Petition for Writ of Certiorari — Jacksonville Terminal Co. v. Florida East Coast Railway Co.

s

7 Office Supreme Court, U.S.

4 | 3 FILED |

are | Ba the

| Supreme Court of the Hnited

i OcToBER TERM, ‘1964

JUN 2 1964

States

JCHn *; DAVIS, GLERK

No BOG

" JACKSONVILLE TERMINAL COMPANY, a corporation,

ATLANTIC COAST LINE RAILROAD. COMPANY, a

corporation,

COMPANY, a corporation,

and SEABOARD

AIR \LINE RAILROAD

*

a

FLORIDA “EAST COAST RAILWAY re OMPANY, a cor-

poration, k

gt Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT i

KURZ, TOOLE,

& MARTIN

704. Florida Theatre Building

Jacksonville, Florida 32202

COX, GRISSETT & WEBB

630 American Heritage Life

Building

Jacksonville, Florida 32202

McCARTHY, ADAMS &

FOOTE

801 Atlantic’ National Bank

Building

Jacksonville, Florida 32202

Of Counsel

MANESS

LOUIS KURZ.

704 Florida Theatre Building

Jacksonville, Florida 32202

Attorney for Petitioner, At-

lantic Coast Line Railroad

Company

JOHN S. COX

630 American Heritage Life

Building

Jacksonville, Florida 32202 |

Attorney for Petitioner, Sea-

board Air Line Railroad

Company

EDWARD McCARTHY

801 Atlantic National Bank

Building

Jacksonville, Florida 32202

Attorney for Petitioner, Jack-

sonville: Terminal Company

INDEX

CITATIONS TO OPINIONS BELOW .............

“JURISDICTION oo... cece cc ceve cece ecevcee ee

QUESTION: PRESENTED ...... ee eae

STATUTES INVOLVED ......... welsiaechs TEE

. REASONS FOR GRANTING’ THE WRIT ..... ie

ee ey) re:

APPENDIX-A ...... Re ees en

i

to

3.

4, 1964 ....... A fine tog aun Seti g ie Se nee

4. Judgment -of Circuit Court of Appeals, dated

Merce 4, 1004 .......+;.. RSs eae MOM A Restores

5. Order ‘of Circuit Court of Appeals Denying Peti-

tion for Rehearing, dated March 3i, 1964 ......

APPENDIX B |... pn ar Ae eG eee ;

1. Title 28, Section 1337, United States Code ......

2. Title 49, Section 5/2), United States Code re eay

3. Article Twenty-First - Operating and Guaranty

Order of District Court, dated September 5, 1963

dismissing case for lack of Federal jurisdiction .

Amended Order of District Court, dated Septem-

oe eee ane es Serer ie P

Opinion of Circuit Court of Appeals, dated March

Agreement of December 1, 1947 ............. a

16

‘29

| CITATIONS |

CASES: | 4 ce Page ”

American C onstruction Co. v. Jacksonville’ etc. R. Co.,

148 U.S. 372, 13 §.Ct. 58, 37 L.Ed. 486 ......--.

Chicago & N.W., Ry. v. Toledo, P. & W.R. Co., 324

“1

Hed, $1008 ..... Soil aretone \iintee ee 10"

Cook County v. Calumet, ete. Canal Co., 138 US. 635,

.' ea _Ed. Re ya's OA eee No wih 6 6 48

Dickson Vv. Edwards, 2933 Fed. od SN rane § : 5

First Sabha Bank v. Ww illiams, a2 US. 304, 64 L.Ed.

ie ch ce hohe RA Mahe oS ee ae a SOS Oe oe Oe 7,8

Gully v. First National Bank, 299 US. 109, 81 Ld.

7 eee: eee hen SI eee 7,8;9,13

Heflin v. United States, 358 U.S. 415, 79 S.Ct. 451, 3

L.Ed. 2d 407 ...... 5 Sere

~1

International Association of Machinists v. Central Air-

‘lines. Inc., 372 U.S. 682, 10° L.Ed. 67 ....+..----- 15

Lend v. Dollar, | 330 U.S. 731, 67 S.Ct. 1009, 91 LEd.

SMe pera char ence tabaee nant hsesrsres** 7.

Marshall \. Desert Properties, 103 Fed: $4 S51 :..... 12

Niles-Bement-Pond Co. v. fron Moulders Union, 254

07.5. Ti. GB L.Ed 146 ... cnc cece e ccc cees ae ey

* Romero v. International Terminal Operating Co., 358

_ US. 334. 79 S.Ct. 465, 3 L.Ed. 2d 368 .......---

~)

State Automobile Insurance Association v. Parry, 123

ek Ms ca eck neve Rae ees wae Sees a 12

Teague v. Brotherhood of Locomotive Firemen, et al,

og ae” Sara eee eh wa ek ay 11

United States v. General halons C orp.. $23: USS.. 37 3,

65 S.Ct. 357, 89 L.Ed: 311 Mas Kae eee ea eee

~1

CITATIONS—continued :

per sce , Page

STATUTES: cs _ |

Title 28, Section 1201(c), United States Code Pee ee 2

Title 28, Section 1254(1), United States Code ........ | 2

- Title 28, Section 1331, United States © ode ae ie yee Gain pee

| Title 28, Section. 133%, United States Code .... 3,6,7 9, 24

_ Title 30, Section 21, United States Code Teak oe es 13

, Tide 45, Section 11, United States Code ............ | 13

= Section 1, United States Code perk vecess oes 3

‘Title 49, Section , United States Code .. 3,4, 6,7, 13,25

7

RULES OF COURT: °

Rule 19 1(b), Rules of The a Court of The

United States ..... Sy ki geste Obanstsauessaseekes ee

1

In the a pe

Supreme Court of the United States

OcroBER TERM,” 1964 a

\

No. wn meceencoceceseeoooe-qrese=

JACKSONVILLE TERMINAL COMPANY, ‘a corporation,

ATLANTIC COAST LINE RAILROAD COMPANY, a

corporation, and SEABOARD AIR LINE RAILROAD

COMPANY, a corporation, .

