1. The power of Congress to regulate interstate commerce is
subject to the guaranty of due process in the Fifth Amendment. P.
295 U. S.
347.
2. A railroad's assets, though dedicated to public use, remain
the private property of its owners, and cannot be taken without
just compensation. P.
295 U. S.
357.
3. There is no warrant for taking the property or money of one
interstate carrier and transferring it to another without
compensation, whether the object of the transfer be to build up the
transferee or to pension its employees. P.
295 U. S.
357.
4. A declaration in a statute that invalid provisions shall not
operate to destroy it entirely creates a presumption of
severability, but cannot empower the court to rewrite the statute
and give it an effect altogether different from that sought by the
measure viewed as a whole. P.
295 U. S.
361.
5. The Railroad Retirement Act of June 27, 1934, is
unconstitutional because it contains inseverable provisions that
violate the due process clause, and because it is not, in purpose
or effect, a regulation of interstate commerce within the meaning
of Art. I, § 8. Pp.
295 U. S. 347,
295 U. S.
362.
6. This Act purported to establish a compulsory retirement and
pension system for all interstate carriers by railroad. A fund, to
be deposited in the national treasury and administered by a
governmental Board, was to be created and kept up by enforced
contributions from all the carriers and their employees. The sums
payable by employees were to be percentages of their current
compensation, and the sums payable by each carrier double the total
payable by its employees. The Board was to determine
Page 295 U. S. 331
from time to time the percentage requisite to produce the
necessary funds; but, pending its action, the Act fixed each
employee's annual contribution at 2% of his compensation. The Act
was sought to be sustained as a measure to promote efficiency,
economy, and safety in the operations of interstate railroads.
That the Act violates the due process clause is shown by the
following considerations:
(1) All persons who were in carrier service within one year
prior to the passage of the Act (about 146,000) would be entitled
under it to pensions, whether reemployed or not. Among them would
be those who had been discharged for cause, or had been retired, or
had resigned to the other gainful employment, or whose positions
had been abolished, or whose employment was temporary. These person
were not in carrier service at the date of the Act, and it is
certain thousands of them never again will be. To place such a
burden upon the carriers is arbitrary in the last degree, and the
claim that such largess would promote efficiency or safety in the
future operation of the railroads is without rational support. P.
295 U. S.
348.
(2) If any one of the million or more living persons who left
the service more than a year before the date of the Act were
reemployed by any carrier at any time, for any period, and in any
capacity, his prior service would count, under the Act, in
computing the annuity payable upon his attaining 65 years of age.
This provision would impose vast future burdens never contemplated
by the earlier contracts of employment, and would take from the
railroads' future earnings to pay for services already fully
compensated; as to some of the railroads, it constitutes a naked
appropriation of private property upon the basis of transactions
with which the owners of the property were never connected. The
contention that economy, efficiency, or safety of operation would
be thereby increased is without rational basis. P.
295 U. S.
349.
(3) Upon attaining 65 years of age, any person who had been in
carrier service, however briefly, and even though he had been
discharged for speculation or gross negligence, would be entitled
to a pension. In thus substituting legislative largess for private
bounty, the Act, instead of improving the kind of "morale" among
the employees which works for efficiency, loyalty, and continuity
of service, would surely destroy it. P.
295 U. S.
351.
(4) Were the Act upheld, thousands of employees in the service
at its date would at once become entitled to annuities without
Page 295 U. S. 332
having contributed to the fund. This enormous exaction is
plainly irrelevant to efficiency and safety of operation. The claim
that it would prevent incompetent men being kept in service is a
bare assumption, without evidence to support it. P.
295 U. S.
352.
(5) The Act would allow any employee who had served 30 years to
retire on pension (reduced 1/15 for each year he lacked of 65),
without regard to his competency, and wholly at his own option.
This again adds to the carriers' burden without promoting economy,
efficiency, or safety of their operations. P.
295 U. S.
352.
(6) The Act would credit those who were in carrier employment at
the date of its passage with their past service without requiring
them to make corresponding contribution. There can be no
constitutional justification for thus arbitrarily imposing upon the
carriers vast additional liabilities in respect of transactions
which were long ago closed and fully paid for on a basis of cost to
which the carriers' rates and their fiscal affairs were adjusted.
P.
295 U. S.
353.
(7) The provision entitling representatives of employee
organizations to retire from carrier service and receive pensions
by paying in future amounts equal to the sum of the contributions
of an employee and of an employer is arbitrary and unreasonable. P.
295 U. S.
354.
(8) The scheme of pooling the contributions of all the carriers
and treating all as though there were one employer operates
unconstitutionally (a) by discrimination against carriers having
relatively few, if any, superannuated employees (p.
295 U. S.
355); (b) by requiring solvent carriers to contribute
for employees of the insolvent (p.
295 U. S.
356); (c) by forcing carriers to pay for past service of
employees of carriers no longer in existence (p.
id.), and
(d) by forcing them to insure repayment, to employees or their
estates, of the amounts of the employees' contributions (p.
id.).
(9) The provisions of the Act which disregard the private and
separate ownerships of the several carriers, treat all as a single
employer, and pool their assets regardless of their individual
obligations and of the varying conditions found in their respective
enterprises cannot be reconciled with due process of law. P.
295 U. S.
357.
That the Act is not a legitimate exercise of the power to
regulate interstate commerce results from the considerations
following:
(10) Its declared purposes to provide "adequately for the
satisfactory retirement of aged employees;" "to make possible
greater employment opportunity and more rapid advancement;" to
provide
"the greatest practicable amount of relief from unemployment
Page 295 U. S. 333
and the greatest possible use of resources available for said
purpose and for the payment of annuities for the relief of
superannuated employees,"
have obviously no reasonable relation to the business of
interstate transportation. P.
295 U. S.
362.
(11) As for the other declared purpose --
viz., to
promote efficiency and safety in interstate transportation -- it is
clear from overwhelming evidence and from the face of the Act that,
though the plan might bring about social benefits to employees, it
can have no relation to the promotion of efficiency, economy, or
safety by separating the unfit from the industry. P.
295 U. S.
363.
(12) The power of Congress to regulate interstate commerce at
the expense of the carriers cannot be extended to regulations
related merely to the social welfare of the worker upon the theory
that, by engendering contentment and a sense of personal security,
they will induce more efficient service. P.
295 U. S.
367.
(13) Safety Appliance Acts, Employers' Liability Acts, and
Workmen's Compensation Acts afford no precedent or justification
for the Act here in question, which seeks to attach to the relation
of employer and employee a new incident, without reference to any
existing obligation or legal liability, solely in the interest of
the employee, with no regard to the conduct of the business or its
safety or efficiency, but purely for social ends. P.
295 U. S.
368.
(14) Assuming that a pension system established voluntarily by a
carrier may, by exciting the loyalty of employees, promote
efficiency and continuity in service, it is palpable that this
attitude and those effects are destroyed when the pension becomes
an imposition planned by Congress and forced upon all employers in
favor of all employees, without regard to how long they have
served, or how long for any one employer. P.
295 U. S.
371.
(15) The fact that carriers, for their own purposes, have
adopted voluntary pension systems cannot extend the power to
regulate interstate commerce, and thus enable Congress to compel
all carriers to accept any pension system it devises. P.
295 U. S.
373.
Affirmed.
Certiorari, 293 U.S. 552, to review a decree of the Supreme
Court of the District of Columbia enjoining the Railroad Retirement
Board and its members from enforcing the Railroad Retirement Act.
When the writ issued, the case was pending on appeal in the United
States
Page 295 U. S. 334
Court of Appeals for the District. The writ was therefore
directed to that court.
Page 295 U. S. 344
MR. JUSTICE ROBERTS delivered the opinion of the Court.
The respondents, comprising 134 class I railroads, two express
companies, and the Pullman Company, brought this suit in the
Supreme Court of the District of Columbia, asserting the
unconstitutionality of the Railroad Retirement Act [
Footnote 1] and praying an injunction against
its enforcement. From a decree granting the relief sought, an
appeal was perfected to the Court of Appeals. Before hearing in
that tribunal, the petitioners applied for a writ of certiorari,
representing that no serious or difficult questions of fact were
involved and urging the importance of an early and final decision
of the controversy. In the exercise of power conferred by statute,
[
Footnote 2] we issued the
writ. [
Footnote 3]
The Act establishes a compulsory retirement and pension system
for all carriers subject to the Interstate Commerce Act. There is
provision for the creation of a fund to be deposited in the United
States Treasury (§§ 5, 8) and administered by a Board denominated
an independent agency in the executive branch of the government (§
9). The retirement fund for payment of these pensions and for the
expenses of administration of the system will arise from compulsory
contributions from present and future employees and the carriers.
The sums payable by the employees are to be percentages of their
current compensation, and those by each carrier double the total
payable by its employees. The Board is to determine from
Page 295 U. S. 345
time to time what percentage is required to provide the
necessary funds, but, until that body otherwise determines, the
employee contribution is to be 2% of compensation (§ 5). Out of
this fund, annuities are to be paid to beneficiaries.
The classes of persons eligible for such annuities are (1)
employees of any carrier on the date of passage of the Act; (2)
those who subsequently become employees of any carrier; (3) those
who, within one year prior to the date of enactment, were in the
service of any carrier. (§1(b)).
To every person in any of the three categories, an annuity
becomes payable (a) when he reaches the age of 65 years, whether
then in carrier service or not (§ 3); if still in such service, he
and his employer may agree that he shall remain for successive
periods of one year until he attains 70, at which time he must
retire (§ 4); (b) at the option of the employee at any time between
the ages of 51 and 65, if he has served a total of 30 years in the
employ of one or more carriers, whether continuously or not (§ 3; §
1(f)). The compulsory retirement provision is not applicable to
those in official positions until five years after the effective
date of the Act (§ 4).
The annuity is payable monthly (§ 1(d)). The amount is
ascertained by multiplying the number of years of service, not
exceeding 30, before as well as subsequent to the date the Act was
adopted, whether for a single carrier or a number of carriers, and
whether continuous or not, by graduated percentages of the
employee's average monthly compensation (excluding all over $300).
If one who has completed 30 years of service elects to retire
before attaining the age of 65 years, the annuity is reduced by
one-fifteenth for each year he lacks of that age, unless the
retirement is due to physical or mental disability (§ 3).
Upon the death of an employee, before or after retirement, his
estate is to be repaid all that he has contributed
Page 295 U. S. 346
to the fund, with 3% interest compounded annually, less any
annuity payments received by him (§ 3).
