Appendix — Ex parte Stewart
Supreme Court brief1944
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SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1943
No. 767
THE INTERSTATE COMMERCE COMMISSION AND
HUDSON & MANHATTAN RAILROAD COMPANY,
APPELLANTS,
vs.
THE CITY OF JERSEY CITY, FRED M. VINSON,
STABILIZATION DIRECTOR BY CHESTER
BOWLES, PRICE ADMINISTRATOR
APPEAL FROM THE DISTHICT COUNT OF THE UNITED STATES FoR
THE DISTHICT OF NEW JERSEY
INDEX,
Original = Print
Record from D, ©. VU, &,, ae ST TTT , i i
Complaint 6655555 ++) benenvevens i i
Affidavit of Arthur Potertoms ss. ...0 5500555, 7 10
Exhibilla 1" to "6" (omitted in printing) is
Onier convening clatatery eturt and setting ease for Rear
ing..... 7 0
Summons and return. peeeeee (omitted in printing) 7a
Answer of /nterstate Commerce Comminsion....., 75 wo
Exhibit "A" Order of Commission reopening pro-
ceed!Ha® in the matter of passenger fares of Hudson
& Manhattan Railroad Company, ................ al 2s
Stipulation @Xtending time of Hudao, & Manhattan Rail:
road Company to plead (omitted in printing)........... a2
Notice of r#©tion for leave to file amended complaint, .... . ag uM
Order gran#i®& leave to file amended complaint,.......... S4 PN)
Amended fed complaint SERERELELEEEEECELECECOCOCCCTL Tee &S 25
vit of Arthur Potterton.... 6... 55, Mt 40
Exhibi#® “1” to “7”... ........ (omitted in printing) 103
Notice of tion of Economic Stabilization Director for
leave to fle and serve petition (complaint). ............ 171 Bey
Jupp & DerwP™*® (inc), Paorrems, Wasmmvcron, D. C.. Aram 5, 1944.
—1320
EE
Record from D. ©. U. 8., District of New Jersey—Continued
Petition of Economie Stabilization Director for leave to
complaint
Exhibit “A” —Original complaint filed by City of Jersey
City (omitted in printing). ..000 06666 ccc ccc eees
Exhibit “B’—RKule 101 of the Interstate Commerce
Vahibit “C”—Letter dated October 25, 1044 from
Charles Hershenstein and 6, 8. Vieen to W. P. Bartel
(omitted in printing). .
Anewer of Interstate Commerce Commiasion to amended
oe eee eee eee ee eee
PORE AA Maa aaa
complaint
Anawer of the United Mates to amended complaint
Anewer of Hudeon & Manhattan Mailroad Co. to petition of
Veonomic Mabilisation Director
Anewer of Interstate Commerce Commission to petition of
Keonomic Mabilisation Direetor
Amended anawer of Interstate Commerce Commiasion to
eee cempuns tae ve pollen of Seenente Seneiee
tion Director. .
amaova of Walter . Brown in opponition to motion tor
interlocutory injunction
SRST SSE STEERER EERE HEH
Original §= Print
173 55
182
1970s:
198 67
202
203 71
205 71
215
221 #7
222
wna wn
74) wa
2a\ 7)
aM a)
240 101
242 102
a i
200 il4
MS 116
285 118
285 118
286 119
300 127
ct] 128
Record from D. C, U. 8., District of New Jersey—Continued
Transcript of hearing on application for permanent in-
Junction—Continued Original
Argument of Mr. Hershenstein for the City of Jersey
City 315
(omitted in printing). .
Notice of appeal to Attorney General of New Jormey......
Order ae to exhibits
Defondanta’-Appellanta’ praeeipe for consolidated record
Hervies of citation... ............ (omitted in printing),
Olork’s cortifiemta, 5.5.55 ....++, (omitted in printing), ,
Vinhibite:
Plaintiff's Wahibit 2" — Deport of the Interstate Com-
iv
INDEX
Record from D, C. U. 8., District of New Jersey—Continued
Exhibits—Continued
Plaintiff's Exhibit “7”—Reply of protestants to peti-
tion of Hudson & Manhattan Railroad Co., for
S 6.b OO SE OSS OP LOD ERE SVC CRE RHOeT ES OCFECRFECe
ceedings
Intervenor’s Exhibit “2”—Reply of Economic Stabiliza-
tion Director to petition of Hudson & Manhattan
proposed by Examiner.........---.-.-s+seeee5+:
Hudson & Manhattan Exhibit “1’”—Reply of Hudson
& Manhattan Railroad Co. to motion of Economic
Stabilization Director for modification of the Com-
mission’s order of September 18, 1943 and for re-
OPOMING. «6... eee eee cence teen en eeeeeeees
Hudeon & Manhattan Exhibit “2”—Letter dated
October 25, 1943 from Charles Hershenstein and 8. 8.
Interstate Commerce Commission by Hudson & Man-
hattan Hailroad Co. for reopening of proceedings, and
for leave to publish and charge a 10 cent fare.......
Hudson & Manhattan Exhibit “4’”—Reply of City of
Jersey City to petition of Hudson & Manhattan Rail-
roe’ Co. for reopening proceedings and for leave to
publish Aid charge a 10 cent fare...........-..-+-
Hudson & Manhattan Exhibit “6”—lLetter dated
Oowber 17, 1942 from Harry R. Booth to W. P.
RS Rhy Si itis Aa
Hudeon & Manhattan Exhibit “7”—Letter dated
Novembe, 9, 1942 from Hudson & Manhattan Rail-
road O8, 'o the Price Administrator...........----
Hudeon & Manhattan Exhibit “11”—Stipulation of
counsel ®% to certain traffic statistics...........--..
Interstate Gommerce Commission Exhibit “1”—Order
of November 13, 1942 granting OPA right to intervene
Interstate Gommerce Commission Exhibit “2”—Order
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Statement of pointe on which appellants intend to rely and
y an
designation of part, of record to be printed..........----.--
Order noting probabi, ;
eves eeereeeeeresreeseseereres
573
578
Original Print
345
351
352
[fol. 1]
IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF NEW JERSEY
Crry or Jersey Crry, Plaintiff,
vs.
Tue Untrep Srares or America, Interstate CoMMERCE
Commission, and Hupson & Mannatran Rarroap Com-
pany, Defendants
Comp.taint—Filed September 13, 1943
Plaintiff, The City of Jersey City, brings this action
against the United States of America, the Interstate Com-
merce Commisison (hereinafter sometimes called the Com-
mission), and Hudson & Manhattan Railroad Company
(hereinafter sometimes called the Railroad), for the pur-
pose of enjoining, setting aside and annulling an order
of the Commission decided August 3, 1943, in the pro-
ceedings entitled ‘‘Investigation and Suspension Docket
No. 4394, Passenger Fares of Hudson & Manhattan Rail-
road Company’’, and alleges:
1. The jurisdiction of this Court over this action is under
and pursuant to the provisions of Sections 41, subdivision
(28), and Sections 43 to 48, inclusive, of Title 28 of the
United States Code.
2. Plaintiff is a municipal corporation in the County of
Hudson and State of New Jersey, and is a body politic.
The matter covered by said order of the Commission arose
in the District of New Jersey.
3. The defendant, United States of America, is sed pur-
suant to express authority of the Congress of the United
States, as provided in Sections 43 to 48 of Title 28 of the
United States Code.
The defendant, Interstate Commerce Commission, is an
administrative commission existing under and by virtue
of the Interstate Commerce Act, United States Code;
Title 49, and is specifically charged with the administra-
tion and enforcement of the provisions of said act.
The defendant, Hudson & Manhattan Railroad Company
is a common carrier by railroad engaged in the transporta-
ot NER
tion of passengers in interstate commeree, subject to the
provisions of the Interstate Commerce Act, United States
Code, Title 49, Chapter I, part I, except those provisions
which by their terms are not applicable to the interurban
electric railway operated by the Hudson & Manhattan
Railroad Company, and the order, hereinafter complained
of, permits this railroad to increase its fares.
4. The defendant, Hudson & Manhattan Railroad Com-
pany, is a consolidated corporation organized and existing
under and pursuant to the laws of the States of New York
and New Jersey, having a residence and its statutory office
in the District of New Jersey. The railroad transports
passengers only, and does not transport baggage, freight
or express matter.
5. The railroad properties consist of an underground
rapid transit passenger railway, furnishing transportation
facilities between points in uptown and downtown New
York City and points in Jersey City and Hoboken, New
Jersey. The railroad operates its trains in two services,
commonly referred to as the downtown line and the up-
town line.
On the downtown line the trains operate (a) between
the downtown terminal at Hudson Terminal, New York
City, on the one hand, and on the other the New Jersey
(fol. 2] stations of Exchange Place, Grove and Henderson
Streets and Journal Square, and (b) between the down-
town terminal at Hudson Terminal on the one hand, and
on the other the New Jersey stations located at Exchange
Place, Erie Station and Hoboken.
On the uptown line the trains operate (a) between the
New Jersey stations of Hoboken on the one hand, and on
the other New York City stations of Christopher Street,
9th Street, 14th Street, 19th Street, 23rd Street and 33rd
Street and (b) between the New Jersey stations at Journal
Square, Grove and Henderson Streets and Erie Station,
one the one hand, and on the other the New York City sta-
tions located at Christopher Street, 9th Street, 14th Street,
19th Street, 23rd Street and 33rd Street.
The railroad also operates, in conjunction with the Penn-
sylvania Railroad, a joint rapid transit electric train serv-
ice between the downtown terminal at Hudson Terminal,
New York, and the station of the Pennsylvania Railroad
at Market Street, Newark, New Jersey. The trains in this
3
joint service operate over the lines of the railroad between
the downtown terminal, Hadson Terminal at New York
City, and the Journal Square station, Jersey City, and
from that point over a line owned *> the Pennsylvania
Railroad to the latter’s station at Market Street, Newark,
New Jersey.
6. On July 31, 1937, the railroad issued, published and
filed, with the Commission, its local passenger tariff desig-
nated as I. C. C. No. 42, to become effective September 1,
1937, providing for the establishiaent of a fare of ten cents
for the interstate transportation of passengers on the rail-
road’s downtown line as aforesaid, in lieu of a fare of six
cents previously published and maintained in force and
effect. Said tariff provided for no changes in the fare then
in effect for interstate transportation on the uptown line
previously and then established at ten cents.