; - Petitioners,

| vs.

FLORIDA EAST COAST RAILWAY COMPANY, a cor-

poration, oe Be oe

Respondent.

PETITION FOR A WRIT OF CERTIORARI |

-TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

.

To the Honorable, The Chief Justice and Associate Justices

of the Supreme Court of the United States:

~~

Petitioners pray that a Writ of Certiorari issue tc review

a judgment of the United States Court of Appeals for the

Fifth Circuit. entered on March 4, 1964, which reversed an

‘order of the United States District Court for the Middle

District of Florida, dismissing the case for want of federal

court jurisdiction. Petitioners filed a petition for rehearing,

which the Court of Appeals denied without opinion on

March 31, 1964. ye |

2.

OPINIONS BELOW —

The United States District Court for The Middle District ,

of Florida delivered no opinion but entered an order on

‘September 5, 1963 dismissing the case for lack of Federal

jurisdiction. This Order was amended for clarification pur-

poses on September 23, 1963. The Order of September 5.

1963 and the Amended Order of September 23, 1963 are

printed in Appendix A hereto at pages 15 and 16.

The opinion of The United States Cir uit Court of Ap-

peals, Fifth Circuit reversing the District Court (R, 87) is

reported in 328 Fed. 9d 720 and is printed in Appendix A

hereto at page 17. The judgment of the Circuit Court of

Appeals (R 94) is printed in Appendix A hereto at page 22:

The Order of The Circuit Court of Appeals denying Peti-

_ tion For Rehearing (R 101) is printed in Appendix A hereto.

at page 23. ' as

JURISDICTION .

As heretofore stated. tHe judgment of the Circuit Court

of Appeals was entered on March 4, 1964. (R 94) and is

printed in Appendix A hereto at page 8a. Rehearing was

denied without opinion on March 31, 1964 (R 101) and the

Order denying Petition for Rehearing is printed in Appendix

A hereto at page 9a. The jurisdiction of this Court is in- *

voked under Sections 1201/c). and 1254(1) of Title 28,

United States Code and Rule 19 i(b): Rules of The Supreme

Court of The United States. ;

3 '

QUESTION PRESENTED

Where a contract between common carriers by Railroad;

as defined in the Interstate Commerce Act, providing for

the joint use and operation of terminal facilities, contains a°

separate clause relating, in part, to the dismissal of certain

officers: of the terminal company corporation, do the Federal

Courts have jurisdiction to determine the contract rights of

the partics relating to such dismissal of such Terminal Com-

pany officers simpli because the overall contract for the joint

use and operation of the terminal facilities had been submitted

to and approved by the Interstate Commerce Commission

under "© provisions of Title 49, Section 5(2), United Statés

Code? 7

STATUTES INVOLVED

Plaintiff in the district court claims that federal court juris-

diction exists under-Title 28, United States Code, Section 1337

and the interstate Commerce Act, Title 49, United States Cede,

Section 1, et seq., and particularly Section 5(2)., Title 28,

U. S. Code, Sec. 1337 is set forth herein in Appendix B, page

24 and Title 49 U. S. Code, Sec. 5(2) is set forth herein in

Appendix B, page 25. ae

STATEMENT OF THE CASE

The petitioner, Jacksonville Terminal Company, is a cor-

poration organized and existing under the laws of the State

of Fiorida. :

_ For many years, both prior to and subsequent to the oper-

ating and guaranty agreement involved in this case, the cor- |

porate stock of the petitioner, Jacksonville Terminal Company,

has been wholly owned by the petitioners, Atlantic Coast Line

Railroad Company and Seaboard Air Line Railroad Company.

and by the respondent, Florida East Coast Railway Company,

f'*

and Southern Railway Company and Georgia Southern &

Florida Railway Gompany (KR 2, 11-13).

At all times material hereto the respondent Florida Fast

Coast Railway Company owned or controlled one-fourth of

the corporate stock of said Terminal Company. the petitioners

\tlantic Coast Line Railroad Company and Seaboard Air Line

Railread Company owned or controlled one-fourth each of

said corporate stock, and Southern Railway Company and

~Georsia Southern and Florida Railway Company owned or

controlled one-eighth each of said corporate stock (R 2).

In the vear 1947 the petitioner, Jacksonville Terminal Com-

pans, proposed to issue and sell certain First. Mortgage Bonds °

in the amount of $4,000,000 (R 14). In connection therewith

an “Operating and Guaranty Agreement” dated December 1],

1947. was executed between the petitioner, Jacksonville Ter-

minal Company. and the above-named owners of its corporate

stock. together with United States Trust’ Company’ of New

York and Frank I Wideman, the corporate and individual

_ trustetés. under the First Mortgage of the Terminal Company

~~ dated’ December 1, 1947 (R-10-56).

This “Operating and Guaranty Agreement” of December 1},

1917 had been submitted for approval to the Interstate Com-

mere Commussion under the provisions of Title 4@ Section

52° United States Code. on November 3, 1947 and had

been approved by the report and order of the Interstate

Commerce Commission. both dated November 10, 1917 CR

65-75!