The Supreme Court of the District of Columbia declared the
establishment of such a system within the competence of Congress,
but thought several inseparable features of the Act transcended the
legislative power to regulate interstate commerce, and required a
holding that the law is unconstitutional in its entirety. Our duty,
like that of the court below, is fairly to construe the powers of
Congress and to ascertain whether or not the enactment falls within
them, uninfluenced by predilection for or against the policy
disclosed in the legislation. The fact that the compulsory scheme
is novel is, of course, no evidence of unconstitutionality. Even
should we consider the Act unwise and prejudicial to both public
and private interest, if it be fairly within delegated power, our
obligation is to sustain it. On the other hand, though we should
think the measure embodies a valuable social plan and be in entire
sympathy with its purpose and intended results, if the provisions
go beyond the boundaries of constitutional power, we must so
declare.
The admitted fact that many railroads have voluntarily adopted
pension plans does not aid materially in determining the authority
of Congress to compel conformance to the one embodied in the
Railroad Retirement Act, nor does the establishment of compulsory
retirement plans in European countries, to which petitioners refer,
for, in many of these, railroads are operated under government
ownership, and none has a constitutional system comparable to
ours.
The federal government is one of enumerated powers; those not
delegated to the United States by the Constitution, nor prohibited
by it to the States, are reserved to the States or to the people.
The Constitution is not a statute, but the supreme law of the land,
to which all
Page 295 U. S. 347
statutes must conform, and the powers conferred upon the federal
government are to be reasonably and fairly construed with a view to
effectuating their purposes. But recognition of this principle
cannot justify attempted exercise of a power clearly beyond the
true purpose of the grant. All agree that the pertinent provision
of the Constitution is Article 1, § 8, cl. 3, which confers power
on the Congress "to regulate Commerce . . . among the several
States, . . . " and that this power must be exercised in subjection
to the guarantee of due process of law found in the Fifth
Amendment. [
Footnote 4]
The petitioners assert that the questioned Act, fairly
considered, is a proper and necessary regulation of interstate
commerce; its various provisions have reasonable relation to the
main and controlling purposes of the enactment, the promotion of
efficiency, economy, and safety; consequently it falls within the
power conferred by the commerce clause, and does not offend the
principle of due process. The respondents insist that numerous
features of the Act contravene the due process guaranty, and
further that the requirement of pensions for employees of railroads
is not a regulation of interstate commerce within the meaning of
the Constitution. These conflicting views open two fields of
inquiry which to some extent overlap. [
Footnote 5] If we assume that, under the power to
Page 295 U. S. 348
regulate commerce between the States, Congress may require the
carriers to make some provision for retiring and pensioning their
employees, then the contention that various provisions of the Act
are arbitrary and unreasonable and bear no proper relation to that
end must be considered. If any are found which deprive the
railroads of their property without due process, we must determine
whether the remainder may nevertheless stand. Broadly, the record
presents the question whether a statutory requirement that retired
employees shall be paid pensions is regulation of commerce between
the States within Article 1, § 8.
1. We first consider the provisions affecting former employees.
The Act makes eligible for pensions all who were in carrier service
within one year prior to its passage, irrespective of any future
reemployment. About 146,000 persons fall within this class, which,
as found below, includes those who have been discharged for cause,
who have been retired, who have resigned to take other gainful
employment, who have been discharged because their positions were
abolished, who were temporarily employed, or who left the service
for other reasons. These persons were not in carrier service at the
date of the Act, and it is certain thousands of them never again
will be. The petitioners say the provision was inserted to assure
those on furlough, or temporarily relieved from duty subject to
call, the benefit of past years of service, in the event of
reemployment, and to prevent the carriers from escaping their just
obligations by omitting to recall these persons to service. And it
is said that to attempt nicely to adjust the provisions of the Act
to furloughed men
Page 295 U. S. 349
would involve difficulties of interpretation and inequalities of
operation which the blanket provision avoids. We cannot accept this
view. It is arbitrary in the last degree to place upon the carriers
the burden of gratuities to thousands who have been unfaithful, and
for that cause have been separated from the service, or who have
elected to pursue some other calling, or who have retired from the
business, or have been for other reasons lawfully dismissed. And
the claim that such largess will promote efficiency or safety in
the future operation of the railroads is without support in reason
or common sense.
In addition to the 146,000 who left the service during the year
preceding the passage of the Act, over 1,000,000 persons have been,
but are not now, in the employ of the carriers. The statute
provides that, if any of them is reemployed at any time, for any
period, however brief, and in any capacity, his prior service with
any carrier shall be reckoned in computing the annuity payable upon
his attaining 65 years of age. Such a person may have been out of
railroad work for years; his employment may have been terminated
for cause; he may have elected to enter some other industry, and
may have devoted the best years of his life to it; yet if,
perchance, some carrier in a distant part of the country should
accept him for work of any description, even temporarily, the Act
throws the burden of his pension on all the railroads, including,
it may be, the very one which for just cause dismissed him. Plainly
this requirement alters contractual rights; plainly it imposes for
the future a burden never contemplated by either party when the
earlier relation existed or when it was terminated. The statute
would take from the railroads' future earnings amounts to be paid
for services fully compensated when rendered in accordance with
contract, with no thought on the part of either employer or
employee that further sums must be provided by the carrier. The
Page 295 U. S. 350
provision is not only retroactive in that it resurrects for new
burdens transactions long since past and closed, but, as to some of
the railroad companies, it constitutes a naked appropriation of
private property upon the basis of transactions with which the
owners of the property were never connected. Thus, the Act denies
due process of law by taking the property of one and bestowing it
upon another. This onerous financial burden cannot be justified
upon the plea that it is in the interest of economy, or will
promote efficiency or safety. The petitioners say that one who is
taken back into service will no doubt render more loyal service,
since he will know he is to receive a bonus for earlier work. But
he will not attribute this benefaction to his employer. The
argument comes merely to the contentment and satisfaction theory
discussed elsewhere. The petitioners also argue that, if the
provision in question threatens an unreasonable burden, the
carriers have in their own control the means of avoidance, since no
carrier need employ any person who has heretofore been in the
railroad business. The position is untenable for several reasons. A
carrier may wish to employ one having experience who has been in
another's service. Must it forego the opportunity because to choose
the servant will impose a financial obligation arising out of an
earlier employment with some other railroad? Would that promote
efficiency and safety? The testimony shows that 22 percent of all
railway employees have had prior service on some railroad. Must a
carrier, at its peril, exercise, through dozens of employment
agencies scattered over a vast territory, an unheard of degree of
care to exclude all former railroad workers at the risk of
incurring the penalty of paying a pension for work long since
performed for some other employer? So to hold would be highly
unreasonable and arbitrary.
2. Several features of the Act touching those now or hereafter
in railroad employment are especially challenged by the
respondents.
Page 295 U. S. 351
No specified length of service is required for eligibility to
pension, though the amount of the annuity is proportionately
reduced if the total term of employment be less than 30 years. One
may take a position with a carrier at 20, remain until he is 30,
resign after gaining valuable skill and aptitude for his work,
enter a more lucrative profession, and, though never thereafter in
carrier employ, at 65 receive a pension calculated on his 10 years
of service. Or, after 10 years, he may be discharged for
speculation and still be entitled to the gratuity. Or he may be
relieved of duty for gross negligence, entailing loss of life or
property, and yet collect his pension at 65. May these results be
fairly denominated the indicia of reasonable regulating of
commerce? May they be cited in favor of this pension system as an
aid to economy, efficiency, or safety? We cannot so hold. The
petitioners' explanation of this feature of the Act is that no
"real assurance" of "old-age security" is possible "when pension
rights may be lost at any time by loss of employment;" that such a
provision is reasonable "because it improves the morale of the
employees while they are in the service." Assurance of security it
truly gives, but, quite as truly, if "morale" is intended to
connote efficiency, loyalty, and continuity of service, the surest
way to destroy it in any privately owned business is to substitute
legislative largess for private bounty, and thus transfer the drive
for pensions to the halls of Congress and transmute loyalty to
employer into gratitude to the legislature.
The Act assumes that, in fairness, both employer and employee
should contribute in fixed proportions to a liberal pension. But we
find that, in contradiction of this recognized principle, thousands
of those in the service at the date of the Act will at once become
entitled to annuities, though they will have contributed nothing to
the fund. The burden thus cast on the carriers is found to be for
the first year of administration over $9,000,000,
Page 295 U. S. 352
and, until the termination of payments to these annuitants, not
less than $78,000,000. All that has been said of the irrelevance of
the requirement of payments based upon services heretofore
terminated to any consideration of efficiency or safety applies
here with equal force. The petitioners say that the retention of
these men will be injurious and costly to the service. This view
assumes they will be retained for years, and are incompetent to do
what they are now doing. Evidence is lacking to support either
supposition. Next it is said "that they will receive from the fund
more than they will have contributed is not significant, for all
retired employees receive more than they contribute." This
attempted but futile justification is significant of the fault in
the feature sought to be supported.
One who has served a total of 30 years is entitled to retire on
pension at his election at whatever his then attained age. Thus,
many who are experienced and reliable may, at their own election,
deprive a carrier of their services, enter another gainful
occupation, cease to contribute to the fund, and go upon the
pension roll years before the fixed retirement age of 65. The
finding is that there are not less than 100,000 in the service of
the carriers between 51 and 65 years of age who have had 30 or more
years of service. The option is not extended to them to retire on
pension in order to improve transportation, for the choice is the
employee's, to be exercised solely on grounds personal to himself,
and the provisions cannot promote economy, for the retiring
workers' place will be filled by another who will receive the same
wage. The court below properly found that
"it is to the interest of the service of plaintiffs, and is to
the interest of the public, that those of such employees who are
competent and efficient be retained in carrier service for the
benefit of their skill and experience."
The petitioners say, "clearly the provision in question is not
arbitrary and unreasonable
Page 295 U. S. 353
so as to be unlawful;" but, in support of this statement, they
adduce only the following considerations: as the pension is reduced
one-fifteenth for each year the annuitant lacks of 65 at the date
of retirement, his separation, it is said, will impose no greater
burden on the fund than if he had waited until 65; the reduction in
the amount payable will discourage early retirement, and so tend to
counteract the loss of skilled workers; and, finally,
"the justification for this provision is that employees who have
completed thirty years of service may find it necessary, and it may
be in the interest of the industry, for them to retire before age
65."
We search in vain for any assertion that the feature under
discussion will promote economy, efficiency, or safety, and the
absence of any such claim is not surprising. The best that can be
said, it seems, is that the burden incident to the privilege of
early retirement will not be as heavy as others imposed by the
statute.
