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. 292 U. S.
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.
292 U. S.
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. 292 U. S.
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 the lessor's
incorporation in which such offices and shops are located. P.
292 U. S.
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. 292 U. S.
6. Section 11 of Title I of the Emergency Railroad
Transportation Act of 1933, providing that nothing in that Title
(which deals with
Page 292 U. S. 523
the authority of the Federal Coordinator 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 roundhouse 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.
292 U. S.
7. Title II of the Emergency Railroad Transportation Act,
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.
that the scope of the immunity is not limited to laws
of the same genus as antitrust legislation. P. 292 U. S.
6 F. Supp. 63 affirmed.
Appeal from a decree of the District Court, consisting of three
judges, which dismissed a bill brought by the Texas, and some of
its officers and municipalities, to annul an order of the
Interstate Commerce Commission.
Page 292 U. S. 524
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.
] The provision
Page 292 U. S. 525
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. [Footnote
Page 292 U. S. 526
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.
Page 292 U. S. 527
The portions of this segment in Arkansas are operated by the
applicant under a lease previously authorized by the Interstate
Commerce Commission. 105 I.C.C. 523. The portion of the northern
segment which lies in the State of Texas is approximately 31 miles
in length. The southern segment of the Texarkana & Fort Smith
Railway extends from the Louisiana-Texas state line at the Sabine
River to Port Arthur, Texas, and is approximately 50 miles in
length. Thus, the total main line mileage of the Texarkana &
Fort Smith Railway in Texas is 81 miles; there are about 18 miles
of branch lines. The portion of the railroad system lying between
the Arkansas-Louisiana state line and the Louisiana-Texas stated
line, approximately 228 miles, is owned by the Kansas City,
Shreveport & Gulf Railroad Company, a subsidiary of the
The Commission, on the first hearing, found that the
consummation of the plan presented by the applicant would result in
an annual saving, under normal conditions, of about $81,000. This
finding was repeated in the final report. The estimated saving
would result from the unification of operations, the discontinuance
of general offices of the Texarkana & Fort Smith Railway
Company at Texarkana, and the removal to Shreveport and Kansas City
of many of the activities at Texarkana which caused duplication of
work. Thus, under the proposed plan, the auditor's and treasurer's
departments of the Texarkana & Fort Smith Railway Company would
be transferred to the applicant's headquarters at Kansas City, with
an estimated annual saving of over $57,000. The offices of the
general freight agent, general passenger agent, superintendent, and
division engineer, and of the master mechanic at Port Arthur, would
be removed to Shreveport and consolidated with similar offices of
the applicant, at an estimated annual saving of over $21,000. There
would also be a decrease in expenses for various services in
connection with the building at Texarkana.
Page 292 U. S. 528
Shreveport, said the Commission, is considered to be more
centrally located from an operating standpoint than Texarkana, and
there are at that point the applicant's main terminal for the
southern territory, shops for heavy repairs, more industry, greater
population, and more railroad connections.
The Commission found that, for the four years 1928-1931, the
Texarkana & Fort Smith Railway Company handled an average of
993,622 tons of intrastate traffic and 3,405,944 tons of interstate
traffic. Of the average total of 4,399,566 tons, the applicant
participated in the handling of 3,192,554 tons. The net income of
the Taxarkana & Fort Smith Railway Company amounted to $441,922
in 1926, $204,052 in 1927, $437,270 in 1928, $598,172 in 1929, and
$95,655 in 1930. In 1931, there appears to have been no net income.
The Commission concluded that,
"in view of the volume of interstate traffic handled by the T.
& F.S. and the net income earned by that carrier, it is clear
that the expenditure of approximately $81,000 a year, which will be
unnecessary under the plan that the applicant proposes to put into
effect under the lease, constitutes an undue burden upon interstate
The Commission further found
"that the lease by the Kansas City Southern Railway Company of
the railroad and properties of the Texarkana & Fort Smith
Railway Company, located in Texas and elsewhere not now under
lease, in accordance with the proposed lease, will be in harmony
with and in furtherance of the plan for the consolidation of
railroad properties heretofore established by us, and will promote
the public interest."