As a result of protests filed by plaintiff and others in
New Jersey the effectiveness of the aforesaid tariff was
suspended and the lawfulness of the proposed increase in
the downtown fare was made the subject matter of a pro-
ceeding instituted by the Interstate Commerce Commission
in Investigation and Suspension Docket No. 4394.
7. After due hearing the Commission found, 227 I. C. C.
741, that the proposed increase from six cents to ten cents
in the passenger fare maintained by the railroad on its
downtown line had not been justified, but that an eight cent
fare had been justified. A fare of eight cents on the down-
town line became e‘fective July 25, 1938, and has since
been maintained. The Commission in its original report
and order, 227 I. C. C. 741 made three paramount findngs:
(1) ‘‘From the standpoint of the cost of the service
to respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents.’’ 227 I. C. C. 741, 754.
(2) ‘‘If respondent should feel impelled to seek a
further increase in revenue it should consider doing so
on interline traffic.’’ 227 I. C. C. 741, 762.
(3) ‘*The proposed fare of ten cents would be un-
reasonable under the Act and has not been justified.’’
227 I. C. C. 741, 762.
4
8. Following the promulgation of the report and order,
227 I. C. C. 741, as aforesaid, the railroad company ap-
pealed to the courts to enjoin the same. It filed its bill
in the Southern District of New York seeking to enjoin
the order of the Commission, but said action was dismissed
by the District Court of the Southern District of New York
because of improper venue, the court holding that proper
venue was in the District of New Jersey, Hudson & M. R.
Co. v. U. S., 28 Fed. Supp. 137. Thereupon the railroad
company filed its bill in the United States District Court
{fol. 3] for the District of New Jersey. The order of the
Commission accompanying the original report was upheld
by the United States District Court, for the District of New
Jersey, Hudson & M. R. Co. v. United States, 33 Fed. Supp.
495, which was affirmed by the Supreme Court, Hudson ¢
Manhattan R. Co. v. U. S., 313 U. 8. 98.
9. Upon petition of the railroad of July 27, 1942, for
further hearing and for leave to publish and charge a ten
cent fare on the downtown line by reason of alleged changed
conditions, the proceeding was reopened for further hear-
ing by the Interstate Commerce Commission. Such further
hearing was held and as a result thereof the Commission
issued its decision on June 8, 1943, 255 I. C. C. 649, affirm-
ing its original conclusion that the proposed fare of ten
cents would be unjust and unreasonable and has not been
justified. The Commission further concluded that an in-
creased local fare of nine cents on the railroad’s downtown
line had been justified for application during the remaining
period of the war and six months after its termination.
10. In promulgating its report and order of June 8, 1943,
as aforesaid, the Commission made the following specific
findings :
(1) ‘*That under normal circumstances the satura-
tion point in increased fares (referring to the eight
cent fare) on that traffic (downtown) has about been
reached.’’
(2) ‘‘If respondent (railroad) had availed itself of
the authority granted by our order of January 21, 1942,
in Increased Railway Rates, Fares, and Charges, 1942,
supra, the downtown fare would now be nine cents.
An increase to that amount would be consistent with
that decision.”’
(3) ‘‘While there can be little doubt that under pres-
ent conditions further increase in this (eight cent) fare,
even to ten cents, would result in additional net reve-
nue, we are convinced that it would be unreasonable to
expect the entire burden of the revenue increase to be
borne by the downtown local passengers, and that a
substantial portion thereof should be sought through
increased divisions on the interline traffic.’’
11. The railroad on July 8, 1943, filed a petition for re-
consideration and modification of the findings made by the
Commission in its report on further hearing, dated June
8, 1943. That petition sought, through the medium of an
affidavit attached thereto and made a part thereof, to secure
modification of the Commission’s order because of an al-
leged disability on the part of the railroad to collect the
nine cent fare on the downtown line with its available fare
collection system. By this petition the railroad sought,
pending the procurement of tokens which were to be sold
at eleven for one dollar with an alternative cash fare of
one dime, that it be authorized to charge, on the downtown
line, a cash fare of ten cents. Such cash fare of ten cents
was to continue in effect indefinitely until necessary tokens
were acquired and alterations were made in the fare
collection boxes. In connection therewith the railroad pro-
posed that if its request were granted it would reduce
the fare on the uptown line from ten cents per passenger
to eleven tokens for one dollar, with an alternative cash fare
payable only by a dime.
12. The plaintiff, on July 14, 1943, replied to the rail-
road’s petition and in requesting denial thereof prayed that
if any affirmative action be taken by the Commission, the
proceeding be set for further hearing to give all parties
their requisite day in Court on the new matters herein
alleged and thereby afford the plaintiff its right of cross-
examination.
13. Gn August 3, 1943, upon the facts as aforesaid, with-
out according the parties further hearing, the Commission
issued its report on reconsideration. Such report affirmed
the prior conclusion that the proposed fare of ten cents
had not been justified for general application on the down-
town line but permitted an increased local fare on the
[fol. 4] downtown line based on the alternative basis of
eleven tokens for one dollar or a cash fare of ten cents,
payable by a dime. Such permissive increase was coupled
with the proviso that contemporaneously with the establish-
ment and maintenance of the increased downtown fare the
same alternative basis, namely, eleven tokens for one
dollar or a cash fare of ten cents, payable by a dime, be
established and maintained on interstate traffic on the
uptown line.
14. In so providing for increased fares on the downtown
line whereby the regular patron or so called commutation
passenger would be required to pay nine and one-eleventh
cents per ride, and the occasional rider ten cents per ride
in lieu of the nine cent fare theretofore found to be the
reasonable maximum figure, the Commission in its report
and order of August 3, 1943, stated:
‘‘The proposed alternatve basis will not increase to
any material extent the relative transportation burden
of the local commuters on the downtown line beyond
that anticipated by our authority as granted in the
prior report. We there found that it would be un-
reasonable to expect the entire burden of the revenue
increase to which respondent is entitled to be borne by
the downtown local passengers, and that a substantial
portion thereof, for the reasons therein stated, should
be sought through increased divisions on the traffic
interchanged with the Pennsylvania Railroad Com-
pany. In its petition respondent states that it will
undertake to seek promptly such increased divisions on
that traffic as shall be adequate.’’
15. In the original report and order of the Commission,
277 I. C. C. 471, the Commission found that if the railroad
‘*should feel impelled to seek a further increase in revenne
(over and above an eight cent downtown fare therein pre-
scribed) it should consider doing so on interline traffic.’’
The Commission’s decision containing such admonition
was upheld by the District Court for the District of New
Jersey, Hudson & M. R. Co. v. U. S., supra, and affirmed
by the Supreme Court of the United States, Hudson & Man-
hattam R. Co. v. U. S., supra. A similar directive to the
railroad to increase its revenue through an adjustment of
its interline division with the Pennsylvania Railroad ap-
peared in the Commission’s report and order of June 8,
7
1943, 255 I. C. C. 649, and again in its report and order
of August 3, 1943.
16. To the exteat that the Commission permits the rail-
road to deliberately disregard the directive, contained in
all of the reports and orders, as aforesaid, requiring the
railroad to increase its revenues through proper adjust-
ments of interline accounting with the Pennsylvania Rail-
road, and in lieu thereof permits increases in the local
downtown fare notwithstanding the Commission’s own
statement, ‘‘that it would be unreasonable to expect the
entire burden of the revenue increase to which respondent
is entitled to be borne by the downtown local passengers,’’
the Commission acts arbitrarily, disregards the evidence,
and transcends the authority vested in it in the adminis-
tration of the Act.
17. It is apparent that the Commission, in authorizing
local downtown fares in excess of the nine cent fare stated
to be the reasonable maximum charge in the report and
order of June 8, 1943, 255 I. C. C. 649, does so wholly be-
cause of an alleged carrier disability. As to such alleged
carrier disability the plaintiff herein has been deprived of
its full day in Court by not having been given an oppor-
tunity to cross-examine witnesses, refute and otherwise
present counter evidence, and the order was entered with-
out due process of law. To the extent that the Commission
considered such matters in this regard, it acted arbitrarily
and beyond the realms of proper judicial procedure.
[fol.5] 18. To the extent that the Commission relegates
the right of the passenger to a reasonable fare to a posi-
tion subordinate to an alleged carrier disability, the Com-
mission disregards established law, that every passenger
is entitled to a reasonable fare. The carrier’s disability
does not justify the assessment of unreasonable fares or
charges.
19. It is evident that the Commission, in part, justifies
the increased downtown fare by the reduction in the uptown
fare from ten cents to eleven tokens for a dollar or in the
alternative a ten cent fare payable only by a dime. In so
doing the Commission commits grievous error of law. A
passenger is entitled to a reasonable fare over any branch
or line of the service, irrespective of the fares or level of
fares on other services thereof.
RENT
ee A a
20. In requiring the establishment of an uptown fare of
eleven tokens for one dollar or in the alternative a cash
fare of ten cents payable only by a dime and permitting
the establishment of the same fare on the downtown line
the Commission wholly and completely disregards the evi-
dence and facts of record by which it arrived at the con-
clusion that:
‘*From the standpoint of the cost of the service to
respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten
cents is a maximum reasonable fare for the uptown
service, the reasonable fare for the downtown service
must be something less than ten cents’’
and in so doing the Commission disregards and overrules
the Supreme Court of the United States, Hudson & Man-
hattan R. Co. v. U. S., 313 U. 8. 98.
21. The basic findings of the Commission in its report
and order of August 3, 1943, are unsupported by any pro-
bative evidence of record. Such basic findings flow from
the acceptance of the carrier contention of alleged dis-
ability. However, even assuming that the facts were prop-
erly and judiciously in evidence, they are inadequate, as a
matter of law, to support the Commission’s ultimate find-
ings. A fare in excess of nine cents, theretofore found to
be unreasonable does not ipso facto become reasonable and
proper because of a carrier disability.
22. In view of all of the facts hereinbefore set forth the
order of the Commission of August 3, 1943, was arbitrary
and capricious without foundation in law, based upon
errors of law, and without adequate findings or any evi-
dence to support them and contrary to the evidence of
record, and in violation of the Interstate Commerce Act,
and in violation of the specific interpretations of the gov-
erning law, made by the Federal Courts, including the
United States Supreme Court, and accordingly the Com-
mission acted in so arbitrary and unreasonable a manner
as to render its order, although within the form of its dele-
gated power, void.