On June 27, 1934, when the Act was approved, there were
1,164,707 people in carrier employ. The Act, by conferring a
statutory right to a pension, based in part on past service, gave
the work theretofore performed by these persons a new quality.
Although completed and compensated in full in conformity with the
agreement of the parties, that work, done over a period of 30 years
past, is to be the basis for further compulsory payment. While, as
petitioners point out, the bounties are payable only in the future,
any continuance of the relation, however brief, subsequent to the
passage of the Act, matures a right which reaches back to the date
of original employment. And to the amount payable in virtue of all
these prior years' service, the employees contribute nothing. It is
no answer to say that, from the effective date of the law, they
will have to contribute from their wages half as much as do their
employers. The future accrues its own annuities. The finding,
accepted by the petitioners as veracious, is that the annuities
payable for service performed prior to June
Page 295 U. S. 354
27, 1934, would, in the year 1935, amount to $68,749,000, and
would increase yearly until 1953, in which year the portion of the
aggregate pension payments attributable to work antedating the
passage of the Act would be $137,435,000. These figures apply only
to pensions to those now employed, and exclude payments to those
who left the service during the year prior to the adoption of the
Act, and to those former employees who may hereafter be
reemployed.
This clearly arbitrary imposition of liability to pay again for
services long since rendered and fully compensated is not
permissible legislation. The court below held the provision
deprived the railroads of their property without due process, and
we agree with that conclusion. Here again, the petitioners insist
that the requirement is appropriate because, they say, it does not
demand additional pay for past services, but expenditure "for a
present and future benefit through improvement of the personnel of
the carriers." But the argument ends with mere statement. Moreover,
if it were correct in its assumption, which we shall presently show
it is not, nevertheless there can be no constitutional
justification for arbitrarily imposing millions of dollars of
additional liabilities upon the carriers in respect of transactions
long closed on a basis of cost with reference to which their rates
were made and their fiscal affairs adjusted.
The Act defines as an employee entitled to its benefits an
official or representative of an employee organization who, during
or following employment by a carrier, acts for such an organization
in behalf of employees. Such an one may retire and receive a
pension provided in future he pays an amount equal to the sum of
the contributions of an employee and of an employer. The
petitioners say the burden thus imposed is not great, but the
provision exhibits the same arbitrary and unreasonable features
Page 295 U. S. 355
as those heretofore discussed, and seems irrelevant to any
enhancement of safety or efficiency in transportation.
3. Certain general features of the system violate the Fifth
Amendment. Under the statutory plan, the draft upon the pension
fund will be at a given rate, while the contributions of individual
carriers to build up the fund will be at a disparate rate. This
results from the underlying theory of the Act, which is that all
the railroads shall be treated as a single employer. The report of
the Senate subcommittee announced: [
Footnote 6]
"It is agreed that all railroads which have been subjected to
the jurisdiction of Congress are to be treated together as one
employer. All persons in the service of the railroads are to be
regarded as employees of the one employer. . . . The old-age
pension or annuity is to be based upon the wages and the length of
service upon all railroads, with specified maximum limits."
The petitioners themselves showed at the trial that the probable
age of entry into service of typical carriers differs materially;
for one it is 28.4, for another 32.4, for a third 29.3, and for a
fourth 34.2. Naturally the age of a pensioner at date of employment
will affect the resultant burden upon the contributors to the fund.
The statute requires that all employees of age 70 must retire
immediately. It is found that 56 of the respondents have no
employees in that class. Nevertheless they must contribute toward
the pensions of such employees of other respondents nearly
$4,000,000 the first year and nearly $33,000,000 in the total. The
petitioners admit that these are the facts, but attempt to avoid
their force by the assertion that "the cost differentials which are
involved are negligible as compared with the total cost." This can
only mean that, in view of the enormous total cost to all
Page 295 U. S. 356
the railroads, the group thus discriminated against should not
complain of the disregard of their ownership of their own assets
because, in comparison with gross cost, the additional payments due
to the inequality mentioned are small.
The evidence shows that some respondents are solvent and others
not, a situation which often may recur. The petitioners concede
that the plan is intended to furnish assurance of payment of
pensions to employees of all the carriers, with the result that
solvent railroads must furnish the money necessary to meet the
demands of the system upon insolvent carriers, since the very
purpose of the Act is that the pension fund itself shall be kept
solvent and able to answer all the obligations placed upon it.
In recent years, many carriers subject to the Interstate
Commerce Act have gone out of existence. The petitioners admit that
the employees of these defunct carriers are treated upon exactly
the same basis as the servants of existing carriers. In other
words, past service for a carrier no longer existing is to be added
to any service hereafter rendered to an operating carrier in
computing a pension the whole burden of payment of which falls on
those carriers still functioning. And all the future employees of
any railroad which discontinues operation must be paid their
pensions by the surviving roads. Again the answer of the
petitioners is that the amount will be negligible. The fact that
millions of dollars are involved in other features of the Act will
not serve to obscure this violation of due process.
All the carriers must make good the contributions of all
employees, for § 3 directs that, upon the death of an employee, the
Board shall pay him from the fund what he has contributed to it
with 3% interest compounded annually, less any payments he has
received. The railroads are not only liable for their own
contributions but are, in a measure, made insurers of those of
Page 295 U. S. 357
the employees. This appears to be an unnecessarily harsh and
arbitrary imposition if the plan is to be what on its face it
imports -- a joint adventure with mutuality of obligation and
benefit.
This Court has repeatedly had occasion to say that the
railroads, though their property be dedicated to the public use,
remain the private property of their owners, and that their assets
may not be taken without just compensation. [
Footnote 7] The carriers have not ceased to be
privately operated and privately owned, however much subject to
regulation in the interest of interstate commerce. There is no
warrant for taking the property or money of one and transferring it
to another without compensation, whether the object of the transfer
be to build up the equipment of the transferee or to pension its
employees.
The petitioners insist that, since the adoption of the
Transportation Act 1920, and as the logical consequence of
decisions of this Court, we must recognize that Congress may deal
with railroad transportation as a whole, and regulate the carriers
generally and in classes with an eye to improvement and development
of railway service as a whole; that the interstate carriers use
common facilities, make through rates, and interact amongst
themselves in various ways, with the result that, where any link in
the chain lacks efficiency, the system as a whole is affected. The
argument is that, since the railroads and the public have a common
interest in the efficient performance of the whole transportation
chain, it is proper and necessary to require all carriers to
contribute to the cost of a plan designed to serve this end. It is
said that the pooling principle is desirable because there are many
small carriers whose employees are too few to justify maintenance
of a separate retirement plan for each. And, finally, the
Page 295 U. S. 358
claim is that, in fixing carrier contributions, any attempt to
give consideration to difference in age, classification, and
service periods of employees would involve grave administrative
difficulties and unduly increase the cost of administration. With
these considerations in view, the petitioners urge that our
decisions sanction the exercise of the power involved in the
pooling feature of the statute. They rely upon the
New England
Divisions Case, 261 U. S. 184.
That case, however, dealt purely with rates, and, while the policy
of awarding a larger share of the division of a joint rate to the
weaker carrier, in consideration of its need for revenue, was
approved, the approval was definitely conditioned upon the
circumstance that the share or division of the joint rate awarded
to the stronger carrier was not so low as to require it to serve
for an unreasonable rate. Thus, the principle that Congress has no
power to confiscate the property of one carrier for the benefit of
another was fully recognized.
Dayton-Goose Creek R. Co. v. United States,
263 U. S. 456,
approved the provision of the Transportation Act 1920 which
required the carriers to contribute one-half of their excess
earnings to a revolving fund to be used by the Interstate Commerce
Commission for making loans to carriers to meet capital
expenditures and to refund maturing obligations, or to purchase
equipment and facilities which might be leased to carriers. This
case is relied upon as sustaining the principle underlying the
Pension Act, but we think improperly. The provision was sustained
upon the ground that it must be so administered as to leave to each
carrier a reasonable return upon its property devoted to
transportation, and the holding is clear that, if this principle
were not observed in administration, the Act would invade
constitutional rights.
Atlantic Coast Line R. Co. v. Riverside Mills,
219 U. S. 186,
which the petitioners cite, is even wider of the mark. There, this
Court upheld the Carmack Amendment,
Page 295 U. S. 359
which made the initial carrier liable to the consignor for loss
of goods contracted to be delivered over connecting lines. The
legislation merely attached certain consequences to a given form of
contract. It was recognized that initial carriers in fact enter
into contracts for delivery of goods beyond their own lines and
make through or joint rates over independent lines. This being so,
it was held a proper exercise of the power of regulation to require
one so contracting to be liable in the first instance to the
shipper. So to regulate a recognized form of contract is not
offensive to the Fifth Amendment.
It is claimed that several other decisions confirm the legality
of the pooling principle when reasonably applied. For this
position, petitioners cite
Mountain Timber Co. v.
Washington, 243 U. S. 219;
Noble State Bank v. Haskell, 219 U.
S. 104, and
Thornton v. Duffy, 254 U.
S. 361. In the first of these, the Washington Workmen's
Compensation Act, which required employers in extra hazardous
employment to pay into a state fund certain premiums based upon the
percentage of estimated payroll of the workmen employed was under
attack. For the purpose of payments into the fund, accounts were to
be kept with each industry in accordance with a statutory
classification, and it was definitely provided that no class should
be liable for the depletion of the accident fund by reason of
accidents happening in any other class. The Act therefore clearly
recognized the difference in drain or burden on the fund arising
from different industries, and sought to equate the burden in
accordance with the risk. The challenge of the employers was that
the statute failed of equitable apportionment as between the
constituted classes. But no proof was furnished to that effect, and
this Court assumed that the classification was made in an effort at
fairness and equity as between classes. The Railroad Retirement
Act, on the contrary, makes no classification, but, as above
said,
Page 295 U. S. 360
treats all the carriers as a single employer, irrespective of
their several conditions.
In the second case, this Court upheld a statute which required
state banks to contribute a uniform percentage of their deposits to
a state guaranty fund established for the purpose of making good
losses to the depositors of banks which might become insolvent. The
Act was sustained upon the principle that an ulterior public
advantage may justify the taking of a comparatively insignificant
amount of private property for what, in its immediate purpose, is a
private use. It was further said that there may be cases other than
those of taxation in which the share of each party in the benefit
of a scheme of mutual protection is sufficient compensation for the
correlative burden which it is compelled to assume. These
considerations clearly distinguish that case from the one now under
discussion.
In the case last cited, it was asserted that the Workmen's
Compensation Act of Ohio unfairly discriminated because it allowed
employers in certain cases to pay directly to workmen or their
dependents the compensation provided by law in lieu of contributing
to the State fund established to secure such payments. This Court
held that the classification did not amount to a denial of due
process.