,

Amon other provisions, said “operating and. Guaranty”

\ereeinent” contained Article Twenty-first as follows:

“Twenty-First: That the use of said. station, tracks

ant facilities of the Terminal Company by the Railway

Companies shall be subject to the jurisdiction of the

Terminal Company and its duly authorized officers and

ernployees; and the Railway Companies agree that while

in or about the said termina! facilities of the Terminal

Company, their employees and trains shall faithfully

conform to all reasonable and prope ginstructions and

directions of all proper officers of, and will use the

proper standard time prescribed by, the Terminal Com-

pany; PROVIDED, however, that the President or

General Manager, or any othes..officer subject to elec-

tion by the Board of Directors of the Terminal Com-

pany, shall be appointed and serve only by unanimous

consent of the Guarantor Companies and shal! (any

provision of the by-laws of the Termina! Compan’ to

the contrary notwithstanding) be dismissed upon the

written request of any one of the Railway Companies,

and that the dismissal of any subordinate official of

the Terminal Company shall be made by the President

or the General Manager upon the written request of

any one- of ‘the Railway Companies. The Terminal

Company shall require that ‘the services of all its offi-

cers and employees shall be performed without partially

or discrimination as betwee. the Railway Companies.”

Said Article Twenty-first is printed in Appendix-B hereto at”

page 29. :

“Respondent, alleged in its complaint that a written request

had been submitted by it for the immediate dismissal of the

Président and General Manager and the General Counsel of

the Terminal Company. but that the petitioners. Atlantic

Coast Line Railroad Company and Seaboard Air Line Rail-

road Company, insisted that they would take. no action to

honor or enforce such request, unless and until the Board of

Directors of Jacksonville Terminal Company “had dismissed

the said officers from their respective positions and their ‘suc-

6

cessors had been. chosen and qualified in accordance with

corporate pracedure (R 6-7).

Respondent contends that Federal Court jurisdiction exists

because the aforesaid operating, and guaranty agreement was

submitted to and approved by the Interstate Commerce Com-

missien uncer the provisions of Title 49, Section 5( 2), United

States Code, and that therefore the action is one arising under

the laws of the United States within the meaning of Title 25,

Section 1337, United States Code.” .

The petitioners filed respective motions to dismiss ad-

dressed to the respondent's complaint in the District Court.

alleging lack of Federal jurisdiction as one of the grounds

for such motions (R 56, 59-60).

‘

After due argument an order was entered by the District

Judge on September 5, 1963 granting said motions for lack of

jurisdiction (R79). This order was amended for clarification

on September 23, 1964 (R 50). Appeal ‘was taken by respond-

ents to the United States Circuit Court for the Fifth Circuit

and that court reversed the district court's order and opined

that federal court jurisdiction exists (R 87 and App. A p. 17).

Petition for rehearing was denied by the Court of Appeals

(R 101 and App. A p. 23).

REASONS FOR GRANTING THE WRIT .

The ruling of the Court of Appeals is of importance in the

proper administration of justice because it affects and enlarges .

the jurisdiction of the district court in cases arising under

the Constitution. and treaties, and laws of the United States

under Title 25, Sections 1331 and 1337, United States Code, by

holding that jurisdiction exists in controversies over contracts

Catered into under, authority of a federal statute, although the

validity, construction or effect of the statute is not involved.

While the agreement between Jacksonville Terminal Com-

pany’ and its tenant lines was approved under the provisions

of Section 5 (2), Title 49,. Uhited States Code, the validity,

construction or effect of that section is not involved. This is

necessary in order to confer’ federal court jurisdiction. First

National Bank v. Williams,-252 U.S. 504, 64 L. Ed. 690; Niles-

Bement-Pond Company v. Iron Moulders Union, 254 U.S. 77,

63 L. Ed. 145: Gully v. First National Bank, 299 U. S. 109, 81

UL. Ed. 70. —-. ;

.

The decision of the Court of Appeals is therefore in apparent

conflict with applicable decisions of the United States Supreme

Court and decisions of other Courts of Appeal, so that certiorari

should be granted. Heflin v. U. S., 358 U.S. 415, 79 S. Ct. 451,

3 1|.Ed. 2d 407: Romero v. International Terminal Operat-

in Co., 358 US. 354, 79 S.Ct. 468, 3 L.Ed. 2d 365: Rule

19 1 (b), Rules of The Supreme Court of The United States.

Although the judgment is not a final one, the issue is furida-

mental to the further conduct of the case inasmuch as.it in-

volves the jurisdiction of the Court and certiorari is there-

fore a proper remedy. Land v. Dollar, 330 U.S. 731, 67 S. Ct.

1009. 91 L.Ed. 1209: U.S. v. General Motors Corp:, 323 US.

373. 65 S. Ct. 357, 89 L-Fd. 311. American Construction Co.

vy. Jacksenville etc. R. Co., AS US. 372. 13 S. Ct. 58, 37 L.Ed.

ASG. ,

As stated before, only one question is involved, i. €., does

the District Court have jurisdiction of this case under Title

28 Section 1337, United States Code, which reads:

4. “The district court shall have original jurisdiction of any

- civil action or proceeding arising under any Act of

Congress regulating commerce or protecting trade and

commerce against restraint and monopoly. June 23:

1948, c. 646, 62 Stat. 931."

8

In order for jurisdiction to attach under this section an

appropriate statement by the plaintiff. unaided by ay an-

ticipation or avoidance of defenses, must disclose that the

controversy’ really and substantially involved a dispute re-

specting the validity, cor caction or effect of an Act of

Congress, upon a determination of which the ‘result of the

litigation depends. First Nationa! Bank v. Williams, 952°U. S.