23. The effectiveness of transportation fares on the
downtown line in excess of the prescribed reasonable maxi-
mum fare of nine cents will create an undue and unjust
S
burden upon the local downtown passenger in violation of
the Interstate Commerce Act, and unless the enforcement,
operation and execution of the Commission’s order of Aug-
ust 3, 1943, is restrained will cause plaintiff and the mem-
bers of its body politic great damages as aforesaid for
which plaintiff has no adequate remedy at law.
24. Attached hereto and made a part hereof, as Exhibits,
are the following:
Exhibit No. 1. The report and order of the Interstate
Commerce Commission dated July 11, 1938, reported at 227
LC.C. 741.
Exhibit No. 2. The report and order of the Interstate
Commerce Commission dated June 8, 1943, reported at 255
LC.C. 649.
[fol.6] Exhibit No. 3. The report and order of the Inter-
state Commerce Commission dated August 3, 1943.
Exhibit No. 4. The petition of the Hudson & Manhattan
Railroad Company dated July 8, 1943, for Reconsideration
and Modification of the Findings Made by the Commission
in its Report on Further Hearing.
Exhibit No. 5. Reply of Protestants dated July 14, 1943,
to the petition of the Hudson & Manhattan Railroad Com-
pany dated July 8, 1943.
Wherefore, plaintiff prays:
First: That, upon the final hearing, the Judge shall call
to his assistance, in the hearing and determination of this
cause, two other Judges, of whom at least one shall be a
Circuit Judge.
Second: That process may issue against defendants,
United States of America, Interstate Commerce Commis-
sion and Hudson & Manhattan Railroad Company, and that
due and proper service of such process of this complaint be
forthwith made upon the United States of America by de-
livering a copy of the summons and of the complaint to the
United States Attorney for the District of New Jersey, and
by sending a copy of the summons and of the complaint by
registered mail to the Attorney General of the United
States of America at Washington, D. C., and upon the
Interstate Commerce Commission by sending a copy of the
summons and of the complaint by registered mail to the
Secretary of the Interstate Commerce Commission, Wash-
10
ington, D. C., and upon the Hudson & Manhattan Railroad
Company, by serving a copy of the summons and of the
complaint upon the registered agent of said company.
Third: That upon final hearing of this cause this Court
adjudge, order and decree that the said order of the Com-
mission dated August 3, 1943, in so far as such order per-
mits the establishment of any local interstate fare in excess
of nine cents for transportation on the downtown line, is,
and has at all times been, beyond the lawful authority of
said Commission and wholly null and void and that said
order be perpetually set aside and annulled and the en-
forcement thereof perpetually enjoined.
Fourth: That pending said final hearing, and in the mean-
time, a temporary injunction and restraint issue enjoining
the defendants from so much of said Order of August 3,
1943, which permits the establishment of any local inter-
state fare in excess of nine cents for transportation on the
downtown line.
Fifth: That this Court grant to plaintiff such order and
further relief as may be proper in the premises.
(Sgd.) Charles A. Rooney, Attorney for Plaintiff.
(Sgd.) Charles Hershenstein, Of Counsel.
(fol. 7] Arripavir or Artur Potrerton In Support oF
CoMPLAINT
Strate or New Jersey,
County of Hudson, ss. :
Artuur Porrertoy, of full age, being duly sworn accord-
ing to law on his oath deposes and says:
I am Acting Mayor of Jersey City. I have read the fore-
going complaint and the matters and things therein set
forth are true to the best of my knowledge, information
and belief. The plaintiff, City of Jersey City, brings this
action against the United States of America, the Interstate
Commerce Commission (hereinafter sometimes called the
Commission), and Hudson & Manhattan Railroad Com-
pany (hereinafter sometimes called the Railroad), for the
purpose of enjoining, setting aside and annulling an order
ll
of the Commission decided August 3, 1943, in the proceed-
ings entitled ‘‘Investigation and Suspension Docket No.
4394, Passenger Fares of Hudson & Manhattan Railroad
Company’’:
1. The jurisdiction of this Court over this action is under
and pursuant to the provisions of Sections 41 subdivision
(28), and Sections 43 to 48, inclusive, of Title 28 of the
United States Code.
2. Plaintiff is a municipal corporation in the County of
Hudson and State of New Jersey, and is a body politic.
The mater covered by said order of the Commission arose
in the District of New Jersey.
3. The defendant, United States of America, is sued
pursuant to express authority of the Congress of the United
States, as provided in Sections 43 to 48 of Title 28 of the
United States Code.
The defendant, Interstate Commerce Commission, is an
administrative commission existing under and by virtue
of the Interstate Commerce Act, United States Code, Title
49, and is specifically charged with the administration an
enforcement of the provisions of said act. .
The defendant, Hudson & Manhattan Railroad Company
is a common carrier by railroad engaged in the transporta-
tion of passengers in interstate commerce, subject to the
provisions of the Interstate Commerce Act, United States
Code, Title 49, Chapter I, part I, except those provisions
which by their terms are not applicable to the interurban
electric railway operated by the Hudson & Manhattan Rail-
road Company, and the order, hereinafter complained of,
permits this railroad to increase its fares.
4. The defendant, Hudson & Manhattan Railroad Com-
pany is a consolidated corporation organized and existing
under and pursuant to the laws of the States of New York
and New Jersey, having a residence and its statutory office
in the District of New Jersey. The railroad transports
passengers only, and does not transport baggage, freight
or express matter.
5. The railroad properties consist of an underground
rapid transit passenger railway, furnishing transportation
facilities between points in uptown and downtown New
York City and points in Jersey City and Hoboken, New
we a a:
Jersey. The railroad operates its trains in two services,
commonly referred to as the downtown line and the uptown
line.
On the downtown line the trains operate (a) between the
downtown terminal at Hudson Terminal, New York City,
on the one hand, and on the other the New Jersey stations
(fol. 8] of Exchange Place, Grove and Henderson Streets
and Journal Square, and (b) between the downtown termi-
nal at Hudson Terminal on the one hand, and on the other
the New Jersey stations located at Exchange Place, Erie
Station and Hoboken.
On the uptown line the trains operate (a) between the
New Jersey stations of Hoboken on the one hand, and on
the other New York City stations of Christopher Street,
9th Street, 14th Street, 19th Street, 23rd Street and 33rd
Street and (b) between the New Jersey stations at Journal
Square, Grove and Henderson Streets and Erie Station,
on the one hand, and on the other the New York City
stations located at Christopher Street, 9th Street, 14th
Street, 19th Street, 23rd Street and 33rd Street.
The railroad also operates, in conjunction with the Penn-
sylvania Railroad, a joint rapid transit electric train ser-
vice between the downtown terminal at Hudson Terminal,
New York, and the station of the Pennsylvania Railroad at
Market Street, Newark, New Jersey. The trains in this
joint service operate over the lines of the railroad between
the downtown terminal, Hudson Terminal at New York
City, and the Journal Square station, Jersey City, and from
that point over a line owned by the Pennsylvania Railroad
to the latter’s station at Market Street, Newark, New
Jersey.
6. On July 31, 1937, the railroad issued, published and
filed, with the Commission, its local passenger tariff desig-
nated as L.C.C. No. 42, to become effective September 1,
1937, providing for the establishment of a fare of ten cents
for the interstate transportation of passengers on the rail-
road’s downtown line as aforesaid, in lieu of a fare of six
cents previously published and maintained in force and
effect. Said tariff provided for no changes in the fare then
in effect for interstate transportation on the uptown line
previously and then established at ten cents.
As a result of protests filed by plaintiff and others in
New Jersey the effectiveness of the aforesaid tariff was
13
suspended and the lawfulness of the proposed increase in
the downtown fare was made the subject matter of a pro-
ceeding instituted by the Interstate Commerce Commis-
sion in Investigation and Suspension Docket No. 4394.
7. After due hearing the Commission found, 227 I.C.C.
741, that the proposed increase from six cents to ten cents
in the passenger fare maintained by the railroad on its
downtown line had not been justified, but that an eight cent
fare had been justified. A fare of eight cents on the down-
town line became effective July 25, 1938, and has since been
maintained. The Commission in its original report and
order, 227 LC.C. 741 made three paramount findings:
(1) ‘‘From the standpoint of the cost of the service
to respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents.’’ 227 I.C.C. 741, 754.
(2) ‘If respondent should feel impelled to seek a
further increase in revenue it should consider doing
so on interline traffic.’’ 227 I.C.C. 741, 762.
(3) ‘‘The proposed fare of ten cents would be unrea-
sonable under the Act and has not been justified.”
227 L.C.C. 741, 762.
8. Following the promulgation of the report and order,
227 I.C.C. 741, as aforesaid, the railroad company appealed
to the courts to enjoin the same. It filed its bill in the
Southern District of New York seeking to enjoin the order
of the Commission, but said action was dismissed by the
District Court of the Southern District of New York be-
cause of improper venue, the court holding that proper
venue was in the District of New Jersey, Hudson & M, R.
Co. v. U. S., 28 Fed. Supp. 137. Thereupon the railroad
company filed its bill in the United States’ District Court
[fol. 9] for the District of New Jersey. The order of the
Commission accompanying the original report was upheld
by the United States District Court, for the District of New
Jersey, Hudson & M. R. Co. . United States, 33 Fed. Supp.
495, which was affirmed by the Supreme Court, Hudson
¢ Manhattan R. Co. v. U. S., 313 U. 8. 98.
ee
——-
4
9. Upon petition of the railroad of July 27, 1942, for
further hearing and fer leave to publish and charge a ten
cent fare on the downtown line by reason of alleged changed
conditions, the proceeding was reopened for further hear-
ing by the Interstate Commerce Commission. Such further
hearing was held and as a result thereof the Commission
issued its decision on June 8, 1943, 255 I. C. C. 649, affirm-
ing its original conclusion that the proposed fare of ten
- cents would be unjust and unreasonable and has not been
justified. The Commission further concluded that an in-
creased local fare of nine cents on the railroad’s downtown
line had been justified for application during the remaining
period of the war and six months after its termination.