We conclude that the provisions of the Act which disregard the
private and separate ownership of the several respondents, treat
them all as a single employer, and pool all their assets,
regardless of their individual obligations and the varying
conditions found in their respective enterprises, cannot be
justified as consistent with due process.
The Act is said to be unconstitutional because unreasonably and
unconscionably burdensome and oppressive upon the respondents, and
we are referred to a finding of the court below to which
petitioners do not assign error.
Page 295 U. S. 361
The facts as found are: based upon present payrolls, the
carriers' contributions for the first year will aggregate not less
than $60,000,000; at the rates fixed in the Act, total employee and
carrier contributions will, on the basis of present pay rolls, be
approximately $90,000,000 per year; unless the amount of the
contributions is increased by the Board, the drain on the fund for
payment of pensions will result in a deficit of over $11,000,000 by
the year 1942. To keep the fund in operation, it will be necessary
for the Board to increase the percentages of contributions named in
the Act. The petitioners' actuary testified that, in the tenth year
of operation, the payments from the fund will be upwards of
$137,000,000. The railroads' total contribution to pensions on
account of prior service of employees in service at the date of the
Act may amount to $2,943,966,000. We are not prepared to hold that,
if the law were in other respects within the legislative
competence, the enormous cost involved in its administration would
invalidate it, but the recited facts at least emphasize the
burdensome and perhaps destructive effect of the contraventions of
the due process of law clause which we find exist. Moreover, they
exhibit the inconsistency of the petitioners' position that the law
is necessary because, in times of depression, the voluntary systems
of the carriers are threatened by loss of revenue. It is difficult
to perceive how the vast increase in pension expense entailed by
the statute will, without provision of additional revenue, relieve
the difficulty experienced by some railroads in meeting the demands
of the plans now in force.
4. What has been said sufficiently indicates our agreement with
the holding of the trial court respecting the disregard of due
process exhibited by a number of the provisions of the Act. We also
concur in that court's views concerning the inseverability of
certain of them. The statute contains a section broadly declaring
the intent that invalid provisions shall not operate to destroy
Page 295 U. S. 362
the law as a whole. [
Footnote
8] Such a declaration provides a rule which may aid in
determining the legislative intent, but is not an inexorable
command.
Dorchy v. Kansas, 264 U.
S. 286. It has the effect of reversing the presumption
which would otherwise be indulged, of an intent that, unless the
Act operates as an entirety, it shall be wholly ineffective.
Williams v. Standard Oil Co., 278 U.
S. 235,
278 U. S. 242;
Utah Power & Light Co. v. Pfost, 286 U.
S. 165,
286 U. S. 184.
But, notwithstanding the presumption in favor of divisibility which
arises from the legislative declaration, we cannot rewrite a
statute and give it an effect altogether different from that sought
by the measure viewed as a whole.
Compare Hill v. Wallace,
259 U. S. 44,
259 U. S. 70. In
this view, we are confirmed by the petitioners' argument that, as
to some of the features we hold unenforceable, it is "unthinkable"
and "impossible" that the Congress would have created the
compulsory pension system without them. They so affect the dominant
aim of the whole statute as to carry it down with them.
5. It results from what has now been said that the Act is
invalid because several of its inseparable provisions contravene
the due process of law clause of the Fifth Amendment. We are of
opinion that it is also bad for another reason which goes to the
heart of the law, even if it could survive the loss of the
unconstitutional features which we have discussed. The Act is not,
in purpose or effect, a regulation of interstate commerce within
the meaning of the Constitution.
Several purposes are expressed in § 2(a), of the Act, amongst
them: to provide "adequately for the satisfactory retirement of
aged employees;" "to make possible greater
Page 295 U. S. 363
employment opportunity and more rapid advancement;" to provide
by the administration and construction of the Act
"the greatest practicable amount of relief from unemployment and
the greatest possible use of resources available for said purpose
and for the payment of annuities for the relief of superannuated
employees."
The respondents assert, and the petitioners admit, that though
these may in and of themselves be laudable objects, they have no
reasonable relation to the business of interstate transportation.
The clause, however, states a further purpose, the promotion of
"efficiency and safety in interstate transportation," and the
respondents concede that an Act the provisions of which show that
it actually is directed to the attainment of such a purpose falls
within the regulatory power conferred upon the Congress; but they
contend that here, the provisions of the statute emphasize the
necessary conclusion that the plan is conceived solely for the
promotion of the stated purposes other than efficient and safe
operation of the railroads. The petitioners' view is that this is
the true and only purpose of the enactment, and the other objects
stated are collateral to it, and may be disregarded if the law is
found apt for the promotion of this legitimate purpose.
From what has already been said with respect to sundry features
of the statutory scheme, it must be evident that petitioners' view
is that safety and efficiency are promoted by two claimed results
of the plan -- the abolition of excessive superannuation and the
improvement of morale.
The parties are at odds respecting the existing superannuation
of railway employees. Petitioners say it is much greater than that
found in the heavy industries. Respondents assert it is less, and
the court below so found. The finding is challenged as being
contrary to the evidence. We may, for present purposes, assume that
"superannuation," as petitioners use the term --
i.e.,
the
Page 295 U. S. 364
attainment of 65 years, is as great or greater in the railroad
industry than in comparable employments. It does not follow, as
contended, that the man of that age is inefficient or incompetent.
The facts indicate a contrary conclusion. Petitioners say the
seniority rules and the laying off of younger men first in reducing
forces necessarily tend to keep an undue proportion of older men in
the service. They say this tendency has long been marked in the
railroad industry, and has been most noticeable in recent years of
depression, when forces have been greatly reduced. But what are the
uncontradicted facts as to efficiency and safety of operation?
Incontrovertible statistics obtained from the records of the
Interstate Commerce Commission show a steady increase in safety of
operation, during this period of alleged increasing superannuation.
[
Footnote 9]
Page 295 U. S. 365
Indeed, one of the petitioners, and one of their most important
witnesses, has written, referring to railroads:
"Experience seems to have proved, moreover, that older workers
cause fewer accidents than do younger; hence there is little
necessity for removing them on that ground. [
Footnote 10]"
There is overwhelming evidence in the record to the same effect.
All that petitioners offer on the subject in their brief is:
"In an industry having as many hazardous
Page 295 U. S. 366
occupations as the railway industry, improvement in personnel
conditions is likely to mean increased safety."
We think it not unfair to say that the claim for promotion of
safety is virtually abandoned.
How stands the case for efficiency? Here again, the record,
without contradiction, demonstrates that, in step with the alleged
progressive superannuation on the railroads, their operations have
increased in efficiency. [
Footnote 11] The trial court found, and its finding is
not assigned as error:
"Railroads were, when the Act was enacted, and are now, operated
efficiently and safely, and more efficiently and much more safely
than at any time in history."
Lastly, the petitioners suggest that diminution of
superannuation promotes economy, because younger and lower paid men
will replace the retired older men. But the argument is based upon
inadvertent disregard of the wage structure of the carriers,
especially in the train and engine service, whereby contract
compensation is based not on age, but upon the nature of the duties
performed. The replacement of one by another who is to do the same
work will therefore beget no saving in wages.
When to these considerations is added that, as heretofore said,
the Act disregards fitness to work, pensions the worker who
retires, at his option, before any suggested superannuation,
irrespective of skill or ability, pensions those who are presently
compelled by the law to retire, irrespective of their fitness to
labor, and grants annuities to those who are discharged for
dishonesty or gross carelessness,
Page 295 U. S. 367
it becomes perfectly clear that, though the plan may bring about
the social benefits mentioned in § 2(a), it has and can have no
relation to the promotion of efficiency, economy, or safety by
separating the unfit from the industry. If these ends demand the
elimination of aged employees, their retirement from the service
would suffice to accomplish the object. For these purposes, the
prescription of a pension for those dropped from service is wholly
irrelevant. The petitioners, conscious of the truth of this
statement, endeavor to avoid its force by the argument that social
and humanitarian considerations demand the support of the retired
employee. They assert that it would be unthinkable to retire a man
without pension, and add that attempted separation of retirement
and pensions is unreal in any practical sense, since it would be
impossible to require carriers to cast old workers aside without
means of support. The supposed impossibility arises from a failure
to distinguish constitutional power from social desirability. The
relation of retirement to safety and efficiency is distinct from
the relation of a pension to the same ends, and the two
relationships are not to be confused.
In final analysis, the petitioners' sole reliance is the thesis
that efficiency depends upon morale, and morale, in turn, upon
assurance of security for the worker's old-age. Thus, pensions are
sought to be related to efficiency of transportation, and brought
within the commerce power. In supporting the Act, the petitioners
constantly recur to such phrases as "old-age security," "assurance
of old-age security," "improvement of employee morale and
efficiency through providing definite assurance of old-age
security," "assurance of old-age support," "mind at ease," and
"fear of old-age dependency." These expressions are frequently
connected with assertions that the removal of the fear of old-age
dependency will tend to create a better morale throughout the ranks
of employees.
Page 295 U. S. 368
The theory is that one who has an assurance against future
dependency will do his work more cheerfully, and therefore more
efficiently. The question at once presents itself whether the
fostering of a contented mind on the part of an employee by
legislation of this type is, in any just sense, a regulation of
interstate transportation. If that question be answered in the
affirmative, obviously there is no limit to the field of so-called
regulation. The catalogue of means and actions which might be
imposed upon an employer in any business, tending to the
satisfaction and comfort of his employees, seems endless. Provision
for free medical attendance and nursing, for clothing, for food,
for housing, for the education of children, and a hundred other
matters, might with equal propriety be proposed as tending to
relieve the employee of mental strain and worry. Can it fairly be
said that the power of Congress to regulate interstate commerce
extends to the prescription of any or all of these things? Is it
not apparent that they are really and essentially related solely to
the social welfare of the worker, and therefore remote from any
regulation of commerce, as such? We think the answer is plain.
These matters obviously lie outside the orbit of congressional
power. The answer of the petitioners is that not all such means of
promoting contentment have such a close relation to interstate
commerce as pensions. This is, in truth, no answer, for we must
deal with the principle involved, and not the means adopted. If
contentment of the employee were an object for the attainment of
which the regulatory power could be exerted, the courts could not
question the wisdom of methods adopted for its advancement.
No support for a plan which pensions those who have retired from
the service of the railroads can be drawn from the decisions of
this Court sustaining measures touching the relations of employer
and employee in the carrier field in the interest of a more
efficient system of transportation.
