engineer, superintendent of motive power and machinery, master mechanic, master of transportation, fuel agent, general claim agent; and each one of its general offices shall be so kept and

Opinion of the Court.

292 U.S.

The Interstate Commerce Commission was divided in opinion. Upon a prior hearing, the Commission approved the lease upon the condition that the paragraph in controversy should be eliminated. Report and order of December 27, 1932; 189 I.C.C. 253. Following the enactment of the Emergency Railroad Transportation Act, 1933 (Act of June 16, 1933, c. 91), the proceeding was reopened and, after hearing, the Commission modified its order by striking out the above-mentioned condition, thus approving and authorizing the lease with its provision, in § 5, as to offices and shops.

The findings of fact set forth in the Commission's report are not contested. The lines which constitute what is called the Kansas City Southern Railway system (embracing the portions covered by the proposed lease) extend from Kansas City, Missouri, to Port Arthur, Texas (over 800 miles). The line of the Kansas City Southern Railway Company, the applicant, extends from Kansas City, Missouri, to Mena, Arkansas. The line of the Texarkana & Fort Smith Railway Company is in two segments. The northern segment extends from Mena in a southerly direction, crosses, the Arkansas-Texas State line, and runs through Texarkana and thence southeasterly into Arkansas and to the Arkansas-Louisiana State line.

maintained by whatever name it is known, and the persons who perform the duties of said general offices, by whatever name known, shall keep and maintain their offices at the place where said general offices are required to be located and maintained; and the persons holding said general offices shall reside at the place and keep and maintain their offices at the place where said general offices are required by law to be kept and maintained. . . ."

Art. 6286. "No railroad company shall change the location of its general offices, machine shops or roundhouses, save with the consent and approval of the Railroad Commission of Texas, and this shall apply also to receivers and to purchasers of the franchises and properties of railroad companies and to new corporations formed by such purchasers or their assigns. . . .