504. 64 L: Ed. 690; Gully v. First National Bank, 299 U. S.

109. 81 L. Ed. 70; Niles-Bement-Pond Co. v. Iron Moulders:

Union, 234 U. $..77, 65 L. Ed. 145.

There ‘is no allegation ip respondent's Complaint (R 1-9)

that the operations of rt | respondent had been in anvwise

interfered with or that the respondent had been deprived of

any rights or privileges in and about the operations of the

facilities of the Terminal Company. Copy. of the operating

and guaranty agreement was attached to the complaint © R

10-54). Copy of the report and order of the Interstate Com-

merce Commission was not atlached to the complaint, filed

May 20, 1963, but was filed in open court September 4. 1965

(R 63-78). On September 5, 1963 the court granted peti-

tioners’ motion to dismiss the complaint for lack of jurisdic-

tion (R 79).

The Court of Appeals quoting from its opinion in Dickson

.. Edwards, 293 Fed. 2d 211, stated:

“The test is the familiar one that it must appear from

the complaint that the construction of a federal statute

will have an adverse ‘effect on the right of recovery if

the statute is construed one way rather than another

way.

and held:

7

“We think the contract which was authorized by the

federal statute and made legal only because of the

federal statute may be construed by the federal court .

upon application of the plaintiff.”

In so holding the Court apparently overlooked the fact that in

sorder te confer federal jurisdiction under both Sections 1331

and 1337 of Title 28: United States.Code, the construction of

the federal statute, rather than the construction of the agree-

ment. must be in question and such construction must really

and substantially involve the validity construction or effect of

the statute. No such construction ‘of any federal statute is,

mvolved here.. To use the language of Mr. Justice Cardoza

in Gully v. First National Bank, supra. (299 US., page 117):

“The most one can say is that a question of federal

law is lurking in the background.” '

The report of the Interstate Commerce Commission on the

application of Jacksonville Terminal Company and the other.

parties, above referred to (R 65), goes at length into the

financial situation and the effect of the issue of the $-4,-

000.000 of bonds songht to be approved, as does. the order

of the Commission based on that report (R75), but insofar

as the operations -of the terminal are concerned, the order

“merely provides (R77): as

“It is further ordered, That, subject to the, conditions |

for the protection of employees indicated in the report

aforesaid, the continued joint‘use by the Atlantic Coast

Line Railroad Company, Scott M. Loftin and John

\\. Martin. trustees of the Florida East Coast Railway

Company, Seaboard Air Line Railroad Company,

10

Southern Railway Company, and Georgia Southern

and Florida Railway Company of the passenger and

freight terminal facilities of the Jacksonville Terminal

Company until December is 1977, described ‘in the

report aforesaid, ‘upon the terms and conditions in

said report found just and reasonable, be. and it is

hereby, approved and authorized.”

73):

Those terms and conditions are (R

“© © © The operating :carriers state that no emplovees

will be adversely affected but. that they have no objec-

tion to the imposition of conditions similar to those pre-

scribed in Chicago & N.W. Ry. Co. Merger. 261 LCC.

672. Our authorization and approval will be upon

the understanding that the protective conditions con-

tained in the cited case will be included herein.”

It will thus be seen that the Interstate Commerce Com-

mission did not consider the ‘provisions of the operating

agreement dealing with the internal mandgement of the

Terminal Company. Furthermore, it is apparent that the

action complained of by the, Respondent in its Complaint

does not undertake to do more than maintain’ the status quo —

until a successor to the office of president and general counsel

of the Terminal Company can be elected by the Board of

Directors. The conclusion of the pleader that the petitioners

entered into a transaction to acquire, maintain or exercise

control. or the power to contrel, the operations of the Ter-

minal Company is not supported by the facts pleaded. in

support of that conclusion.

ef ; :

The Court of Appeals for the Seventh Cirenit. in the case of

Chicago & NW. Ry. Co. v. Toledo, P. & W. R..Co., 324 Fed.

2d 936. decided December 5. 1963, had before it the identical

il

question, i. e.. whether the federal district court had juris-

diction in a suit relating to a joint trackage agreement be-

tween two railroads which agreement had been approved by

the Interstate Commerce Commission. The district court

held that it did not have jurisdiction and the Court of Ap-

peals affirmed, saying at page 93S:

“We hold that’ although it. was necessary to obtain

Interstate Commerce Commission approval of the 1957

agreement, this is not sufficient to confer jurisdiction

upon the District Court. No mandatory order of the

Interstate Commerce Commission is involved. We

avree with the District Court that the Interstate Com-

merce Commission approval was permissive only. The

fact that such permission was required, does not have

the effect of making the commerce act a part of the

contract insofar as the respective rights of North, West-

- ern and TP&W are. concerned.”

This decision, involving the identical jurisdictional question,

is in direct conflict with the decision of the Fifth Circuit

Court of Appeals ‘in the case at bar. .

The Court of Appeals for the Sixth Circuit in Feague v.