Page 295 U. S. 369
The Safety Appliance Acts, the Employers' Liability Acts, hours
of service laws, and others of analogous character, cited in
support of this Act, have a direct and intimate connection with the
actual operation of the railroads. No less inapposite are the
statutes which deal with exchange of facilities, joint facilities,
joint rates, etc. For these have an obvious and direct bearing on
the obligations of public service incident to the calling of the
railroads. The railway labor act was upheld by this Court upon the
express ground that to facilitate the amicable settlement of
disputes which threatened the service of the necessary agencies of
interstate transportation tended to prevent interruptions of
service, and was therefore within the delegated power of
regulation. It was pointed out that the Act did not interfere with
the normal right of the carrier to select its employees or
discharge them.
Texas & New Orleans R. Co. v. Railway
Clerks, 281 U. S. 548,
281 U. S.
570-571. The legislation considered in
Wilson v.
New, 243 U. S. 332, was
drafted to meet a particular exigency, and its validity depended
upon circumstances so unusual that this Court's decision respecting
it cannot be considered a precedent here.
Stress is laid upon the supposed analogy between workmen's
compensation laws and the challenged statute. It is said that,
while Congress has not adopted a compulsory and exclusive system of
workmen's compensation applicable to interstate carriers, no one
doubts the power so to do, and the Retirement Act cannot, in
principle, be distinguished. The contention overlooks fundamental
differences. Every carrier owes to its employees certain duties,
the disregard of which render it liable at common law in an action
sounding in tort. Each state has developed or adopted, as part of
its jurisprudence, rules as to the employer's liability in
particular circumstances. These are not the same in all the states.
In the absence of a rule applicable to all engaged in interstate
transportation,
Page 295 U. S. 370
the right of recovery for injury or death of an employee may
vary depending upon the applicable state law. That Congress may,
under the commerce power, prescribe an uniform rule of liability
and a remedy uniformly available to all those so engaged is not
open to doubt. The considerations upon which we have sustained
compulsory workmen's compensation laws passed by the States in the
sphere where their jurisdiction is exclusive apply with equal force
in any sphere wherein Congress has been granted paramount
authority. Such authority it may assert whenever its exercise is
appropriate to the purpose of the grant. A case in point is the
Longshoremen's and Harbor Workers' Compensation Act, passed
pursuant to the delegation of admiralty jurisdiction to the United
States. Modern industry, and this is particularly true of
railroads, involves instrumentalities, tasks, and dangers unknown
when the doctrines of the common law as to negligence were
developing. The resultant injuries to employees, impossible of
prevention by the utmost care, may well demand new and different
redress from that afforded in the past. In dealing with the
situation, it is permissible to substitute a new remedy for the
common law right of action; to deprive the employer of common law
defenses and substitute a fixed and reasonable compensation
commuted the degree of injury; to replace uncertainty and
protracted litigation with certainty and celerity of payment; to
eliminate waste, and to make the rule of compensation uniform
throughout the field of interstate transportation, in contrast with
inconsistent local systems. By the very certainty that compensation
must be paid for every injury, such legislation promotes and
encourages precaution on the part of the employer against accident,
and tends to make transportation safer and more efficient. The
power to prescribe an uniform rule for the transportation industry
throughout
Page 295 U. S. 371
the country justifies the modification of common law rules by
the Safety Appliance Acts and the Employers' Liability Acts
applicable to interstate carriers, and would serve to sustain
compensation acts of a broader scope, like those in force in many
states. The collateral fact that such a law may produce contentment
among employees, an object which, as a separate and independent
matter, is wholly beyond the power of Congress, would not, of
course, render the legislation unconstitutional. It is beside the
point that compensation would have to be paid despite the fact that
the carrier has performed its contract with its employee and has
paid the agreed wages. Liability in tort is imposed without regard
to such considerations, and, in view of the risks of modern
industry, the substituted liability for compensation likewise
disregards them. Workmen's compensation laws deal with existing
rights and liabilities by readjusting old benefits and burdens
incident to the relation of employer and employee. Before their
adoption, the employer was bound to provide a fund to answer the
lawful claims of his employees; the change is merely in the
required disbursement of that fund in consequence of the
recognition that the industry should compensate for injuries
occurring with or without fault. The Act with which we are
concerned seeks to attach to the relation of employer and employee
a new incident, without reference to any existing obligation or
legal liability, solely in the interest of the employee, with no
regard to the conduct of the business or its safety or efficiency,
but purely for social ends.
The petitioners, in support of their argument as to morale, rely
upon the voluntary systems adopted in past years by almost all the
carriers, and now in operation. The argument runs that these
voluntary plans were adopted in the industry for two principal
reasons; the creation of loyalty, and the encouragement of
continuity
Page 295 U. S. 372
in service. The petitioners quote from a statement by the
National Industrial Conference Board the following:
"More specifically, the efficiency of the individual workers is
stimulated by the feeling of security and hopefulness that results
when the individual is relieved of the fear of destitution and
dependency in old age and by the sentiment of loyalty and goodwill
fostered by the pension plan, which thus operates as a spur to the
ambition of the worker and incites him to more intensive and
sustained effort. Similarly, the efficiency of the organization as
a whole is increased by the improvement of industrial relations,
the development of a cooperative spirit, and the promotion of
constancy and continuity of employment."
They assert that the Railroad Retirement Act,
"although it embodies the first compulsory retirement and
pension plan enacted in this country, is but the development of
voluntary plans which have been in use in this country,
particularly among the railroads, for more than a third of a
century."
The argument is self-contradictory. If, as is conceded, the
purpose of the voluntary establishment of pensions is to create
loyalty to the employer who establishes them and continuity in his
service, it seems axiomatic that the removal of the voluntary
character of the pension and the imposition of it in such form as
Congress may determine, upon all employers, and irrespective of
length of service, or of service for the same employer, will
eliminate all sense of loyalty or gratitude to the employer and
remove every incentive to continuance in the service of a single
carrier. In fact, the petitioners so admit, for they say in their
brief:
"That the benefits which respondents expected to derive from
their voluntary pension plans (said to be (1) greater continuity of
service and (2) improved employee loyalty) differ from those
emphasized in the Retirement Act does not affect the Act's
validity, so long as it is calculated in other ways to promote
efficiency and safety. "
Page 295 U. S. 373
We are left to surmise what these "other ways" may be unless
they are the contentment and assurance of security so much stressed
in the argument. The petitioners, in effect, say: the carriers with
certain objects and purposes have adopted voluntary systems; this
proves that pensions are germane to the railroad business; Congress
may legislate on any subject germane to interstate transportation;
therefore, Congress may for any reason or with any motive impose
any type of pension plan. The contention comes very near to this:
that whatever some carriers choose to do voluntarily in the
management of their business at once invests Congress with the
power to compel all carriers to do. The fallacy is obvious. The
meaning of the commerce and due process clauses of the Constitution
is not so easily enlarged by the voluntary acts of individuals or
corporations.
Counsel for the petitioners admit that "it may well be"
voluntary plans are intended to promote efficiency and safety by
"inducing loyalty and continuity," and "it could also be true that
these means were ignored in the Retirement Act." They add:
"Congress has deliberately chosen the means of providing old-age
security for all railroad employees, measured by years of service,
but not dependent upon continuity of service with any particular
carrier, as is required under the existing railway pension systems.
If it were true, as claimed, that the Act will not encourage
continuity of service and will remove the incentives for employee
loyalty to employer, it has other virtues, as has been indicated --
for example, it provides greater assurance to employees of old-age
security than has been the case under the carriers' pension plans,
and is likely to be productive of efficiency through improvement of
employee morale."
Certainly the argument is inconsistent with any thought that a
plan imposed by statute requiring the
Page 295 U. S. 374
payment of a pension will promote the same loyalty and
continuity of service which were the ends and objects of the
voluntary plans. It is going far to say, as petitioners do, that
Congress chose the more progressive method "already tried in the
laboratory of industrial experience," which they claim has been
approved and recommended by those qualified to speak. In support of
the assertion, however, they cite general works dealing with
voluntary pension plans, and not with any such compulsory system as
that with which we are concerned. We think it cannot be denied,
and, indeed, is in effect admitted, that the sole reliance of the
petitioners is upon the theory that contentment and assurance of
security are the major purposes of the Act. We cannot agree that
these ends, if dictated by statute, and not voluntarily extended by
the employer, encourage loyalty and continuity of service. We feel
bound to hold that a pension plan thus imposed is in no proper
sense a regulation of the Activity of interstate transportation. It
is an attempt for social ends to impose by sheer fiat
noncontractual incidents upon the relation of employer and employee
not as a rule or regulation of commerce and transportation between
the States, but as a means of assuring a particular class of
employees against old-age dependency. This is neither a necessary
nor an appropriate rule or regulation affecting the due fulfillment
of the railroads' duty to serve the public in interstate
transportation.
The judgment of the Supreme Court of the District of Columbia
is
Affirmed.
[
Footnote 1]
Act June 27, 1934, c. 868, 48 Stat. 1283.
[
Footnote 2]
U.S.C. Tit. 28, § 347(a).
[
Footnote 3]
293 U.S. 552.
[
Footnote 4]
See Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 196-197;
Monongahela Navigation Co. v. United States, 148 U.
S. 312,
148 U. S. 336;
Lottery Case, 188 U. S. 321,
188 U. S.
362-363;
United States v. Chicago, M., St. P. &
P. R. Co., 282 U. S. 311,
282 U. S.
327.
[
Footnote 5]
When the question is whether the Congress has properly exercised
a granted power, the inquiry is whether the means adopted bear any
reasonable relation to the ostensible exertion of the power.
Mugler v. Kansas, 123 U. S. 623,
123 U. S. 661;
Hammer v. Dagenhart, 247 U. S. 251,
247 U. S. 276;
Bailey v. Drexel Furniture Co., 259 U. S.
20,
259 U. S. 37.
When the question is whether legislative action transcends the
limits of due process guaranteed by the Fifth Amendment, decision
is guided by the principle that the law shall not be unreasonable,
arbitrary, or capricious, and that the means selected shall have a
real and substantial relation to the object sought to be attained.
Nebbia v. New York, 291 U. S. 502,
291 U. S.
525.
[
Footnote 6]
Cong.Rec. vol. 78, p. 5699.
[
Footnote 7]
Interstate Commerce Commission v. Oregon-Washington R.
Co., 288 U. S. 14,
288 U. S. 40,
and cases cited.
[
Footnote 8]
"Sec. 14. If any provision of this Act, or the application
thereof to any person or circumstances, is held invalid, the
remainder of the Act or application of such provision to other
persons or circumstances shall not be affected thereby."