10. In promulgating its report and order of June 8, 1943,
as aforesaid, the Commission made the following specific
findings :
(1) ‘*That under normal circumstances the satura-
tion point in increased fares (referring to the eight
cent fare) on that traffic (downtown) has about been
reached.’’
(2) ‘‘If respondent (railroad) had availed itself of
the authority granted by our order of January 21, 1942,
in Increased Railway Rates, Fares, and Charges, 1942,
supra, the downtown fare would now be nine cents. An
increase to that amount would be consistent with that
decision.’’
(3) ‘* While there can be little doubt that under pres-
ent conditions further increase in this (eight cent) fare,
even to ten cents, would result in additional net reve-
nue, we are convinced that it would be unreasonable to
expect the entire burden of the revenue increase to be
borne by the downtown local passengers, and that a
substantial portion thereof should be sought through
increased divisions on the interline traffic.’’
11. The railroad on July 8, 1943, filed a petition for re-
consideration and modification of the findings made by the
Commission in its report on further hearing, dated June
8, 1943. That petition sought, through the medium of an
affidavit attached thereto and made a part thereof, to secure
modification of the Commission’s order because of an al-
leged disability on the part of the railroad to collect the nine
15
cent fare on the downtown line with its available fare col-
lection system. By this petition the railroad sought, pend-
ing the procurement of tokens which were to be sold at
eleven for one dollar with an alternative cash fare of one
dime, that it be authorized to charge, on the downtown line,
a cash fare of ten cents. Suchcash fare of tencents was tocon-
tinue in effect: indefinitely until necessary tokens were ac-
quired and alterations were made in the fare collection
boxes. In connection therewith the railroad proposed that
if its request were granted it would reduce the fare on the
uptown line from ten cents per passenger to eleven tokens
for one dollar, with an alternaitve cash fare payable only
by a dime.
12. The plaintiff, on July 14, 1943, replied to the rail-
road’s petition and in requesting denial thereof prayed that
if any affirmative action be taken by the Commission, the
proceeding be set for further hearing to give all parties
their requisite day in Court on the new matters herein al-
leged and thereby afford the plaintiff its right of cross
examination.
13. On August 3, 1943, upon the facts as aforesaid, witb-
out according the parties further hearing, the Commission
issued its report on reconsideration. Such report affirmed
the prior conclusion that the proposed fare of ten cents had
not been justified for general application on the downtown
[fol. 10] line but permitted an increased local fare on the
downtown line based on the alternative basis of eleven
tokens for one dollar or a cash fare of ten cents, payable by
a dime. Such permissive increase was coupled with the
proviso that contemporaneonsly with the establishment
and maintenance of the increased downtown fare the same
alternative basis, namely, eleven tokens for one dollar or
a cash fare of ten cents, payable by a dime, be established
and maintained on interstate traffic on the uptown line.
14. In so providing for increased fares on the downtown
line whereby the regular patron or so called commutation
passenger would be required to pay nine and one-eleventh
cents per ride, and the occasional rider ten cents per ride in
lieu of the nine cent fare theretofore found to be the rea-
sonable maximum figure, the Commission in its report
and order of August 3, 1943, stated:
‘‘The proposed alternative basis will not increase
to any material extent the relative transportation bur-
ee —™S
16 “
den of the local commuters on the downtown line be-
yond that anticipated by our authority as granted in
the prior report. We there found that it would be un-
reasonable to expect the entire burden of the revenue
increase to which respondent is entitled to be borne
by the downtown local passengers, and that a sub-
stantial portion thereof, for the reasons therein stated,
should be sought through increased divisions on the
traffic interchanged with the Pennsylvania Railroad
Company. In its petition respondent states that it
will undertake to seek promptly such increased di-
visions on that traffic as shall be adequate.’’
15. In the original report and order of the Commission,
277 I. C. C. 471, the Commission found that if the railroad
*‘should feel impelled to seek a further increase in reve-
nue (over and above an eight cent downtown fare therein
prescribed) it should consider doing so on interline traffic.’’
The Commission’s decision containing such admonition was
upheld by the District Court for the District of Now Jersey,
Hudson & M. R. Co. v. U. S., supra, and affirmed by the Su-
preme Court of the United States, Hudson & Manhattan R.
Co. v. U. S., supra. A similar directive to the railroad to
increase its revenue through an adjustment of its inter-
line division with the Pennsylvania Railroad appeared
in the Commission’s report and order of June 8, 1943, 255
I. C. C. 649, and again in its report and order of August 3,
1943.
16. To the extent that the Commission permits the rail-.
road to deliberately disregard the directive, contained in all
of the reports and orders, as aforesaid, requiring the rail-
road to increase its revenues threugh proper adjustments
of interline accounting with the Pennsylvania Railroad, and
in lieu thereof permits increases in the local downtown fare
notwithstanding the Commission’s own statement, ‘‘that
it would be unreasonable to expect the entire burden of the
revenue increase to which respondent is entitled to be
borne by the downtown local passengers,’’ the Commis-
sion acts arbitrarily, disregards the evidence, and tran-
seends the authority vested in it in the administration of
the Act.
17. It is apparent that the Commission, in authorizing
local downtown fares in excess of the nine cent fare stated
17
to be the reasonable maximum charge in the report and
order or June &, (945, 255 © C. OC. 0&Y, does so wholly be-
cause of an alleged carrier disability. As to such alleged
carrier disability the plaintiff herein has been deprived of
its full day in Court by not having been given an oppor-
tunity to cross examine witnesses, refute and otherwise pre-
sent counter evidence, and the order was entered without
due process of law. To the extent that the Commission
considered such matters in this regard, it acted arbitrarily
and beyond the realms of proper judicial procedure.
{fol.11] 18. To the extent that the Commission relegates
the right of the passenger to a reasonable fare to a posi-
tion subordinate to an alleged carrier disability, the Com-
mission disregards established law, that every passenger
is entitled to a reasonable fare. The carrier’s disability
does not justify the assessment of unreasonable fares or
charges.
19. It is evident that the Commission, in part, justifies the
increased downtown fare by the reduction in the uptown
fare from ten cents to eleven tokens for a dollar or in the
alternative a ten cent fare payable only by a dime. In so
doing the Commission commits grevious error of law. A
passenger is entitled to a reasonable fare over any branch
or line of the service, irrespective of the fares or level of
fares on other services thereof.
20. In requiring the establishment of an uptown fare
of eleven tokens for one dollar or in the alternative a cash
fare of ten cents payable only by a dime and permitting
the establishment of the same fare on the downtown line the
Commission wholly and completely disregards the evidence
and facts of record by which it arrived at the conclusion
that:
‘*From the standpoint of the cost of the service to
respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents’’
and in so doing the Commission disregards and overrules
the Supreme Court of the United States, Hudson & Man-
hattan R. Co. v. U. S., 313 U. 8. 98.
2—767
Sem Watney ee =.
18
21. The basic findings of the Commission in its report and
order of August 3, 1943, are unsupported by any probative
evidence of record. Such basic findings flow from the ac-
ceptance of the carrier contention of alleged disability.
However, even assuming that the facts were properly and
judiciously in evidence, they are inadequate, as a matter of
law, to support the Commission’s ultimate findings. A fare
in excess of nine cents, theretofore found to be unreasonable
does not ipso facto become reasonable and ott because
of a carrier disability.
22. In view of all of the facts hereinbefore set forth the
order of the Commission of August 3, 1943, was arbitrary
and capricious without foundation in law, based upon er-
rors of law, and without adequate findings or any evidence
to support them and contrary to the evidence of record, and
in violation of the Interstate Commerce Act, and in viola-
tion of the specific interpretations of the governing law,
made by the Federal Courts, including the United States
Supreme Court, and accordingly the Commission acted
in so arbitrary and unreasonable a manner as to render its
order, although within the form of its delegated power,
void.
23. The effectiveness of transportation fares on the
downtown line in excess of the prescribed reasonable maxi-
mum fare of nine cents will create an undue and unjust
burden upon the local downtown passenger in violation of
the Interstate Commerce Act, and unless the enforcement,
operation and execution of the Commission’s order of Au-
gust 3, 1943, is restrained will cause plaintiff and the mem-
bers of its body politic great damages as aforesaid for
which plaintiff has no adequate remedy at law.
24. Attached hereto and made a part hereof, as Exhibits,
are the following:
Exhibit No. 1. The report and order of the Interstate
Commerce Commission dated July 11, 1938, reported at 227
I. C. C. 741.
Exhibit No. 2. The report and order of the Interstate
Commerce Commission dated June 8, 1943, reported at 255
I. C. C. 649.
(fol. 12-70] Exhibit No. 3. The report and order of the
Interstate Commerce Commission dated August 3, 1943.
19
Exhibit No. 4. The petition of the Hudson & Manhattan
Railroad Company dated July 8, 1943, for Reconsideration
and Modification of the Findings Made by the Commission
in its Report on Further Hearing.
Exhibit No. 5. Reply of Protestants dated July 14, 1943,
to the petition of the Hudson & Manhattan Railroad Com-
pany dated July 8, 1943.
(Sgd.) Arthur Potterton.
Sworn and subscribed to before me at Jersey City
this September 7th, 1943. (Sgd.) Ann G. Hogan,
Notary Public of New Jersey.
{fol.71] In tue Unrrep Srares District Court
[Title omitted]
Orper Convenine Statutory Court anp Serrine Case FoR
Hearinc—September 14, 1943
It appearing that plaintiff in the above entitled cause on
September 13, 1943, filed a complaint seeking to have per-
petually set aside and annulled so much of the Order of the
Interstate Commerce Commission dated August 3, 1943 in
a proceeding entitled ‘‘Investigation and Suspension
Docket No. 4394, Passenger Fares of Hudson & Manhattan
Railroad Company”’’ which permits the establishment of a
local interstate fare in excess of nine cents for transporta-
tion on its downtown line, and to perpetually enjoin the
enforcement of said order in which said complaint the
plaintiff also seeks a temporary injunction and restraint
enjoining the enforcement of so much of said order of
August 3, 1943 which permits the establishment of any
local interstate fare in excess of nine cents for transporta-
tion on its downtown line, and that the said complaint
prays that the judge shall call to his assistance in the hear-
ing and determination of this cause two other judges of
whom at least one shall be a Circuit J udge; and
It further appearing that the matter of the issuance of a
temporary injunction and restraint should be forthwith
heard and determined,
Honorable Gerald McLaughlin, United States Circuit
Judge, Third Circuit, and Honorable Guy L. Fahe, United
[fols. 72-74] States District Judge for the District of New
Jersey, are hereby called to the assistance of the Judge
of this Court whose signature is affixed hereto for the hear-
ing and determination in the application for a temporary
injunction and restraint and for the hearing and determina-
tion of the said cause; and
It is Ordered by the Court that the application for the
temporary injunction and restraint in the herein above
entitled cause be and it is hereby set for hearing at the
United States Court in Newark, N. J. on Sept. 21st, 1943
at 10:30 o’clock in the forenoon.