Brotherhood of Locomotive Firemen, et al, 127 Fed. 2d 53,

in a case involving the construction of a collective hargain-

ing agreement, which the plaintiff alleged impaired his sen-

iority rights, held that no federal jurisdiction existed and

‘said, at paye 59:

~9¢°The mere fact that one of the alleged conspirators

cames into existence through the operation of a Federal

law does not bring into question either the validity

or the interpretation ‘of the statute. * * ° ° ° Even

were this a.suit to enforce a right which takes its

s: @

origin in the laws of the United States, a Federal ques-

tion would not necessarily be involved for, as’ was

said earlier. “A suit to enforce a right: -which takes its

origin in the laws of the United States is not necessarily,

or for that reason alone, one arising under those laws,

for a suit does not so arise unless it really and sub-

stantially involves ‘a dispute or controversy respecting

the validity, construction, or effect of such.a law, upon

the determination of which the result mee ty Shul-

this v. McDougal, 225 U. S. 561, 569, 32 S. Ct. 704

706, 56 L. Ed. .1205.” ¢ .

‘This decision also-is in apparent conflict with the decision

of the Fifth Circuit in the case at bar.

The Court ‘of Appeals for the Eighth Circuit. in the

case of State Automobile Insurance Association v. Parry, 125

’ Fed. 2d 243. involving the construction of a policy of insur-

ance issued with a rider. required by the Interstate Com-

merce Commission under the Motor Carrier Act. affirmed

the action of the district court dismissing the case for want

of jurisdiction on the ground that no substantial federal ques-

tion was involved. The Court of Appeals said that a case

which in fact depends for its decision upon: a question of |

local Jaw cannot be brought within the jurisdiction of the

federal court merely by referring in the complaint to some

federal statute and setting up a claim thereunder which ob-

viously is without any reasonable foundation. Here again

it appears that the decision is in conflict with that of the

‘Circuit Court in this proceeding.

In Marshall tc. i sert Properties, 103 Fed. 2d 351. certiorari

denied. 308 U. S. 3, 84 L. Ed. 473, the Court of Appeals for

the Ninth Circuit “had before it an action to. quiet title to

fa,

13

mining claims. The plaintiff alleged ‘that’ the defendant's

mining claims were invalid under the United States Mining,

Law. Title 30, United States Code, Section 21, et seq., because

that Act limits a single locator of a placer mining claim to

twenty acres for each claim so made. It was urged by the plain-

tiffs that a determination of their rights required a construction

of the mining laws of the United States under which the de-

fendant’s purported locatic.us were inade. The district court

held there was no jurisdiction and the Court of Appeals af-

firmed, citing. Gully v. First National Bank, supra, and Cook

County vs. Calumet, etc. Canal Co.. 138 U. S. 635, 34 L. Ed.

1110, where this Court said (138 U..S. 653):

“The validity of a statute is not drawn in question

every time rights claimed under such statute are con-

. troverted, nor is the validity of an authority every time

an act done by such authority is “disputed.” .

In its opinion in the case at bar, the Circuit Court relied

upon the regent decision of this Court in International Asso-

ciation of Machinists vs. Central Airlines,. Inc., 372 U. S.

682. 10 L. Ed. 2d 67. However, in that case the effect to

be given to an award made by a System Adjustment Board

established by agreement between the Union and the Air-

line depended of necessity upon the construction of the

Railway’ Labor Act, as amended, (Section 151, et. seq., Title

45, United States Code) and the decision depended upon a

construction of that statute.. That case, therefore, differs in

an essential element from the case at bar, for here neither

of the parties has questioned the effect of Title 49, United

States Code, Section 5/2), under which the Interstate Com-

merce Commission approved the execution of the December

»]. 1947 agreement. No construction of that statute is required

to determine the rights of the respondent under that agree-

ment.

14

CONCLUSION

_ We respectfully submit that the Court of Appeals fell into

error and because. of‘ the important jurisdictional question

involved and the apparent conflict” of the decision here with ;

the cited decisions of this Court and of other Courts of Ap-

peal, the petition for certiorari should be granted.

Respectfully submitted,

Sccedcccccceccccecccoccssccesesssososssessoossssseroreoe

LOUIS KURZ

704 Florida Theatre Building

jacksonville, Florida 32202

Attorney for Petitioner, At-

lantic Coast Line Railroad

Company

Cecccccccccccccceccoscecsssosecosowsesbocoscsosoosrooros

KURZ, TOOLE, MANESS JOHN S. COX

& MARTIN 630 American Heritage Life

704° Florida Theatre Building Building

Jacksonville, Florida 32202 ° Jacksonville, Florida 32202

COX. GRISSETT & WEBB Attorney for Petitioner, Sea.

630 American Heritage Life board Air Line Railroad

’ Building —

Jacksonville, Florida 32202

McCARTHY, ADAMS & EDWARD McCARTHY

FOOTE: A. 801 Atlantic National Bank

801 Atlantic National Bank Building

Building Jacksonville, Florida 32202

Jacksonville, Florida 32202

Attorney for Petitioner, Jack-

Of Counsel

sonville Terminal Company

15

APPENDIX A

ORDER

(Number and Title Omitted) —

” Filed: Sept. 5, 1963

After due notice, this case was heard in open court on

September 4, 1963, and the Court was fully advised in the

_premises. Upon consideration, it is 7

ORDERED that Defendants’ Motion to Dismiss for lack

of jurisdiction filed June 7, 1963 and June 10, 1963, are

granted, and therefore Defendants’ Motions to Strike are

‘rendered moot.

DONE AND ORDERED at Jacksonville, Florida,-tnis 5th

day of. September, 1963.

(Signed) WM. A. McRAE JR.