[
Footnote 9]
Tables included in the record are as follows:
Year:
1905, 1 passenger killed for each 1,376,000 carried.
1910, 1 passenger killed for each 3,000,000 carried.
1915, 1 passenger killed for each 4,954,000 carried.
1920, 1 passenger killed for each 5,673,000 carried.
1925, 1 passenger killed for each 5,237,000 carried.
1930, 1 passenger killed for each 11,658,000 carried.
1932, 1 passenger killed for each 17,921,000 carried.
Decrease in frequency, 77%.
------------------------------------------------------
Total Frt. Frequency
Psgr. and Total Train Per
Year Motor Train Accidents Million
Miles Train Miles
(Thousands)
------------------------------------------------------
1923 . . . . . . 1,207,714 27,497 22.77
1924 . . . . . . 1,171,812 22,368 19.09
1925 . . . . . . 1,187,731 20,785 17.50
1926 . . . . . . 1,211,617 21,077 17.39
1927 . . . . . . 1,184,455 18,976 16.02
1928 . . . . . . 1,169,442 16,949 14.49
1929 . . . . . . 1,178,585 17,185 14.58
1930 . . . . . . 1,082,306 12,313 11.38
1931 . . . . . . 951,220 8,052 8.46
1932 . . . . . . 813,091 5,770 7.09
------------------------------------------------------
Decrease in frequency, 69%.
------------------------------------------------------------------
Total
Total man- casualty
hours worked Total employees killed and injured rate all
Year by all em- ---------------------------------- employees
ployees Killed Injured Total per million
(thousands) man-hours
------------------------------------------------------------------
1923 4,856,964 1,866 148,146 150,012 30.89
1924 4,473,186 1,403 120,912 122,315 27.34
1925 4,448,377 1,460 114,639 116,099 26.10
1926 4,557,537 1,528 107,218 108,746 23.86
1927 4,406,627 1,427 83,883 85,310 19.36
1928 4,191,065 1,187 66,744 67,931 16.21
1929 4,225,292 1,302 57,164 58,466 13.84
1930 3,641,412 898 33,184 34,082 9.36
1931 2,930,657 621 21,417 22,038 7.52
1932 2,286,561 532 16,359 16,891 7.39
------------------------------------------------------------------
Decrease in frequency, 76%
--------------------------------------------------------------
Total
Man-hours Casualty
worked by Number Number Total Rate per
Year Trainmen Trainmen Trainmen Trainmen's Million
(Thousands) Killed Injured Casualties Man-hours
--------------------------------------------------------------
1923 915,084 896 35,342 36,238 39.60
1924 829,533 628 28,438 29,066 35.04
1925 831,682 691 28,297 28,989 34.86
1926 858,598 691 29,864 30,555 35.59
1927 812,853 639 24,462 25,101 30.88
1928 776,184 501 20,943 21,444 27.63
1929 785,504 587 19,116 19,703 24.96
1930 673,208 423 11,771 12,194 18.11
1931 546,277 292 8,259 8,551 15.65
1932 431,083 265 6,318 6,583 15.27
--------------------------------------------------------------
Decrease in frequency, 61%.
[
Footnote 10]
Latimer, Industrial Pension Systems, Vol. II, 724.
[
Footnote 11]
Thus, it appears that the average speed of freight trains
between terminals in 1928 was 10.9 miles per hour, in 1929, was
13.2 miles per hour, and in 1933, was 15.7 miles per hour.
Excluding weight of locomotive and tender, each freight train hour
in 1923 produced 16,764 gross ton-miles; in 1929, produced 24,539
gross ton-miles, and in 1933, produced 27,343 gross ton-miles, and
net ton-miles per freight train hour increased 41.2% from 1923 to
1933, and 3.7% from 1929 to 1933. Cost of transportation is also
shown to have decreased in the same periods.
THE CHIEF JUSTICE, dissenting.
I am unable to concur in the decision of this case. The gravest
aspect of the decision is that it does not rest simply upon a
condemnation of particular features of the Railroad Retirement Act,
but denies to Congress the power to pass any compulsory pension act
for railroad
Page 295 U. S. 375
employees. If the opinion were limited to the particular
provisions of the Act, which the majority find to be objectionable
and not severable, the Congress would be free to overcome the
objections by a new statute. Classes of persons held to be
improperly brought within the range of the Act could be eliminated.
Criticisms of the basis of payments, of the conditions prescribed
for the receipt of benefits, and of the requirements of
contributions could be met. Even in place of a unitary retirement
system, another sort of plan could be worked out. What was thus
found to be inconsistent with the requirements of due process could
be excised and other provisions substituted. But, after discussing
these matters, the majority finally raise a barrier against all
legislative action of this nature by declaring that the subject
matter itself lies beyond the reach of the congressional authority
to regulate interstate commerce. In that view, no matter how
suitably limited a pension act for railroad employees might be with
respect to the persons to be benefited, or how appropriate the
measure of retirement allowances, or how sound actuarialy the plan,
or how well adjusted the burden, still, under this decision,
Congress would not be at liberty to enact such a measure. That is a
conclusion of such serious and far-reaching importance that it
overshadows all other questions raised by the Act. Indeed, it makes
their discussion superfluous. The final objection goes, as the
opinion states, "to the heart of the law, even if it could survive
the loss of the unconstitutional features" which the opinion
perceives. I think that the conclusion thus reached is a departure
from sound principles, and places an unwarranted limitation upon
the commerce clause of the Constitution.
First. In defining the power vested in Congress to
regulate interstate commerce, we invariably refer to the classic
statement of Chief Justice Marshall. It is the power "to prescribe
the rule by which commerce is to be governed."
Page 295 U. S. 376
The power "is complete in itself, may be exercised to its utmost
extent, and acknowledges no limitations, other than are prescribed
in the constitution."
Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 196. It
is a power to enact "all appropriate legislation for the protection
or advancement" of interstate commerce.
The Daniel
Ball, 10 Wall. 557,
77 U. S. 564.
"To regulate," we said in the
Second Employers' Liability
Cases, 223 U. S. 1,
223 U. S. 47,
"in the sense intended is to foster, protect, control, and
restrain, with appropriate regard for the welfare of those who are
immediately concerned and of the public at large."
And the exercise of the power thus broadly defined has had the
widest range in dealing with railroads, which are engaged as common
carriers in interstate transportation. As their service is vital to
the nation, nothing which has a real or substantial relation to the
suitable maintenance of that service, or to the discharge of the
responsibilities which inhere in it, can be regarded as beyond the
power of regulation.
The Shreveport Case, 234 U.
S. 342,
234 U. S. 351;
Dayton-Goose Creek Ry. Co. v. United States, 263 U.
S. 456,
263 U. S. 478;
Colorado v. United States, 271 U.
S. 153,
271 U. S.
163-164;
New York Central Securities Corp. v. United
States, 287 U. S. 12,
287 U. S.
24-25.
It was inevitable that, with the development of the
transportation system of the country, requiring a vast number of
employees, there should have been a growing appreciation of the
importance of conditions of employment. It could not be denied that
the sovereign power to govern interstate carriers extends to the
regulation of their relations with their employees who likewise are
engaged in interstate commerce. The scope of this sort of
regulation has been extensive. There has been not only the
paramount consideration of safety, but also the recognition of the
fact that fair treatment in other respects aids in conserving the
peace and good order which are essential to the maintenance of the
service without disastrous interruptions, and in promoting the
efficiency which inevitably
Page 295 U. S. 377
suffers from a failure to meet the reasonable demands of
justice. An absolute duty to furnish safety appliances has been
imposed, restrictions of hours of continuous service have been
prescribed, standards of a day's work have been established for
work and wages, the liability of carriers for injuries to employees
has been regulated by the abrogation of the fellow servant rule and
the limitation of defenses as to contributory negligence and
assumption of risk, and provisions have been enacted to facilitate
the amicable settlement of disputes and to protect employees in
their freedom to organize for the purpose of safeguarding their
interests.
St. Louis, I.M. & S. R. Co. v. Taylor,
210 U. S. 281;
Baltimore & Ohio R. Co. v. Interstate Commerce Comm'n,
221 U. S. 612;
Wilson v. New, 243 U. S. 332;
Texas & New Orleans R. Co. v. Railway Clerks,
281 U. S. 548.
The argument that a pension measure, however sound and
reasonable as such, is
per se outside the pale of the
regulation of interstate carriers because such a plan could not
possibly have a reasonable relation to the ends which Congress is
entitled to serve is largely answered by the practice of the
carriers themselves. Following precedents long established in
Europe, certain railroad companies in the United States set up
voluntary pension systems many years ago. It appears that the first
of these was established in 1884, another was adopted in 1900. By
1910, formal pension plans covered 50% of all railroad employees,
and, by 1927, over 82%. In establishing these plans, the carriers
were not contemplating the payment of a largess unrelated to
legitimate transportation ends. Their witnesses say the carriers
aimed at loyalty and continuity of service. However limited their
motives, they acted upon business principles. Pension plans were
not deemed to be essentially foreign to the proper conduct of their
enterprises. But if retirement or pension plans are not
per
se unrelated to the government
Page 295 U. S. 378
of transportation operations, Congress could consider such
plans, examine their utility, and reach its own conclusions. If the
subject matter was open to consideration, Congress was not limited
to the particular motives which inspired the plans of the
carriers.
The government stresses the importance of facilitating the
retirement of superannuated employees. The argument points to the
conclusions of expert students as given in the testimony below, and
to the reports of investigating committees and boards of leading
business organizations. "Employees' Retirement Annuities," Chamber
of Commerce of the United States, 1932, pp. 7, 8; "Elements of
Industrial Pension Plans," National Industrial Conference Board,
1931, pp. 8, 10. Mr. Eastman, the Federal Coordinator of
Transportation, in his affidavit on the hearing below, expressed
the view that there was excessive superannuation among railroad
employees. He says:
"This excessive superannuation is detrimental to railroad
service in several ways. Men who have grown old in the service
decline in efficiency. The carrier pays in wages an amount out of
proportion to the service rendered. These conditions exist upon the
railroads at the present time. There is now a large body of
superannuated employees in the railroad service who, for the good
of the service, ought to be retired. Pension systems of one sort or
another have been in existence in the railroad industry for as long
as 50 years. The need for them was recognized by the more
progressive carriers at an early date. In late years, particularly,
with the voluntary systems in danger, the matter of retirement and
pensions has been a crucial issue in railroad employment.
Withdrawal or extensive curtailment of existing pensions in the
railroad industry would impair the morale of railroad employees and
play havoc with railroad labor relations. It would, in addition,
increase the existing excessive superannuation among railroad
employees and block the employment and promotion of younger men.