The state of Texas raises no question as to the constitutional
power of the Congress to confer authority upon the Commission to
approve the proposed lease with the stipulations under
consideration. The question is simply as to the scope of the
authority which has been conferred
Page 292 U. S. 529
-- the construction of the applicable statutory provisions.
These are found in § 5 of the Interstate Commerce Act, as amended
by the Emergency Railroad Transportation Act 1933 (Title 2, §§ 201,
202). Paragraphs (4)(a) and (4)(b) of that section make it lawful,
with the approval and authorization of the Commission, for two or
more carriers to consolidate or merge their properties, "or for any
carrier . . . to purchase, lease, or contract to operate the
properties, or any part thereof, of another," or to acquire control
of another through purchase of its stock. On application to the
Commission for such approval, appropriate notice of public hearing
must be given to the Governor of each state in which any part of
the properties of the carriers involved in situated, as well as to
the carriers themselves. If, after hearing,
"the Commission finds that, subject to such terms and conditions
and such modifications as it shall find to be just and reasonable,
the proposed consolidation, merger, purchase, lease, operating
contract, or acquisition of control will be in harmony with and in
furtherance of the plan for the consolidation of railway properties
established pursuant to paragraph (3), and will promote the public
the Commission may give its approval and authorization
accordingly. [Footnote 3
Page 292 U. S. 530
These broadening provisions of the Emergency Railroad
Transportation Act 1933 confirm and carry forward the purpose which
led to the enactment of Transportation Act 1920 (Title 4, 41 Stat.
474 et seq.
). We found that Transportation Act 1920
introduced into the federal legislation a new railroad policy,
seeking to insure an adequate transportation service. To attain
that end, new rights, new obligations, new machinery, were created.
Railroad Commission of Wisconsin v. Chicago, B. & Q. R.
Co., 257 U. S. 563
257 U. S. 585
New England Divisions Case, 261 U.
, 261 U. S.
-190; Dayton-Goose Creek Ry. Co. v. United
States, 263 U. S. 456
263 U. S. 478
It is a primary aim of that policy to secure the avoidance of
waste. That avoidance, as well as the maintenance of service, is
viewed as a direct concern of the public. Davis v. Farmers'
Cooperative Equity Co., 262 U. S. 312
262 U. S. 317
Texas & Pacific Ry. Co. v. Gulf, C. & S.F. Ry.
Co., 270 U. S. 266
270 U. S. 277
The authority given to the Commission to authorize consolidations,
Page 292 U. S. 531
leases, operating contracts, and acquisition of control, was
given in aid of that policy. New York Central Securities Corp.
v. United States, 287 U. S. 12
287 U. S. 24
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. And that
term as used in the statute is not a mere general reference to
public welfare, but, as shown by the context and purpose of the
"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
New York Central Securities Corp. v. United States,
It is in the light of this criterion that we must consider the
scope of the Commission's authority in relation to provisions which
are intended to relieve interstate carriers from burdensome
outlays. The fact that burdensome expenditures may be required by
state regulations is not a barrier to their removal by dominant
federal authority in the protection of interstate commerce. As we
said in Colorado v. United States, 271 U.
, 271 U. S.
"Prejudice to interstate commerce may be effected in many ways.
One way is by excessive expenditures from the common fund in the
local interest, thereby lessening the ability of the carrier
properly to serve interstate commerce."
Even explicit charter provisions must yield to the paramount
regulatory power of the Congress. New York v. United
States, 257 U. S. 591
257 U. S. 601
Obligations assumed by the corporation under its charter of
providing intrastate service are subordinate to the performance by
it of its federal duty, also assumed, "efficiently to render
transportation services in interstate commerce." Colorado v.