Judge. :

16

AMENDED ORDER

| ( Number and Title Omitted )

Filed: Sept. 23, 1963

The plain‘iff having made known to the Court its desire

to appeal from the Court’s ruling made by its Order dated

‘September 5, 1963, granting defendants’ motions to dismiss

for lack of jurisdiction, without first .attempting to amend

the jurisdictional allegations of its complaint, and it appear-

ing to ‘the Court that doubt may reasonably exist as to

whether the Court's Order ‘as entered: is an appealable

Order, it is now ordered by the Cour* that the ordering por-

tion of the Court's Order of September 5, 1963, be and the

same is hereby amended to read as follows:

| “ORDERED that defendants’ motions to dismiss

for lack of jurisdiction filed June 7, 1963, and Juné

10, 1963, are granted, and therefore defendants’

motions to strike are rendered moot. The above-

entitled action be and the same is hereby dismissed

for lack of jurisdiction.” pas

DONE and ORDERED aat Jacksonville. Florida, this

23rd day of September, 1963. ~

°

(Signed) WM. A. McRAE Jr:

Judge.

—

p= eee

. 17.

OPINION OF THE UNITED STATES

CIRCUIT COURT, FIFTH CIRCUIT

Dated March 4, 1964

(Caption Omitted )

Before TUTTLE, Chief Judge, and JONES and BELL,

; Circuit Judges.

TUTTLE, Chief Judge: This litigation between two sets

of railroad companies, over: the management of the jointly

owned Jacksonville Terminal Company, was dismissed by

the trial court for want of federal court jurisdiction.

The present posture of the case can best be understood by

- our adopting the statement of the case’ as contained in ap-

pellant’s brief, which is accepted as correct by each of the

three appellees—a circumstance which we think it appropriate

to say speaks well for the fairness and objectivity of counsel

for appellant and equally well for the spirit of fairness and

willingness to cooperate of counsel for the appellees. The

result is that the coyrt’s task. is made measurably simpler

by being permitted to turn at once to the legal question.

That question is.» Did the trif] court have jurisdiction of the

subject matter of plaintiff's suit?

The following statement of the case has been agreed upom

Alleging in its complaint that its action arises: under the,

Interstate Commerce Act and’ thus within. the: jurisdiction

of a federal’ court, Florida East Coast Railway Company

prayed for injunctive relief ‘and a money decree against

7

Ye

15

Jacksonville Terminal Company, owner and operator of Jack-

sonville’s. railroad terminal facilities, and against Atlantic

Coast Line Railroad Company and Seaboard Air Line Rail-

road Company, who ‘with Southern Railway Company,’

Georgia Southern and Florida Railway Company and plaintiff

jointly own Jacksonville. Terminal Company and jointly con-

tro! its affairs under an Operating and Guaranty Agreement

between the parties dated December 1, 1947.

ak

The Operating and Guaranty Agreement is alleged and is

shown to provide in. part: ;

that ,the President or General Manager

(of Terminal Company], or any other officer subject

to election by the Board of Directors of the ‘Terminal

Company shall be appointed and serve only by

tinanimous consent of the Guarantor Companies ana

shall (any provision of the by-laws of the Terminal

Company to’ the contrary notwithstanding ) be dis-

missed upon the written request of any one of the

Railway Companies, and . . . the dismissal of any

subordinate official of the Terminal Company shail

be made by the President or the General Manager

upon'the written request of any one of the Railway

Companies.”

Plaintiff charges by its. complaint’ that on February 8,

1963, plaintiff made an appropriate writes! request, pursuant

to Article Twenty-first of the Agreement, for the immediate

dismissal of M. C. Jennette as President and General Mana-

ver and of Elliott Adams-as General Counsel of defendant

Terminal Company and that, by reason of the Agreement,

bx reason of the Interstate Commerce Commission's order

anthoriviag, and approving the Acreement and the transaction —

reflected thereby, and by reason of Title 49 United States

at |

19

Code. Section 3, it became and was the duty of each de-

fendant (a)-to honor and enforce plaintiff's request and (b)

not to enter into anv transaction to acquire or maintain the

power to control, directly or indirectly, Terminal Company's

organization or operation and not to participate in accom-

plishing control of Terminal Company's organization in a

common interest with anv other defendant in any manner

whatsoever, except in accordance with the Operating .and

Guaranty Agreement or otherwise with the prior approval

and authorization of the Interstate Commerce Commission. °

Plaintiff's clain. for relief is that the defendants Terminal

Company, Coast Line and -Seaboard have refused to honor

plaintiff's said request and have frustrated plaintiff's right

effectively te object to the continued service of the two

Terminal Company officials.” Plaintiff alleges ‘in terms that

Terminal Company, Coast ‘Line and Seaboard have thereby

ousted plaintiff from its right to maintain’ jointly with the

other: owners the power to control the Terminal Company's

organization and operation. and that those defendants have

acquiree that power for themselves, in violation of (a) the

Operating and Guaranty Agreement, which was created under

the ae-ris of federal law to govern the affairs of Terminal Com-

pany in a way consistent with the law: and ‘b) the Inter-

state Commerce Act. which makes unlawful [Title 49 U.S.C.

Section 3“-4)} the acquisition of such power without the

approval and authorization of the Interstate Commerce Com-

mission. ;

On motions by the defendants Terminal Company, Coast

Line and Seaboard, the district court dismissed the com-

plaint and plaintiff's action for lack of jurisdic tion.

The parties are not in substantial disagreement over the

test. of federal: jurisdiction’ where it is asserted under the

. 20

Federal Question Section—2S U.S.C.A. § 1531—or under the

Commerce and Anti-Trust Sectiop—28 U.S.C.A. § 1337—of

the jurisdiction statutes. As we sta§ed in Dickson v. Edwards,

5 Cir., 293 F&d 211 (a federal question suit):

“The test is the familiar one that it must, appear

frony the complaint that the construction of a federal

statute will have an adverse effect on the right of:

recovery if the statute is construed one rather than

another way.”