"
Page 295 U. S. 379
The carriers deny that there is excessive superannuation. They
assert that the removal of older employees has no reasonable
relation to either safety or efficiency. The opinion of the Court
enters this field of controversy, reviews statistics as to the
increase of safety and efficiency in operation during the period of
the alleged increasing superannuation, and supports the finding
that railroads are now operated more efficiently and safely than at
any time in history. But that gratifying fact does not establish
that further improvement is not needed or obtainable, or that a
sound pension plan would not be of considerable benefit to the
carriers' operations. At best, the question as to the extent of
superannuation, and its effect, is a debatable one, and hence one
upon which Congress was entitled to form a legislative judgment. As
we said in
Radice v. New York, 264 U.
S. 292,
264 U. S.
294:
"Where the constitutional validity of a statute depends upon the
existence of facts, courts must be cautious about reaching a
conclusion respecting them contrary to that reached by the
legislature, and if the question of what the facts establish be a
fairly debatable one, it is not permissible for the judge to set up
his opinion in respect of it against the opinion of the
lawmaker."
See Stephenson v. Binford, 287 U.
S. 251,
287 U. S.
272.
Laying that question on one side, I think that it is clear that
the morale of railroad employees has an important bearing upon the
efficiency of the transportation service, and that a reasonable
pension plan, by its assurance of security, is an appropriate means
to that end. Nor should such a plan be removed from the reach of
constitutional power by classing it with a variety of conceivable
benefits which have no such close and substantial relation to the
terms and conditions of employment. The appropriate relation of the
exercise of constitutional power to the legitimate objects of that
power is always a subject of judicial scrutiny. With approximately
82% of
Page 295 U. S. 380
railroad employees, 90% of those employed in cable, telephone,
and telegraph companies, and about one-half of those in the service
of electric railways, light, heat, and power companies under formal
pension plans, [
Footnote 2/1] with
the extensive recognition by national, state and local governments
of the benefit of retirement and pension systems for public
employees in the interest of both efficiency and economy, [
Footnote 2/2] it is evident that there is a
widespread conviction that the assurance of security through a
pension plan for retired employees is closely and substantially
related to the proper conduct of business enterprises.
But, with respect to the carriers' plans, we are told that as
they were framed in the desire to promote loyalty and continuity of
service in the employment of particular carriers, the accruing
advantages were due to the fact that the plans were of a voluntary
character. In short, that the reaction of the employees would be
simply one of gratitude for an act of grace. I find no adequate
basis for a conclusion that the advantages of a pension plan can be
only such as the carriers contemplated or that the benefit which
may accrue to the service from a sense of security on the part of
employees should be disregarded. In that aspect, it would be the
fact that protection was assured, and not the motive in supplying
it, which would produce the desired result. That benefit would not
be lost because the sense of security was fostered by a pension
plan enforced as an act of justice. Indeed, voluntary plans may
have the defect of being voluntary, of being subject to curtailment
or withdrawal at will. And the danger of such curtailment or
abandonment, with the consequent frustration of the hopes of a vast
number of railroad workers and its effect upon labor relations in
this enterprise of
Page 295 U. S. 381
outstanding national importance, might well be considered as an
additional reason for the adoption of a compulsory plan.
Wilson
v. New, supra, pp.
243 U. S.
347-348. There was also testimony (by Mr. Eastman) that
"the experience with the voluntary pension systems has been
unsatisfactory," that "the depression brought clearly to light
their many weaknesses and uncertainties."
The argument in relation to voluntary plans discloses the
fundamental contention on the question of constitutional authority.
In substance, it is that the relation of the carriers and their
employees is the subject of contract; that the contract prescribes
the work and the compensation, and that a compulsory pension plan
is an attempt for social ends to impose upon the relation
noncontractual incidents in order to insure to employees protection
in their old age. And this is said to lie outside the power of
Congress in the government of interstate commerce. Congress may,
indeed, it seems to be assumed, compel the elimination of aged
employees. A retirement act for that purpose might be passed. But
not a pension act. The government's power is conceived to be
limited to a requirement that the railroads dismiss their
superannuated employees, throwing them out helpless, without any
reasonable provision for their protection.
The argument pays insufficient attention to the responsibilities
which inhere in the carriers' enterprise. Those responsibilities,
growing out of their relation to their employees, cannot be
regarded as confined to the contractual engagement. The range of
existing federal regulation of interstate carriers affords many
illustrations of the imposition upon the employer-employee relation
of noncontractual incidents for social ends. A close analogy to the
provision of a pension plan is suggested by the familiar examples
of compensation acts. The power of Congress to pass a compensation
act to govern interstate carriers and their employees engaged in
interstate
Page 295 U. S. 382
commerce does not seem to be questioned. The carriers might thus
be compelled to provide appropriate compensation for injuries or
death of employees, although caused without fault on the carriers'
part. A thorough examination of the question of constitutional
authority to adopt such a compulsory measure was made some years
ago by a commission constituted under a Joint Resolution of
Congress, of which Senator Sutherland (now MR. JUSTICE SUTHERLAND)
was chairman. [
Footnote 2/3] 36
Stat. 884. Its elaborate and unanimous report, transmitted to
Congress by President Taft with his complete approval, considered
the constitutional question in all aspects, upheld the
congressional power, and proposed its exercise. Sen.Doc. No. 338,
62d Cong.2d Sess. Among the principles announced was that:
"If the proposed legislation effectuates any constitutional
power, it is not rendered unconstitutional because to a greater or
less extent it may accomplish or tend to accomplish some other
result which, as a separate and independent matter, would be wholly
beyond the power of Congress to deal with."
Id., p. 26. The legislation was deemed to be a
regulation of interstate commerce because, among other specified
things, of its effect on the state of mind of the employee. On this
point, the commission said:
"By insuring to every employee engaged in interstate commerce
definite compensation in case of his injury, and to his widow and
children, or other dependents, in case of his death, irrespective
of fault, the mind of the employee will, to a great extent, be
relieved from anxiety for the future and he will be able to render
better and more efficient, and consequently safer, service."
Id., p. 28. The commission explicitly pointed out that
the legislation which it recommended was not based
Page 295 U. S. 383
on any wrong or neglect of the carrier, "but upon the fact of
injury resulting from accident in the course of the employment" --
that is, that accidents should be regarded "as risks of the
industry."
Id., p. 15. The circumstance that such a
compensation measure has not been enacted by Congress is readily
attributable to questions of policy, rather than to any doubt of
constitutional power.
The effort to dispose of the analogy serves only to make it the
more impressive. Compensation acts are said to be a response to the
demands which inhere in the development of industry, requiring new
measures for the protection of employees. But pension measures are
a similar response. If Congress may supply a uniform rule in the
one case, why not in the other? If affording certainty of
protection is deemed to be an aid to efficiency, why should that
consideration be ruled out with respect to retirement allowances
and be admitted to support compensation allowances for accidents
which happen in the absence of fault? Compensation acts do not
simply readjust old burdens and benefits. They add new ones,
outside and beyond former burdens and benefits, and thus in truth
add a new incident to the relation of employer and employee.
When we go to the heart of the subject, we find that
compensation and pension measures for employees rest upon similar
basic considerations. In the case of compensation acts, the carrier
has performed its contract with the employee, has paid the agreed
wages, has done its best to protect the employee from injury, is
guilty of no neglect, but yet is made liable for compensation for
injury or for death which ends the possibility of future service
because, in the development of modern enterprises in which
accidents are inevitable, it has come to be recognized that the
industry itself should bear its attendant risks.
New York
Central R. Co. v. White, 243 U. S. 188;
Mountain Timber Co. v. Washington, 243 U.
S. 219. An
Page 295 U. S. 384
attempted distinction as to pension measures for employees
retired by reason of age, because old age is not, in itself, a
consequence of employment, is but superficial. The common judgment
takes note of the fact that the retirement of workers by reason of
incapacity due to advancing years is an incident of employment, and
that a fair consideration of their plight justifies retirement
allowances as a feature of the service to which they have long been
devoted. This is recognized as especially fitting in the case of
large industrial enterprises, and of municipal undertakings such as
police and fire protection, where there are stable conditions of
employment in which workers normally continue so long as they are
able to give service, and should be retired when efficiency is
impaired by age. What sound distinction, from a constitutional
standpoint, is there between compelling reasonable compensation for
those injured without any fault of the employer and requiring a
fair allowance for those who practically give their lives to the
service and are incapacitated by the wear and tear of time, the
attrition of the years? I perceive no constitutional ground upon
which the one can be upheld and the other condemned.
The fundamental consideration which supports this type of
legislation is that industry should take care of its human wastage,
whether that is due to accident or age. That view cannot be
dismissed as arbitrary or capricious. It is a reasoned conviction
based upon abundant experience. The expression of that conviction
in law is regulation. When expressed in the government of
interstate carriers, with respect to their employees likewise
engaged in interstate commerce, it is a regulation of that
commerce. As such, so far as the subject matter is concerned, the
commerce clause should be held applicable.
Second. With this opinion as to the validity of a
pension measure if it is reasonably conceived, we are brought to
the question of due process -- whether the particular
provisions
Page 295 U. S. 385
of the retirement act now before us violate the requirement of
due process which, under the Fifth Amendment, limits the exercise
of the commerce power.
The most serious of the objections, sustained by the Court on
this score, relates to the establishment of a unitary or pooling
system for all railroads. It is said that in this respect the plan
disregards the private and separate ownership of the respective
carriers, treating them as a single employer, and illustrations are
given to show that unequal burdens are thus imposed.
The objection encounters previous decisions of this Court. We
have sustained a unitary or group system under state compensation
acts against the argument under the due process clause of the
Fourteenth Amendment.
Mountain Timber Co. v. Washington,
supra. The Washington compensation act established a state
fund for the compensation of workmen injured in hazardous
employment, and the fund was maintained by compulsory contributions
from employers in such industries. While classes of industries were
established, each class was made liable for the accidents occurring
in that class. The Court described the law as so operating that
"the enforced contributions of the employer are to be made
whether injuries have befallen his own employees or not; so that,
however prudently one may manage his business, even to the point of
immunity to his employees from accidental injury or death, he
nevertheless is required to make periodical contributions to a fund
for making compensation to the injured employees of his perhaps
negligent competitors."
Id., pp.
243 U. S.
236-237. The statute was sustained in the view that its
provisions did not rest upon the wrong or neglect of employers, but
upon the responsibility which was deemed to attach to those who
conducted such industries. The Court concluded
"that the State acted within its power in declaring that no
employer should conduct such an industry without making
Page 295 U. S. 386
stated and fairly apportioned contributions adequate to maintain
a public fund for indemnifying injured employees and the dependents
of those killed, irrespective of the particular plant in which the
accident might happen to occur."