United States, supra,
p. 271 U. S. 165
See Transit Commission v. United States, 284 U.
, 284 U. S.
-368; Transit Commission v. United States,
289 U. S. 121
289 U. S. 127
Florida v. United States,
Page 292 U. S. 532
p. 292 U. S. 1
. In the
present case, the findings of the Commission, setting forth
undisputed facts, leave no doubt that the provision of the lease
permitting the abandonment, or removal from the state, of general
offices and shops of the lessor has direct relation to economy and
efficiency in interstate operations and to the achievement of the
purpose which the Congress had in view in its grant of
Counsel for the United States and for the Interstate Commerce
Commission emphasize the limitations of the challenged provision.
They point out that, in addition to the customary "general offices"
of railroads, § 3 of Article X of the Constitution of Texas
provides that railroad corporations must
"maintain a public office or place in this state for the
transaction of its business, where transfers of stock shall be made
and where shall be kept for inspection by the stockholders of such
in which shall be recorded the amount of capital stock
subscribed, the names of stockholders, etc., and transfers, the
amount of its assets and liabilities, and the names and places of
residence of its officers. See also
Art. 4115, Texas
Revised Statutes 1879; Laws of Texas 1885, c. 68; Arts. 1358, 6281,
Revised Civil Statutes of Texas 1925. Counsel for the United States
and for the Interstate Commerce Commission urge that the
"Office-Shops Act" here involved was enacted independently of the
above statutes. Laws of Texas 1889, c. 106; Art. 6275, Revised
Civil Statutes of Texas 1925. Accordingly, they insist that the
order of the Commission and the lease in question apply to the
"general offices," shops, etc., and not to the "public office" of
the domestic corporation. Counsel for the applicant, the Kansas
City Southern Railway Company, submits that the lease, by necessary
implication, requires the Texarkana & Fort Smith Railway
Company to maintain its principal office
Page 292 U. S. 533
in Texas, as the Texas statute requires. See,
service of process, Art. 2029, Revised Civil Statutes of Texas
1925. In view of the disclaimer on behalf of the United States and
the Interstate Commerce Commission, and the interpretation placed
upon the provision in the lease, we assume that the question before
us merely relates to the abandonment or removal of "general
offices," shops, etc., as distinguished from the "public office"
required by the Texas statutes -- that is, to those transportation
facilities the continued maintenance of which, in the circumstances
described by the findings of the Commission, would entail
unnecessary and burdensome expenditures in operation. As thus
construed, we find no ground for concluding that the approval of
the provision in the lease was beyond the Commission's authority.
There is no interference with the supervision of the state over the
lessor in matters essentially of state concern, as distinguished
from the operations which in their effect upon interstate commerce
are of national concern.
The state invokes § 11 of Title 1 of the Emergency Railroad
Transportation Act, 1933, which provides that
"Nothing in this title shall be construed to relieve any carrier
from any contractual obligation which it may have assumed prior to
the enactment of this Act (June 16, 1933) with regard to the
location or maintenance of offices, shops, or roundhouses at any
But that section refers explicitly to what is contained in Title
I of the Act, with respect to "emergency powers," dealing with the
authority of the Federal Coordinator of Transportation and kindred
matters, and does not, by its terms, apply to the provisions of
Title II of the Act, in which are found the amendments of § 5 of
the Interstate Commerce Act with respect to the approval and
authorization by the Interstate Commerce Commission of
consolidations, purchases, and leases. And § 11 of Title I relates
to "contractual obligations" assumed by the carrier, and does not
aptly refer to obligations
Page 292 U. S. 534
imposed by statute. [Footnote
] The insertion of the provision in Title I, with its
restricted application, and the omission of a similar provision
from Title II, indicate an intentional distinction.