°

.

Here, the plaintiff alleged that it had entered a contract

with certain other earriers touching on the control and map-

avement of the Terminal Company, also, within the purview

of the federal statutes, a carrier. This contract would have

been illegal but for the order of the Interstate Commerce

Commission approving it. This follows from the provisions

of Title 49 U.S.C.A. § 5(4) quoted above which make it illegal

for any carrier to participate in accomplishing or effectuating.

the control or management in a common interest of any two:

or more carriers, however attained except as provided under

Title 49 U.S.C.A. § 5(2) which permits this to be done “with

the approval and authorization of the Commission.”

ph

Thus, the appellant says that the need for this Commis-

sion- rane contract to be construed brings it within the

purview of § 1337 as a proceeding “arising under an .

Act of Congress regulating commerce. "Appellant cites for

this proposition the recent decision of the Supreme Court in

International Association of Machinists, AFL-CIO v. Central

Airlines. Inc... 972 U.S. 682 which. in a somewhat different

context. but still speaking of a contract authorized by a

federal statute, said: “It is federal law which would deter-

mine whether a § 204 contract is valid and enforceable ac-

21

cording to its terms. If these contracts are to serve this

- function under’ § 204. their validity, interpretation, and en-

forceability cannot be left to the laws of the many states, for

it would be fatal’ to the goals of the Act if a contractual

provision contrary to the federal command were nevertheless,

enforced under state law or if a contract were struck down

grus in furtherance of the federal scheme.”

We think this reasoning is apposite here. A specific con-

tract of joint ownership of the Terminal was approved by

the Interstate Commerce Commission. It contained express

provisions dealing with management personnel. The com-

plaint specifically alleges a breach of this contract by appel-

lees touching upon management personnel. The defendants

calthouch this is not to be considered in passing upon juris-

diction) say, in effect, that they cannot perform the contract

* literally as written because of pecularities of Florida state law.

We think the contract’: which was authorized by federal

statute and made legal only because of the federal statute

mav be construed by the federal court upon application oi

the plaintiff. . y

Moreover. there is more than a merely colorable conten-

tion by appellant that the conduct of the appellees violates

the terms of the statute itself, in that the “freezing” of man-

azement contrary to the Iriterstate ¢ ‘ommerce Commission-

appror ed plan, amouyts to entering into a transaction to ac-

complish or Pee 8 the control or managerent of the

Terminal Company in a manner different from that authorized

by Title 19 U.S.CLA. § 5/2). This being the issue raised. by

the complaint, the plaintiff is entitled to have the question

determined by a federal court. Even though the trial court

may decide contrary to appellant's. contention as to the

22

theory of recovery, the complaint presents the issve and makes

the contention. It thys asserts federal jurisdiction.

The judyment is REVERSED and the case is REMANDED ©

for further proceedings not inconsistent with this opinion.

»

JUDGMENT ENTERED BY COURT OF APPEALS

March 4, 1964

(Caption Omitted )

Before TUTTLE, Chief Judge, and JONES and BELL, Cir-

cuit | uges.

JUDGMENT

This cause came on to be heard on the transcript of the

record from the United States District Court for the Middle

District of Florida, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here or-

dered and adjudged by this Court that the judgment of

the said District Court in this cause be, and the same is here-

by. reversed; and that this cause be, and it is hereby remanded

to the said District Court for further proceedings not incon-

sistent with the opinion of this Court; :

It is further ordered and adjudged that the appellees, Jack-

sonville. Terminal Company. and others, be condemned, in

solido, to pay the costs of this cause in this Court’ for which

execution may be issued out-of the said District Court.

March +4, 1964

23

| ORDER DENYING PETITION FOR REHEARING

Dated March 31, 1964

(Caption ‘Omitted )

Before TUTTLE, Chief Judge, JONES and BELL, Circuit

Judges. PER CURIAM:

‘It is ORDERED that the petition for rehearing filed in

the above styled and numbered cause be, and tie same is,

hereby DENIED.

94 -

APPENDIX B

TITLE 28, SECTION’ 1337, UNITED STATES CODE

“The district courts shall -have original jurisdiction of any

civil action or proceeding arising, under any Act of Congress.

regulating commerce or protecting trade and contmerce’

against restraints and monopolies. June 25, 1948. c. 640, 62

Stat. 931.” |

25

TITLE 49. SECTION 5(2), UNITED STATES CODE

Unifications, mergers, and. acquisitions of control. (a) It

shall be lawful, with the approval and authorization of the

Commission, as provided in subdivision (b! of this para-

graph— . oN ‘

(1) for two or more carriers to consolidate or merge their

properties or franchises, or any part thereof, into one corpora-

tion for the ownership, manazement, and operation of the

properties theretofore in separate ownership. or for any car-

rier. or two or more carriers jointly, to purchase. lease. or con-

tract to operate the properties. or any part thereof, of another:

or for anv-carrier, or two or more Carriers jointh. to acquire

control of another through ownership of its stock or other-

wise, or for a person which is not a carrier to acquire control

of.two or more carriers through ownership of their stock or

otherwise) or for a person which is not a carrier and which

has control of one or more carriers to acquire control of an-

other carrier through ownership of its stock of otherwise: or

ji) for accarrier by railroad to acquire trackage rights

over, or joint ownership in or joint use of, any railroad line

or lines owned or operated by any other such carrier, and ter-

nunals incidental thereto

bh Whenever a transaction’is proposed under subdivision

a of this paragraph. the carrier or carriers or person seeking:

authority. therefor shall present an application to the Com-

mission, and-thereupon the Commission shall notify: the Gov-

ernor of each State in which amy part of the properties of the

earners involved in the proposed transaction is situated. apd

also such carriers and the applicant or appheants and. im case -

carriers bx motor vehicle are un olved, the persons specified im

, 26

section 305(e) of this title), and shall afford reasonable oppor-

tunity for interested parties to be heard. If the Commission

shall consider it necessary in order to determine whether the

findings specified helow may properly be made, it shall-set said

application for public hearing: and a public hearing shall be

> held in all cases where carriers by railroad are involved unless

the Commission determines that a public hearing is not neces-

sarv in the public mterest. .If the Commission finds that, sub-

ject to such terms and conditions and such modifications as

’ it shall find to be just and ‘reasonable, the proposed trans-

action is within the scope of subdivision (a) of this paragraph

and will be consistent with the public interest, it shall enter

an order approving and authorizing such transaction. upon the

terms and conditions, and with the modifications, so found

ty be just and reasonable: Provided, That ii a carrier by rail-

road subject to this chapter, or any person which is controlled

by such a carrier, or affiliated therewith within the meaning

of paragraph (6) of this section, is an applicant in the case

of any such proposed transaction involving a motox_carrier,

the Commissior shall not enter such an order unless it finds

that the ‘transaction proposed will be consistent with. the

public interest and -will enable such carrier to use service by

motor .vehicle to public advantage in its operations and will

not unduly restrain competition. —

¢) In passing upon any proposed transaction under the

' provisions of this paragraph. the Commission shall give weight

to the following considerations, among others. (1) The ef-

fect of the proposed transaction upon adequate transporta-

tion service to the public: (2) the effect upon the public

interest of the inclusion. or failure to include, other railroads

in the territory involved in the proposed transaction: (3)

the total fixed charges resulting from the proposed trans-

action and 4) the interest of the carrier emplovees affected.

2F

‘d) The Commission shall have authority in the case of

a proposed transaction under this paragraph involving a rail-

road or railroads, as a prerequisite to its approval of the pro-

posed transaction, to require; ipon equitable terms, the in-

clusion of another railroad or other railroads in the territory

involved, upon petition by such railroad or railroads request-

ing such inclusion. and upon a that such inclusion is

consistent with the public interést. z

‘e: No transaction which contemplates a guaranty or as-

sumption of payment of dividends Gr of fixed charges, shall

he approved by the Commission under this paragraph except

upon a spec ‘ific finding by the Commission that such guaranty

or assumption is not inconsistent with’ the prublic interest. No

transaction shall be approved under this paragraph which will

result in an increase of total fixed charces. except upon a spe-

cific finding by the Commission that such increase would not

.

be contrary to’ public interest. - °

f) As a condition of its approval. under this paragraph,

of any transaction involving a carrier or carriers by. railroad

subject to the provisions of this chapter, the Commission shall

require a fair and equitable arrangement to protect the in-

‘terests of the railroad employees affected. In its order of

approval the Commission shall include terms and conditions

providing that during the period of four vears from the effec-

tive date of such order such transaction will not result in

employ ees of the carrier or carriers by railroad affected by

such order being in a worse position with respect to their

emplovment, escept that the protection afforded to any em-

plovee pursuant to this sentence shall not be required to con-

tinue for a longer period, following the effective date of such

order, than the period during which such employee was in

the employ of such carrier. or carriers prior to the effective

28

date of such order. Notwithstanding any ot'ier provisions of,

this chapter and chapters 8 and 12 of this title, an agreement

pertaining to the protection of the interests of said employees

may hereafter be entered into by any carrier or carriers by

railroad and the duly authorized representative or representa-

tives of its or their employees. Feb. 4, 1887, c. 104, Pt. I,

§ 5, 24 Stat. 380; Feb. 28, 1920, c. 91, § 407, 41 Stat. 580;

June 16, 1933, c. 91, Title II, §§ 201, 202, 48 Stat. 217; Aug. 9,

1935, c. 498, § 1, 49 Stat. 543; Sept. 18, 1940, c: 722, Title I,

§ 7, 54 Stat. 905; Aug. 2, 1949, c. 379, § 3, 63 Stat. 485.

99 ,

”

ARTICLE TWENTY-FIRST — OPERATING AND

GUARANTY AGREEMENT OF DECEMBER 1, 1947

AND IT IS MUTUALLY COVENANTED AND AGREED:

Twenty-Fmst:. That the use of said station, tracks and

facilities of the Terminal Company by the Railway Compan-

ies shall be subject to the jurisdiction of the Terminal Com-

pany and its duly authorized officers and emplovees: and the

Railway Companies agree that whiie in or about the said

terminal facilities of the Terminal Company. their emplovees

und trains shall faithfully conform to all reasonable and: proper

instructions and directions of all proper officers of, and will

use the proper standard time prescribed by, the Terminal

Company, PROVIDED, however, that the President or General

Manager, or any other officer subject to election by the

Board of Directors of the Terminal Company, shall be ap-

pointed and serve only by unanimous consent of the Guaran-

tor Companies and shall (any: provision of the by-laws of the

Terminal Company ‘to the contrary notwithstanding) be dis-

missed upon. the written request of anv one of the Railway —

Companies, and that the dismissal of any subordinate official

of the Terminal Company shal! be made by the President

or the General Manager upon the .written request of any

one of the Railway’ Companies. The Terminal Company shall

require that the services of all its officers and emplovees shall

be performed without partiality or discrimination as between

the Railway Companies.