Dated, Newark, N. J. September 14, 1943.
Thomas F. Meaney, U. 8. D. J.
[fol. 75] In tHe Disraicr Court or tHe Unirep States
[Title omitted]
Answer or Interstate Commerce Commission—Filed Sep-
tember 25, 1943
The Interstate Commerce Commission, one of the de-
fendants in the above-entitled suit, for answer to the com-
plaint heretofore filed in this case, answers and says:
I
_ Answering the allegations of paragraphs 1 to 6, inclusive,
‘of the complaint, the Commission admits the same.
I
Answering the allegations of paragraph 7 of the com-
plaint, the Commission respectfully refers the court to its
decision, reported in 227 I. C. C. 741, annexed to the com-
plaint as Exhibit No. 1, for more full and complete informa-
tion concerning the findings of the Commission than is con-
tained in said paragraph.
Ill
Answering the allegations of paragraph 8 of the com-
plaint, the Commission admits the same.
21
[fol. 76] IV
Answering the allegations of paragraphs 9 and 10 of the
complaint, the Commission respectfully refers the court to
its decision of June 8, 1943, 255 I. C. C. 649, for more com-
plete information concerning its findings than is contained
in said paragraphs. The Commission’s report of June
3, 1943, is attached to the complaint as Exhibit No. 2, to
which the Commission respectfully refers the court.
v
Answering the allegations of paragraph 11 of the com-
plaint, the Commission admits the filing by the railroad of
the petition for reconsideration therein referred to. Said
petition for reconsideration is attached to and made a part
of the complaint as Exhibit No. 4, to which the Commission
respectfully refers the court for more full and complete
information concerning its contents than is contained in
said paragraph.
VI
Answering the allegations of paragraph 12 of the com-
plaint, the Commission admits the same but refers the court
to the plaintiff’s reply to the railroad’s petition for recon-
sideration, which is attached to the complaint as Exhibit
No. 5.
vil
Answering the allegations of paragraphs 13 and 14 of the
complaint, the Commission respectfully refers the court to
its report of August 3, 1943, for more full and complete in-
formation concerning its findings than is contained in said
paragraphs. Said report of August 3, 1943, is attached
to the complaint as Exhibit No. 3, to which the Commission
respectfully refers the court.
[fol. 77] VIII
Answering the allegations of paragraph 15 of the com-
plaint, the Commission admits the same.
Ix
Answering the allegations of paragraphs 16 to 23, inclu-
sive, of the complaint, the Commission denies the same.
<A POTN PS
oe ROE
x
Answering the allegations of paragraph 24 of the com-
plaint, the Commission admits that the exhibits therein
referred to are true copies of such documents.
Further answering the complaint as a whole, the Commis-
sion alleges that in the proceedings giving rise to this suit
the parties thereto, including the plaintiff herein, were, and
each of them was, accorded the full hearing provided by
the Interstate Commerce Act; that in said hearing testi-
mony and other evidence bearing upon the matters covered
in said report and order was submitted to the Commission
for consideration; that at said hearing and subsequently,
both orally and in briefs filed in said proceedings, questions
relating to said matters were fully argued and submitted to
the Commission for determination on behalf of said parties
by their respective counsel, including many of the particular
questions raised by plaintiff in this suit, whereupon the
Commission determined said matters and entered and
served upon all the parties to said proceedings, including
the plaintiff herein, its said reports and orders; that said
reports and orders included the Commission’s findings of
fact, conclusions and requirements in the premises, and that,
upon the evidence aforesaid, and as shown in and by the
said reports, the Commission made the findings and stated
the conclusions upon which its orders was based.
[fol. 78] The Commission further alleges that the findings
and conclusions in said reports and orders were and are, and
that each of them was and is, fully supported and justified
by the evidence submitted in said proceedings as aforesaid.
The Commission further alleges that in making said re-
ports, it considered and weighed carefully, in the light of its
own knowledge and experience, each fact, circumstance, and
condition called to its attention on behalf of the parties to
said proceedings by their respective counsel, including many
of the matters covered by the allegations of the complaint
herein.
The Commission further alleges that said reports and
orders were not made or entered either arbitrarily or un-
justly, or contrary to the relevant evidence, or without evi-
dence to support them, that in making said orders the Com-
mission did not exceed the authority which had been duly
conferred upon it, and the Commission denies each of and all
the allegations to the contrary contained in the complaint.
To the extent that the allegations contained in the com-
plaint are in conflict with statements and findings contained
in its said reports, the Commission denies the same.
Except as herein expressly admitted, the Commission
denies each of and all the allegations contained in the com-
plaint, in so far as they conflict either with the allegations
herein, or with either the statements or conclusions of fact
included in said reports of July 30, 1938, June 8, 1943, and
August 3, 1943, referred to and made a part of the petition
as Exhibits Nos. 1, 2 and 3, respectively, which reports and
orders are hereby referred to and made parts hereof.
[fol. 79] Further answering the allegations of the com-
plaint, the Commission alleges that on September 18, 1943,
it made and entered an order reopening this proceeding for
further hearing, a copy of which is attached to this answer
as Exhibit A.
All of which matters and things the Commission is ready
to aver, maintain and prove as this Honorable Court shall
direct, and hereby prays that said complaint be dismissed.
Interstate Commerce Commission, by E. M. Reidy,
Assistant Chief Counsel.
Daniel W. Knowlton, Chief Counsel, Of Counsel.
(fol. 80] Duly sworn to by Claude R. Porter. Jurat omit-
ted in printing.
[fols. 81-82] Exnusir A ro Answer or I. C. C.
Interstate Commerce Commission
Order
At a General Session of the Interstate Commerce Commis-
' sion, held at its Office in Washington, D. C., on the 18th
day of September, 1943
Investigation & Suspension Docket No. 4394
Passenger Fares Of Hudson & Manhattan Railroad Com-
pany
Upon further consideration of the record in the above-
entitled proceeding, and good cause appearing,
It Is Ordered, That this proceeding be reopened for fur-
ther hearing to permit any party hereto to present evidence
directed solely to the propriety and lawfulness of the modi-
fications made by the Commission in its report of August 3,
1943, on further consideration of its prior findings and or-
ders of July 11, 1938 and June 8, 1943; that at such further
hearing any party hereto shall have the right to cross ex-
amine adverse witnesses, and, upon the conclusion of such
hearing, any party so desiring may make oral argument
before the examiner, but no further briefs shall be submit-
ted, nor shall a proposed report be issued, nor shall there
be further argument before the Commission.
It Is Further Ordered, That th's proceeding be assigned
for such further hearing before ’.saminer Koch in the Com-
mission’s Offices at Washington, D. C., on September 28,
1943, at 10:00 o’clock A. M.
By the Commission, W. P. Bartel, Secretary. (Seal.)
[fol. 83] Is tHe Unrrep States District Court
[Title omitted]
Notice or Motion ror Leave To Fitz AMENDED CompLaInt—
Filed November 18, 1943
To: The Attorney General of the United States, at Washing-
ton, D. C., and Hon. Charles M. Phillips, United States
Attorney for the District of New Jersey, Attorneys for
United States of America;
Daniel W. Knowlton, Esq., Chief Counsel and E. M. Reidy,
Assistant Chief Counsel, Attorneys for Interstate Com-
merce Commission ;
Collins & Corbin, Esqs., John Finerty, Esq., and John E.
Buck, Esq., Attorneys for Hudson & Manhattan Railroad
Company.
Sirs:
Please Take Notice, that the undersigned will move this
Court on behalf of the plaintiff, City of Jersey City, on the
19th day of November, 1943, at 10:30 o’clock in the forenoon,
or as soon thereafter as counsel can be heard, at the Court
Room of the United States District Court for the District of
New Jersey, Post Office Building, Newark, New Jersey,
upon the complaint filed herein and upon all proceedings
heretofore had herein for an order granting leave to plain-
tiff to file and serve the annexed amended complaint, and
for such other and further relief as to this Court may be
just and proper in the premises.
Dated November 15, 1943.
(S.) Charles A. Rooney, Attorney for Plaintiff, City
of Jersey City, City Hall, Jersey City, N. J.
(S.) Charles Hershenstein, Of Counsel.
[fol.84] Ins roe Unrrep States District Court
[Title omitted]
Orver Grantine Leave to Fire AMENDED CompLaint—No-
vember 19, 1943
Application having been made by the plaintiff herein for
leave to file and serve an amended complaint, due notice of
said application having been given to all of the parties to
these proceedings, and no one objecting thereto and good
cause appearing therefor;
It is, on this Nineteenth day of November, 1943, Ordered
that leave is hereby granted to the plaintiff to file the at-
tached amended complaint and to serve copies thereof upon
all parties interested in the proceeding. .
Thomas P. Meany, Judge, United States District
Court.
[fol.85] In tae Unrrep States District Court
[Title omitted]
AMENDED Comp.Latint—Filed November 18, 1943
Plaintiff, The City of Jersey City, brings this action
against the United States of America, the Interstate Com-
merce Commission (hereinafter sometimes called the Com-
mission), and Hudson & Manhattan Railroad Company
(hereinafter sometimes called the Railroad), for the pur-
pose of enjoining, setting aside and annulling the orders\of
. the Commission decided June 8, 1943 (attached hereto as
Exhibit 2), and November 2, 1943 (attached hereto as Ex-
hibit 7), in the proceedings entitled ‘‘Investigation and
Suspension Docket No. 4394, Passenger Fares of Hudson &
Manhattan Railroad Company’’, and alleges:
1. The jurisdiction of this Court over this action is under
and pursuant to the provisions of Section 41, subdivision
(28), and Sections 43 to 48, inclusive, of Title 28 of the
United States Code.