Title II of the Emergency Railroad Transportation Act 1933, in
amending § 5 of the Interstate Commerce Act, carries its own
provision as to immunity from state requirements which would stand
in the way of the execution of the policy of the Congress through
the Commission's orders. Subdivision (15) of § 5 as amended reads:
"The carriers and any corporation affected by any order made
under the foregoing provisions of this section shall be, and they
are hereby, relieved from the operation of the antitrust laws as
designated in § 1 of the Act entitled 'An Act to supplement
existing laws against unlawful restraints and monopolies, and for
other purposes,' approved October 15, 1914, 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 such order."
The view that, by reference to the context, this immunity should
be regarded as limited to those "restraints or prohibitions by or
imposed under authority of law" which fall within the general
description of "antitrust" legislation is too narrow. The rule of
" is applied as an aid in ascertaining the
intention of the Legislature, not to subvert it when ascertained.
Mid-Northern Oil Co. v. Walker, 268 U. S.
, 268 U. S. 49
The scope of the immunity must be measured by the purpose which
Congress had in view and had constitutional power to accomplish. As
that purpose involved the promotion of economy and efficiency in
interstate transportation by the
Page 292 U. S. 535
removal of the burdens of excessive expenditure, the removal of
such burdens when imposed by state requirements was an essential
part of the plan. The state urges that, in the course of the
passage of Transportation Act, 1920, a provision for federal
incorporation of railroads was struck out. But, while railroad
corporations were left under state charters, they were still
instrumentalities of interstate commerce, and, as such, were
subjected to the paramount federal obligation to render the
efficient and economical service required in the maintenance of an
adequate system of interstate transportation. Colorado v.
United States, supra.
The decision in International & Great Northern Ry. Co.
v. Anderson County, 246 U. S. 424
not opposed. Apart from the fact that, in that case, the state
court had found, upon the verdict of a jury, that the maintenance
of the offices and shops at the place at which the predecessor of
the plaintiff in error had contracted to maintain them did not
impose a burden upon interstate commerce -- a finding which this
Court found no reason to disturb (id.,
pp. 246 U. S.
-434) -- the case arose prior to the enactment of
Transportation Act 1920, and the question here presented was not
The decree dismissing the bill of complaint is affirmed.
"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, 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
"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,
local 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 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. . . ."
The full text of paragraphs (4)(a) and (4)(b) is as follows:
"(4)(a). It shall be lawful, with the approval and authorization
of the Commission, as provided in subdivision (b), for two or more
carriers to consolidate or merge their properties, or any part
thereof, into one corporation for the ownership, management, and
operation of the properties theretofore in separate ownership, or
for any carrier, or two or more carriers jointly, to purchase,
lease, or contract to operate the properties, or any part thereof,
of another; or for any carrier, or two or more carriers jointly, to
acquire control of another through purchase of its stock, or for a
corporation which is not a carrier to acquire control of two or
more carriers through ownership of their stock, or for a
corporation which is not a carrier and which has control of one or
more carriers to acquire control of another carrier through
ownership of its stock."
"(b) Whenever a consolidation, merger, purchase, lease,
operating contract, or acquisition of control is proposed under
subdivision (a), the carrier or carriers or corporation seeking
authority therefor shall present an application to the Commission,
and thereupon the Commission shall notify the Governor of each
state in which any part of the properties of the carriers involved
in the proposed transaction is situated, and also such carriers and
the applicant or applicants, of the time and place for a public
hearing. If, after such hearing, the Commission finds that, subject
to such terms and conditions and such modifications as it shall
find to be just and reasonable, the proposed consolidation, merger,
purchase, lease, operating contract, or acquisition of control will
be in harmony with and in furtherance of the plan for the
consolidation of railway properties established pursuant to
paragraph (3), and will promote the public interest, it may enter
an order approving and authorizing such consolidation, merger,
purchase, lease, operating contract, or acquisition of control upon
the terms and conditions and with the modifications so found to be
just and reasonable."
Cong.Rec.73d Cong.1st Sess. vol. 77, pt. 5, p.
subdivision (8) of § 5 of the Interstate
Commerce Act as amended by Transportation Act 1920.