Id., p.
243 U. S. 244.
We followed the reasoning which had led to the upholding of state
laws imposing assessments on state banks generally in order to
create a guaranty fund to make good the losses of deposits in
insolvent banks.
Noble State Bank v. Haskell, 219 U.
S. 104.
See Abie State Bank v. Weaver,
282 U. S. 765.
But, aside from these analogies, this Court has directly
sustained the grouping of railroads for the purpose of regulation
in enforcing a common policy deemed to be essential to an adequate
national system of transportation, even though it resulted in
taking earnings of a strong road to help a weak one. This was the
effect of the recapture clause of Transportation Act, 1920, which
required carriers to contribute their earnings in excess of a
certain amount in order to provide a fund to be used by the
Interstate Commerce Commission in making loans to other carriers.
Dayton-Goose Creek Ry. Co. v. United States, 263 U.
S. 456. A distinction is sought to be made because the
carriers, which were required to contribute, were permitted to
retain a reasonable return upon their property. But what the strong
roads were compelled to contribute were their own earnings
resulting from just and reasonable rates -- earnings which they
were as clearly entitled to retain for their own benefit as the
moneys which, in the present instance, are to be devoted to
retirement allowances. The fact that the recapture provisions
failed of their purpose and have been abandoned does not disturb
the decision as to constitutional power. The principle that was
applied had been made clear in the
New England Divisions
Case, 261 U. S. 184.
Transportation Act, 1920, had introduced into the federal
legislation a new railroad policy. To attain its purpose,
"new rights
Page 295 U. S. 387
new obligations, new machinery, were created. . . . To preserve
for the nation substantially the whole transportation system was
deemed important. . . . The existence of the varying needs of the
several lines and of their widely varying earning power was fully
realized."
To attain the object,
"two new devices were adopted: the group system of ratemaking
and the division of joint rates in the public interest. Through the
former, weak roads were to be helped by recapture from prosperous
competitors of surplus revenues. Through the latter, the weak were
to be helped by preventing needed revenue from passing to
prosperous connections. Thus, by marshaling the revenues, partly
through capital account, it was planned to distribute augmented
earnings, largely in proportion to the carrier's needs."
Id., pp.
261 U. S.
189-191.
This object of adequately maintaining the whole transportation
system may be served in more than these two ways. The underlying
principle is that Congress has the power to treat the
transportation system of the country as a unit for the purpose of
regulation in the public interest, so long as particular railroad
properties are not subjected to confiscation. In the light of that
principle, and of applications which have been held valid, I am
unable to see that the establishment of a unitary system of
retirement allowances for employees is beyond constitutional
authority. Congress was entitled to weigh the advantages of such a
system, as against inequalities which it would inevitably produce,
and reach a conclusion as to the policy best suited to the needs of
the country.
See Atlantic Coast Line R. Co. v. Riverside
Mills, 219 U. S. 186,
219 U. S. 203;
Railroad Commission v. Southern Pacific Co., 264 U.
S. 331,
264 U. S.
343-344.
Third. Questions are raised as to the classes of
persons to be benefited. In considering these objections, we should
have regard to the explicit provision of the Act as to
severability. It states that, if "any provision," "or the
Page 295 U. S. 388
application thereof to any person or circumstances," is held
invalid, "the remainder of the Act or application of such provision
to other persons or circumstances shall not be affected." This, of
course, does not permit us to rewrite the statute, but it does
allow the excision of invalid provisions, or inclusions, which can
be severed without destroying its structure.
(1) The court below held the Act to be invalid in the view that
its provisions were extended to persons not engaged in interstate
commerce. In the special findings, classes of persons were listed,
numbering 211, 107, which were thought to fall within that
description. It is manifest that the list was prepared under a
misapprehension of the extent of the authority of Congress with
respect to employees of interstate carriers and of the application
of the decision in the first
Employers' Liability Cases,
207 U. S. 463.
Large numbers of employees were thus deemed to be improperly
included whose work, while not immediately connected with the
movement of traffic, did have such relation to the activities of
the carriers in interstate commerce as to bring them within the
range of congressional power. Thus, the list embraced general
officers and their staffs who were not in the operating departments
connected with transportation, employees who dealt with the receipt
and disbursement of moneys, some 86,493 employees in the
maintenance of equipment departments, who were engaged in the
reconstruction or major repair of equipment, withdrawn for that
purpose from service, such as locomotives, cars, platform trucks,
frogs, switches, etc., as distinguished from light or running
repairs, and 36,996 employees whose duties lay in auditing,
accounting, and bookkeeping. It should be observed that the
decisions under the Second Employers' Liability Act of 1908 with
respect to the necessity of the employee being engaged at the time
of his injury in interstate transportation or in work so closely
related to transportation as to
Page 295 U. S. 389
be a part of it are based upon the limitations of that statute,
and do not define the scope of constitutional authority as to
employees of interstate carriers.
Illinois Central R. Co. v.
Behrens, 233 U. S. 473,
233 U. S. 477;
Chicago & Northwestern Ry. Co. v. Bolle, 284 U. S.
74,
284 U. S.
78.
Interstate carriers cannot conduct their interstate operations
without general officers and their staffs, without departments for
major repairs and those for administering finances and keeping
accounts. General management is as important to the interstate
commerce of the carriers as is the immediate supervision of
traffic, and the proper maintenance of equipment and the handling
of moneys and the keeping of books are as necessary as the loading
and moving of cars. In the administration of the Act, there would
be ample opportunity to make all necessary distinctions between
employees engaged in interstate commerce and any others who might
be found to be otherwise exclusively employed, so as to exclude the
latter from its benefits without impairing the general operation of
the Act.
(2) A more serious objection relates to the eligibility for
allowances of all those who were in the service within one year
prior to the enactment, although they may never be reemployed. Such
persons may have been discharged for cause; in any event, for one
reason or another, they had left the service, and may not
return.
I agree with the conclusion that the requirement that the
carriers shall pay retiring allowances to such persons is
arbitrary, and beyond the power of Congress. But I think it clear
that the provision for their benefit is within the clause as to
severability. That application of the Act may be condemned, and
such persons may be excluded from benefits without destroying the
measure as a whole.
Fourth. Other questions relate to the details of the
pension plan -- principally with respect to the basis of the
retirement allowances and the method of their computation.
Page 295 U. S. 390
With the excision of those whose employment was terminated
before the Act was passed, the plan would cover those in carrier
service at that time and those subsequently employed. Retirement is
compulsory at the age of 65, but the service may be extended by
agreement for successive periods of one year each until the age of
70. An employee may retire upon completing 30 years of service,
but, in such case, provision is made for reducing the annuity by
one-fifteenth for each year below the age of 65. Annuities are
calculated by applying graduated percentages of the employee's
average monthly compensation (excluding all over $300) to the
number of years of his service, not exceeding 30. The maximum
annuity thus payable would be $1,440, and, to receive that amount,
it would be necessary for the employee to have been in service 30
years and to have attained the age of 65, and to have been paid an
average monthly compensation of $300. Contributions to the pension
fund are to be made by employees of a certain percentage of their
compensation and the contribution of each carrier is to be twice
that of its employees.
An examination of pension plans in operation reveals a variety
of possible methods, and Congress was entitled to make its choice.
As a basis for the allowance, Congress could select either age or
length of service or both. In the selection of any age, or any
period of service, anomalies would inevitably occur in particular
applications. Extreme illustrations can always be given of the
application of regulations which require the drawing of a line with
respect to age, time, distances, weights, sizes, etc. To deny the
right to select such criteria, or to make scientific precision a
criterion of constitutional authority, would be to make impossible
the practical exercise of power.
Compare Sproles v.
Binford, 286 U. S. 374,
286 U. S.
388-389;
Stanley v. Public Utilities Commission of
Maine, 295 U. S. 76.
Whatever may be said of the capacity of many men after they have
attained 65 years, the fixing
Page 295 U. S. 391
of that age or a period of 30 years' service, or a combination
of both, for general application, cannot be regarded as an
arbitrary choice for railroad employees.
The principal criticism is the bringing into the reckoning of
past periods of service -- antedating the passage of the Act. The
objection is strongly put with respect to those who were in the
employment of the carriers when the Act was passed, and it is even
more earnestly urged as to those who had left the service and later
are reemployed. It is said that the reckoning of their prior
periods of employment compels payment for services fully completed
and paid for before the enactment. But it seems to be assumed that
Congress could compel the dismissal of aged employees, and if it
has that power and also has power to establish a pension system, I
can find no ground for erecting a constitutional limitation which
would make it impossible to provide for employees who were thus
severed from the service. The question simply is: what is a fair
basis for computing a retirement allowance? Is the plan adopted by
Congress destitute of rational support?
Congress could have provided for a retirement allowance in a
flat sum, or could have based it upon the amount of compensation
which the employee was receiving at the time of retirement, or upon
the amount he had received for the preceding year or his average
compensation of a longer time. Selecting a period not to exceed 30
years, or the period of service prior to age 65, merely gives a
measure for the computation of the retirement allowance. It is in
no proper sense a payment for the prior service, any more than
would be the fixing of the allowance at a flat figure or on the
basis of the last compensation received. The result in dollars and
cents might not vary to any great extent whatever method of
calculation was chosen.
The power committed to Congress to govern interstate commerce
does not require that its government should be wise, much less that
it should be perfect. The power
Page 295 U. S. 392
implies a broad discretion, and thus permits a wide range even
of mistakes. Expert discussion of pension plans reveals different
views of the manner in which they should be set up and a close
study of advisable methods is in progress. It is not our province
to enter that field, and I am not persuaded that Congress. in
entering it for the purpose of regulating interstate carriers, has
transcended the limits of the authority which the Constitution
confers.
I think the decree should be reversed.
I am authorized to state that MR. JUSTICE BRANDEIS, MR. JUSTICE
STONE, and MR. JUSTICE CARDOZO join in this opinion.
[
Footnote 2/1]
Latimer, "Industrial Pension Plans," 1932, vol. I, p. 55.
[
Footnote 2/2]
"Public Service Retirement Systems," Bureau of Labor Statistics
(U.S.) Bulletin No. 477, 1929.
[
Footnote 2/3]
The members of the commission were Senators George Sutherland
and George E. Chamberlain, Representatives William G. Brantley and
Reuben O. Moon, William C. Brown, president of the New York Central
lines, and D. L. Cease, the editor of The Railroad Trainman.