2. Plaintiff is a municipal corporation in the County of
Hudson and State of New Jersey, and is a body politic. The
matter covered by said order of the Commission arose in
the District of New Jersey.
3. The defendant, United States of America, is sued pur-
suant to express authority of the Congress of the United
States, as provided in Sections 43 to 48 of Title 28 of the
United States Code.
The defendant, Interstate Commerce Commission, is an
administrative commission existing under and by virtue of
the Interstate Commerce Act, United States Code, Title 49,
and is specifically charged with the administration and en-
forcement of the provisions of said act.
The defendant, Hudson & Manhattan Railroad Company
is a common carrier by railroad engaged in the transporta-
tion of passengers in interstate commerce, subject to the
provisions of the Interstate Commerce Act, United States
Code, Title 49, Chapter I, part I, except those provisions
which by their terms are not applicable to the interurban
electric railway operated by the Hudson & Manhattan Rail-
road Company, and the order, hereinafter complained of,
permits this railroad to increase its fares.
4. The defendant, Hudson & Manhattan Railroad Com-
pany is a consolidated corporation organized and existing
under and pursuant to the laws of the States of New York
and New Jersey, having a residence and its statutory office
in the District of New Jersey. The railroad transports
passengers only, and does not transport baggage, freight
or express matter.
5. The railroad properties consist of an underground
rapid transit passenger railway, furnishing transportation
facilities between points in uptown and downtown New
York City and points in Jersey City and Hoboken, New
27
Jersey. The railroad operates its trains in two services
commonly referred to as the downtown line and the uptown
line.
On the downtown line the trains operate (a) between the
downtown terminal at Hudson Terminal, New York City,
on the one hand, and on the other the New Jersey stations
(fol. 86] of Exchange Place, Grove and Henderson Streets
and Journal Square, and (b) between the downtown termi-
nal at Hudson Terminal on the one hand, and on the other
the New Jersey stations located at Exchange Place, Erie
Station and Hoboken.
On the uptown line the trains operate (a) between the
New Jersey stations of Hoboken on the one hand, and on the
other New York City stations of Christopher Street, 9th
Street, 14th Street, 19th Street, 23rd Street and 33rd Street
and (b) between the New Jersey stations at Journal Square,
Grove and Henderson Streets and Erie Station, on the one
hand, and on the other the New York City stations located
at Christopher Street, 9th Street, 14th Street, 19th Street,
23rd Street and 33rd Street.
The railroad also operates, in conjunction with the Penn-
sylvania Railroad, a joint rapid transit electric train serv-
ice between the downtown terminal at Hudson Terminal,
New York, and the station of the Pennsylvania Railroad at
Market Street, Newark, New Jersey. The trains in this
joint service operate over the lines of the railroad between
the downtown terminal, Hudson Terminal at New York City,
and the Journal Square station, Jersey City, and from
that point over a line owned by the Pennsylvania Railroad
to the latter’s station at Market Street, Newark, New Jersey.
6. On July 31, 1937, the railroad issued, published and
filed, with the Commission, its local passenger tariff desig-
nated as I. C. C. No. 42, to become effective September 1,
1937, providing for the establishment of a fare of ten cents
for the interstate transportation of passengers on the rail-
road’s downtown line as aforesaid, in lieu of a fare of six
cents previously published and maintained ,in force and
effect. Said tariff provided for no changes in the fare then
in effect for interstate transportation on the uptown line
previously and then established at ten cents.
As a result of protests filed by plaintiff and others in
New Jersey the effectiveness of the aforesaid tariff was
suspended and the lawfulness of the proposed increase in
the downtown fare was made the subject matter of a pro-
ceeding instituted by the Interstate Commerce Commission
in Investigation and Suspension Docket No. 4394.
7. After due hearing the Commission on July 11, 1938,
found, 227 I. C. C. 741, that the proposed increase from six
cents to ten cents in the passenger fare maintained by the
railroad on its downtown line had not been justified, but
that an eight-cent fare had been justified. A fare of eight
cents on the downtown line became effective July 25, 1938,
and has since been maintained. The Commission in its
original report and order, 227 I. C. C. 741, made three para-
mount findings:
(1) ‘‘From the standpoint of the cost of the service
to respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents.’’ 227 I. C. C. 741, 754.
(2) ‘‘If respondent should feel impelled to seek a
further increase in revenue it should consider doing so
on interline traffic.’’ 227 1. C. C. 741, 762.
(3) ‘‘The proposed fare of ten cents would be unrea-
sonable under the Act and has not been justified.’’ 227
L. C. C. 741, 762.
8. Following the promulgation of the report and order of
July 11, 1938, 227 I. C. C. 741, as aforesaid, the railroad
company appealed to the courts to enjoin the same. It filed
its bill in the Southern District of New York seeking to en-
join the order of the Commission, but said action was dis-
missed by the District Court of the Southern District of
New York because of improper venue, the court holding that
proper venue was in the District of New Jersey, Hudson &
M. R. Co. v. U. S., 28 Fed. Supp. 137. Thereupon the rail-
road company filed its bill in the United States District
{fol. 87] Court for the District of New Jersey. The order
of the Commission accompanying the original report was
upheld by the United States District Court for the District
of New Jersey, Hudson & M. R. C. v. United States, 33
Fed. Supp. 495, which was affirmed by the Supreme Court,
Hudson & Manhattan R. Co. v. U. S., 313 U. 8. 98.
9. Upon petition of the railroad of July 27, 1942, for fur-
ther hearing and for leave to publish and charge a ten-cent
fare on the downtown line by reason of alleged changed con-
ditions, the proceeding was reopened for further hearing
by the Interstate Commerce Commission. Such further
hearing was held and as a result thereof the Commission
issued its decision on June 8, 1943, 255 I. C. C. 649, affirm-
ing its original conclusion that the proposed fare of ten
cents would be unjust and unreasonable and has not been
justified. The Commission further concluded that an in-
creased local fare of nine cents on the railroad’s downtown
line had been justified for application during the remaining
period of the war and six months after its termination.
10. In promulgating its report and order of June 8, 1943,
as aforesaid, the Commission made the following specific
findings :
(1) ‘That under normal circumstances the satura-
tion point in increased fares (referring to the eight-
cent fare) on that traffic (downtown) has about been
reached.’’
(2) ‘‘If respondent (railroad) had availed itself of
the authority granted by our order of January 21, 1942,
in Increased Railway Rates, Fares and Charges, 1942,
supra, the downtown fare would now be nine cents. An
increase to that amount would be consistent with that
decision.’’
(3) ‘‘While there can be little doubt that under pres-
ent conditions further increase in this (eight-cent) fare,
even to ten cents, would result in additional net reve-
nue, we are convinced that it would be unreasonable to
expect the entire burden of the revenue increase to be
borne by the downtown local passengers, and that a
substantial portion thereof should be sought through
increased divisions on the interline traffic.’’
(4) ‘Moreover, while the fares and charges for com-
mutation service of carriers serving the New York
metropolitan area are not uniform, those of carriers
other than respondent portrayed on this record afford
stronger support, differences in transportation services
considered, for either an eight-cent or a nine-cent fare
than for a ten-cent fare on the downtown line of re-
spondent.’’
11. The railroad on July 8, 1943, filed a petition for re-
consideration and modification of the findings made by the
'
———o ee t—“SSSC~™
Commission in its report on further hearing, dated June
8, 1943. That petition sought, through the medium of an
affidavit attached thereto and made a part thereof, to secure
modification of the Commission’s order because of an al-
leged disability on the part of the railroad to collect the
nine-cent fare on the downtown line with its available fare
collection system. By this petition the railroad sought,
pending the procurment of tokens which were to be sold at
eleven for one doilar with an alternative cash fare of one
dime, that it be authorized to charge, on the downtown line,
a cash fare of ten cents. Such cash fare of ten cents was to
continue in effect indefinitely until necessary tokens were
acquired and alterations were made in the fare-collection
boxes. In connection therewith, the railroad proposed that
if its request were granted it would reduce the fare on the
uptown line from ten cents per passenger to eleven tokens
for one dollar, with an alternative cash fare payable only
by a dime.
12. The plaintiff, on July 14, 1943, replied to the rail-
road’s petition and in requesting denial thereof prayed that
if any affirmative action be taken by the Commission, the
proceeding be set for further hearing to give all parties
their requisite day in Court on the new matters herein al-
leged and thereby afford the plaintiff its right of cross
examination.
{fol. 88] 13. On August 3, 1943, upon the facts as afore-
said, without according the parties further hearing, the
Commission issued its report on reconsideration. Such
report affirmed the prior conclusion that the proposed fare
of ten cents had not been justified for general application
on the downtown line but permitted an increased local fare
on the downtown line based on the alternative basis of
eleven tokens for one dollar or a cash fare of ten cents, pay-
able by adime. Such permissive increase was coupled with
the proviso that contemporaneously with the establishment
and maintenance of the increased downtown fare the same
alternative basis, namely, eleven tokens for one dollar or a
cash fare of ten cents, payable by a dime, be established
and maintained on interstate traffic on the uptown line.
14. In so providing for increased fares on the downtown
line whereby the regular patron or so-called commutation
passenger would be required to pay nine and one-eleventh
31
cents per ride, and the occasional rider ten cents per ride in
lieu of the nine-cent fare theretofore found to be the rea-
sonable maximum figure, the Commission in its report and
order of August 3, 1943, stated:
‘The proposed alternative basis will not increase to
any material extent the relative transportation burden
of the local commuters on the downtown line beyond
that anticipated by our authority as granted in the
prior report. We there found that it would be unrea-
sonable to expect the entire burden of the revenue in-
crease to which respondent is entitled to be borne by the
downtown local passengers, and that a substantial por-
tion thereof, for the reasons herein stated, should be
sought through increased divisions on the traffic inter-
changed with the Pennsylvania Railroad Company. In
its petition respondent states that it will undertake to
seek promptly such increased divisions on that traffic
as shall be adequate.’’
In the original report and order of the Commission made
July 11, 1938, 227 1. C. C. 471, the Commission found that
if the railroad ‘‘should feel impelled to seek a further in-
crease in revenue (over and above an eight-cent downtown
fare therein prescribed) it should consider doing so on in-
terline traffic.’ The Commission’s decision containing
such admonition was upheld by the District Court for the
District of New Jersey, Hudson é M. R. Co. v. U. S., supra,
and affirmed by the Supreme Court of the United States,
Hudson & Manhattan R. Co. v. U. S., swpra. A similar
directive to the railroad to increase its revenue through an
adjustment of its interline division with the Pennsylvania
Railroad appeared in the Commission’s report and order
of June 8, 1943, 255 I. ©. C. 649 and again in its report and
order of August 3, 1943.
The Commission acted arbitrarily and capriciously in
permitting the railroad to increase the burden imposed
upon the local downtown passenger in view of the carrier’s
dereliction to abide by the directive of the Commission to
obtain additional revenue from increased divisions from
interline traffic.
15. To the extent that the Commission permits the rail-
road to deliberately disregard the directive, contained in all
of the reports and orders, as aforesaid, requiring the rail-
road to increase its revenues through proper adjustments
of interline accounting with the Pennsylvania Railroad, and
in lieu thereof permits increases in the local downtown fare
notwithstanding the Commission’s own statement, ‘that
it would be unreasonable to expect the entire burden of the
revenue increase to which respondent is entitled to be borne
by the downtown local passengers,’’ the Commission acts
arbitrarily, disregards the evidence, and transcends the
authority vested in it in the administration of the Act.
16. The Commission, in authorizing local downtown fares
in excess of the nine-cent fare stated to be the reasonable
maximum charge in the report and order of June 8, 1943,
255 I. C. C. 649, does so wholly because of an alleged carrier
(fol. 89] disability. As to such alleged carrier disability
the plaintiff herein has been deprived of its full day in
Court by not having been given an opportunity to cross
examine witnesses, refute and otherwise present counter
evidence, and the order was entered without due process
of law. To the extent that the Commission considered such
matters in this regard, it acted arbitrarily and beyond the
realms of proper judicial procedure.
17. To the extent that the Commission relegates the right
of the passenger to a reasonable fare to a position subordi-
nate to an alleged carrier disability, the Commission dis-
regards established law, that every passenger is entitled to
a reasonable fare. The carrier’s disability does not justify
the assessment of unreasonable fares or charges.
18. The Commission, in part, justifies the increased down-
town fare by the reduction in the uptown fare from ten cents
to eleven tokens for a dollar or in the alternative a ten-cent
fare payable only by a dime. In so doing the Commission
commits grievous error of law. A passenger is entitled toa
reasonable fare over any branch or line of the service
irrespective of the fares or level of fares on other services
thereof.
19. In requiring the establishment of an uptown fare of
eleven tokens for one dollars or in the alternative a cash
fare of ten cents payable only by a dime and permitting the
establishment of the same fare on the downtown line the
Commission wholly and completely disregards the evidence
and facts of reeord by which it arrived at the conclusion
that: .
“From the standpoint of the cost of the service to
respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten
cents is a maximum reasonable fare for the uptown
service, the reasonable fare for the downtown service
must be something less than ten cents’’
and in so doing the Commission disregards and overrules
the Supreme Court of the United States, Hudson & Man-
hattan R. Co. v. U. 8., 313 U. 8. 98.
20. The basic findings of the Commission in its report and
order of August 3, 1943, are unsupported by any probative
evidence of record. Such basic findings flow from the ac-
ceptance of the carrier contention of alleged disability. How-
ever, even assuming that the facts were properly and
judiciously in evidence, they are inadequate, as a matter
of law, to support the Commission’s ultimate findings. A
fare in excess of nine cents, theretofore found to be un-
reasonable does not ipso facto become reasonable and proper
because of a carrier disability.
21. On September 13, 1943, the City of Jersey City filed a
complaint in the United States District Court for the Dis-
trict of New Jersey, having for its purpose the enjoining of
the report and order of August 3, 1943. Application was
made, upon filing said bill, for a temporary restraint against
putting into effect said order and a statutory court was
duly established to hear said application.
22. By order dated September 18, 1943, and prior to
hearing of the application for a temporary restraint, the
Interstate Commerce Commission reopened the instant pro-
ceeding for further hearing ‘‘to permit any party hereto to
present evidence directed solely to the propriety and lawful-
ness of the modifications made by the Commissi6n in its
report of August 3, 1943, on further consideration of its
prior findings and orders of July 11, 1938, and June 8,
1943,’’ and to afford ‘‘any party hereto * * * the right
to cross examine adverse witnesses.’’ Such reopening was
occasioned wholly by the filing of the complaint by the City
of Jersey City, as aforesaid, ‘‘out of an abundance of cau-
tion,’’ language of the Interstate Commerce Commission
in its report and order dated November 2, 1943.
3—767
(fol. 90] The Interstate Commerce Commission order of
reopening, dated September 18, 1943, as above described,
by the terms thereof, specifically limited the scope of the
rehearing wholly and solely to permit the railroad to estab-
lish such evidence of changed conditions since the previous
hearings as would improve their position in the proceed-
ing. By the same token and at the same time, the Com-
mission’s order of September 18, 1943, as defined by the
trial examiner, specifically limited and precluded the other
parties to the proceeding, which includes the plaintiff herein,
from offering any evidence or testimony relative to changed
conditions that occurred since the previous hearings which
would establish the lack of need, by the railroad, for any
revenue over and above that produced by the existing eight-
cent local downtown fare.
23. This proceeding before the Interstate Commerce Com-
mission was and is wholly and solely a revenue proceed-
ing. The railroad seeks authorization to increase its exist-
ing fares for the sole purpose of providing additional reve-
nue which it claims it needs. The railroad’s position, as
indicated in the decision of the Interstate Commerce Com-
mission of June 8, 1943, is that:
‘‘ander present fares (eight cents on the local down-
town line and ten cents on the uptown line) it would be
necessary for its annual traffic to increase by about
30 per cent over that of 1941 in order to meet the
current interest requirements on its bonded indebted-
ness.’’
The plaintiff endeavored to submit proof that the rail-
road’s patronage had been increased by an amount in excess
of 30 per cent, 1943 over 1941, and that no additional reve-
nue was necessary or could properly be prescribed over
and above that resulting from the existing eight-cent local
downtown fare, but the Commission declined to receive any
proof offered by the plaintiff in this regard. Moreover,
if any additional revenue is needed by the railroad, which
the record disputes, such revenue should be obtained
through increased divisions of the interline traffic following
the directives of the Interstate Commerce Commission as
set forth hereinbefore.
24. To the extent that the Commission precluded the
plaintiff from bringing the stale record down to date with
respect to the railroad’s patronage and need for revenue,
the Commission acted arbitrarily and capriciously and
deprived the plaintiff of its full day in Court with respect
to that reopened proceeding, and denied plaintiff due
process of law under the Federal Constitution.
25. Because of the inability of the parties to the pro-
ceeding before the Interstate Commerce Commission to
present testimony and evidence relative to changed circum-
stances and conditions, petitions for further hearing were
presented by the protestants before the Interstate Com-
merce Commission but such petitions were denied on No-
vember 2, 1943, because the Commission stated that:
**We have no reason to believe that, if the additional
hearing sought were held, we would feel warranted in
modifying our findings as made in the second report.’’
To the extent that the Commission prejudges and prophe-
sies its findings that would result from a hearing not yet
held the Commission acts arbitrarily, ca riciously and be-
yond the scope of proper judicial p ng, and is guilty
of an abuse of discretion.
26. The Order of the Interstate Commerce Commission
dated June 8, 1943, is in itself illegal and reflects conclu-
sions arbitrarily made without proper support in the rec-
ord, in that the Commission authorized an increase in fares
from eight to nine cents predicated upon an alleged reve-
nue need of the carrier without in effect finding that revenue
was needed and that such revenue should be obtained from
[fol. 91] the local downtown passengers. As a matter of
fact, the Commission found that any increase in revenue
should be provided by the joint interline traffic through
the medium of increased divisions to the Hudson & Man-
hattan Railroad. Moreover, the Commission predicated its
order of June 8, 1943, authorizing the increase from eight
to nine cents upon the fact that it had previously author-
ized railroads operating in interstate commerce, parties
to a proceeding before it known as Exparte 148, Increased
Railway Rates, Fares and Charges, 1942, 248 1. C. C. 545,
‘*to increase passenger fares by an amount of 10 per cent
and freight rates by an amount of 6 per cent.’’ The de-
fendant, Hudson & Manhattan Railroad Company was
named originally as a party in Ex Parte 148, but upon
aN ONNRNEO
a
interested parties, the Interstate Commerce Commission
found that the railroad carriers operating in interstate
commerce in the United States no longer required increased
revenues and that accordingly there was no justification
for the maintenance of the Ex Parte 148, increases. Ac-
cordingly the Interstate Commerce Commission ordered the
railroads to cancel from their tariffs the 6 per cent increase
authorized on freight traffic. Concurrently, the Commission
found that while the rail carriers offered no justification
for the continuance of the 10 per cent increase on passenger
fares, nevertheless, it deemed its continuance in the in-
terest of the National Defense progra™ in that the removal
of the 10 per cent in increase in passenger fares, which
was no longer justified, would tend to attract and otherwise
induce augmented passenger patronage to the railroads,
which was not desirable, and in order to discourage any
increase in transportation of passengers the Interstate
Commerce Commission continued the 10 per cent increase
on passenger traffic.
Notwithstandng the facts stated above, the Interstate
Commerce Commission in its order of June 8, 1943, in this
case predicated the increase in the railroad local downtown
fare from eight to nine cents upon the statement that ‘‘an
increase to that amount would be consistent with that de-
cision,’’ referring to the decision in Ex Parte 148. Such
increase, however, is not consistent with that decision in
that:
(a) The Hudson & Manhattan Railroad Company
was not a party to the proceeding in Ex Parte 148;
(b) The revenue position of the Hudson & Manhat-
tan Railroad is specifically set forth in the record in
this proceeding and does not justify any increase in
fares; and
(c) The record in this proceeding establishes, and all
parties agree, that the traffic of the Hudson & Manhat-
tan Railroad is predominantly that of commuters oc-
cupying a situation wholly distinct and different from
the general passenger patronage of railroads generally
in the United States, and accordingly such commuter
traffic cannot be treated in the light of conditions affect-
ing railroad passenger patronage generally in the
United States. Commuter traffic cannot be curtailed by
levy in the form of increased and exorbitant fares.
27. Plaintiff further alleges and charges that in making
its findings of November 2, 1943, wherein the Commission
reiterated the findings previously made by it in its report
and order of August 3, 1943, the Commission merely went
through the motions of giving protestants its day in Court.
The Commission’s findings authorizing an increase in the
local downtown fare to an alternative fare basis of eleven
tokens for one dollar or a cash fare of one dime conditioned
upon the establishment and maintenance of the same alter-
native fare basis on the uptown line was predicated, (1)
upon the alleged inability of the railroad to collect a nine-
(fol. 92] cent fare in its present coil collecting facilites,
and (2) upon the fact that such alternative fare basis is
the only practical method of collecting fares to be used
universally on the railroad. The testimony in evidence
upon which these findings were mad were nebulous in
character and fraught with contradictions.
The Commission in finding that it is impracticable for
respondent to collect a cash fare of nine cents does so in
the face of testimony and evidence of the railroad that it
is physicatiy possible so to do with the existing mechanical
devices merely by removing the fare-counting mechanism
presently contained in the collecting devices. The Com-
mission entirely and completely disregards this evidence
as it does also the fact that rapid transit lines through-
out the country make fare collections in coin receptacles
that do not have counting devices. To the extent that the
Commission disregarded this evidence and testimony and
refused to make any findings with respect to the railroad’s
ability to collect the nine-cent fare in its present mechanism
it acted arbitrarily, capriciously and beyond the scope of its
delegated authority, and was guilty of a gross abuse of
discretion.
28. While finding that the alternative fare collection is
the only practical method available to the railroad for uni-
versal application on its facilities, the Commission com-
pletely disregards and discards the railroad’s own testi-
mony of record that such token arrangements cannot pos-
sibly be used on its intrastate facilities. To the extent
thatthe Commission disregards and discards this evidence
and testimony, it commits grievous error of fact and law.
29. The prescription by the Interstate Commerce Com-
mission of a uniform scale of fares on both the uptown and
downtown line completely disregards and overrules the
previous findings made by it, the Federal Courts and the
United States Supreme Court on precisely the same factual
situation. To this extent the Commission acted arbitrarily,
capriciously and beyond the scope of its delegated au-
thority. In so doing the Commission entirely disregarded
the facts of record which portray the related services ac-
corded to the passenger, the cost of the service to the rail-
road, and the value of the service to the passenger.
30. In view of all of the facts hereinbefore set forth the
orders of the Commission of June 8, 1943, and November
2, 1943, were arbitrary and capricious without foundation
in law, based upon errors of law, and without adequate
findings or any evidence to support them and contrary to
the evidence of record, and in violation of the Interstate
Commerce Act, and in violation of the specific interpreta-
tions of the governing law, made by the Federal Courts,
including the United States Supreme Court, and accord-
ingly the Commission acted in so arbitrary and unreason-
able a manner as to render its orders, although within
the form of its delegated power, void.
31. The effectiveness of transportation fares on the down-
town line in excess of the reasonable maximum fare of
eight cents will create an undue and unjust burden upon
the local downtown passenger in violation of the Interstate
Commerce Act and unless the enforcement, operation and
execution of the Commission’s orders of June 8, 1943, and
November 2, 1943, are restrained will cause plaintiff and
the members of its body politic great damages as afore-
said for which plaintiff has no adequate remedy at law.
32. Attached hereto and made a part hereof, as Exhibits,
are the following:
Exhibit No. 1. The report and order of the Interstate
Commerce Commission dated July 11, 1938, reported at
227 I. C. C. 741.
[fol. 93] Exhibit No.2. The report and order of the Inter-
state Commerce Commission dated June 8, 1943, reported
at 255 L. C. C. 649.
Exhibit No. 3. The report and order of the Interstate
Commerce Commission dated August 3, 1943.
Exhibit No. 4. The petition of the Hudson & Manhattan
Railroad Company dated July 8, 1943, for Reconsideration
and Modification of the Findings Made by the Commission
in its Report on Further Hearing.
Exhibit No. 5. Reply of Protestants dated July 14, 1943,
to the petition of the Hudson & Manhattan Railroad Com-
pany dated July 8, 1943.
Exhibit No. 6. Order of the Interstate Commerce Com-
mission, dated September 18, 1943, reopening the proceed-
ings for further hearing and circumscribing the plaintiff’s
right to produce evidence.
Exhibit No. 7. The report and order of the Interstate
Commerce Commission dated November 2, 1943.
Wherefore plaintiff prays:
First. That, upon the final hearing, the Judge shall call
to his assistance, in the hearing and determination of this
cause, two other Judges, of whom at least one shall be a |
Cireuit Judge.
Second. That process may issue against defendants,
United States of America, Interstate Commerce Commis-
sion and Hudson & Manhattan Railroad Company, and that
due and proper service of such process of this complaint be
forthwith made upon the United States of America by
delivering a copy of the summons and of the complaint
to the United States Attorney for the District of New
Jersey, and by sending a copy of the summons and of the
complaint by registered mail to the Attorney General of
the United States of America at Washington, D. C., and
upon the Interstate Commerce Commission by sending a
copy of the summons and of the complaint by registered
mail to the Secretary of the Interstate Commerce Commis-
sion, Washington, D. C., and upon the Hudson & Manhattan
Railroad Company, by serving a copy of the summons and
of the complaint upon the registered agent of said com-
pany.
——— |
tO
n | MIRROR”
ment of any local interstate fare in excess of eight cents
for transportation on the downtown line.
Fifth. That this Court grant to plaintiff such order and
further relief as may be proper in the premises.
(Sgd.) Charles A. Rooney, Attorney for Plaintiff.
(Sgd.) Charles Hershenstein, of Counsel.
[fol. 94] Arripavir or Artuur Porrerton 1x Support or
AmeEenpep ComMPLAINT
Strate or New Jersey,
County of Hudson, ss. :
Artuvr Porrterton, of full age, being duly sworn accord-
ing to law on his oath deposes and says:
I am Acting Mayor of Jersey City. I have read the fore-
going amended complaint and the matters and things therein
set forth are true to the best of my knowledge, information
and belief, The plaintiff, City of Jersey City, brings this
action against the United States of America, the Interstate
Commerce Commission (hereinafter sometimes called the
Commission), and Hudson & Manhattan Railroad Company
(hereinafter sometimes called the Railroad), for the purpose
of enjoining, setting aside and annulling the orders of the
Commission decided June 8, 1943 (attached hereto as Ex-
hibit 2), and November 2, 1943 (attached hereto as Exhibit
7), in the proceedings entitled ‘‘Investigation and suspen-
41
sion Docket No. 4394, Passenger Fares of Hudson & Man-
hattan Railroad Company’’:
1. The jurisdiction of this Court over this action is under
and pursuant to the provisions of Section 41, subdivision
(28), and Sections 43 to 48, inclusive, of Title 28 of the
United States Code.
2.. Plaintiff is a municipal corporation in the County of
Hudson and State of New Jersey, and is a body politic.
The matter covered by said order of the Commission arose
in the District of New Jersey.
3. The defendant, United States of America, is sued pur-
suant to express authority of the Congress of the United
States, as provided in Sections 43 to 48 of Title 28 of the
United States Code. .
The defendant, Interstate Commerce Commission, is an
administrative commission existing under and by virtue of
the Interstate Commerce Act, United States Code, Title 49,
and is specifically charged with the administration and en-
forcement of the provisions of said act.
The defendant, Hudson & Manhattan Railroad Company
is a common carrier by railroad engaged in the transporta-
tion of passengers in interstate commerce, subject to the
provisions of the Interstate Commerce Act, United States
Code, Title 4%. Chapter I, part I, except those provisions
which by their terms are not applicable to the interurban
electric railway operated by the Hudson & Manhattan Rail-
road Company, and the order, hereinafter complained of,
permits this railroad to increase its fares.
4. The defendant, Hudson & Manhattan Railroad Com-
pany is a consolidated corporation organized and existing
under and pursuant to the laws of the States of New York
and New Jersey, having a residence and its statutory office
in the District of New Jersey. The railroad transports
passengers only, and does not transport baggage, freight or
express matter.
5. The railroad properties consist of an underground
rapid transit passenger railway, furnishing transportation
facilities between points in uptown and downtown New York
City and points in Jersey City and Hoboken, New Jersey.
The railroad operates its trains in two services commonly
referred to as the downtown line and the uptown line.
On the downtown line the trains operate (a) between the
downtown terminal at Hudson Terminal, New York City, on
the one hand, and on the other the New Jersey stations of
[fol. 95] Exchange Place, Grove and Henderson Streets and
Journal Square, and (b) between the downtown terminal at
Hudson Termiual on the one hand, and on the other the
New Jersey stations located at Exchange Place, Erie Station
and Hoboken.
On the uptown line the trains operate (a) between the
New Jersey stations of Hoboken on the one hand, and on
the other New York City stations of Christopher Street,
9th Street, 14th Street, 19th Street, 23rd Street and 33rd
Street and (b) between the New Jersey stations at Journal
Square, Grove and Henderson Streets and Erie Station, on
the one hand, and on the other the New York City stations
located at Christopher Street, 9th Street, 14th Street, 19th
Street, 23rd Street and 33rd Street.
The railroad also operates, in conjunction with the Penn-
sylvania Railroad, a joint rapid transit electric train service
between the downdown terminal at Hudson Terminal, New
York, and the station of the Pennsylvania Railroad at
Market Street, Newark, New Jersey. The trains in this
joint service operate over the lines of the railroad between
the downtown terminal, Hudson Terminal at New York
City, and the Journal Square station, Jersey City, and from
that point over a line owned by the Pennsylvania Railroad
to the latter’s station at Market Street, Newark, New Jersey.
6. On July 31, 1937, the railroad issued, published and
filed, with the Commission, its local passenger tariff desig-
nated as I. C. C. No. 42, to become effective September 1,
1937, providing for the establishment of a fare of ten
cents for the interstate transportation of passengers on the
railroad’s downtown line as aforesaid, in lieu of a fare of
six cents previously published and maintained in force
and effect. Said tariff provided for no changes in the
fare then in effect for interstate transportation on the
uptown line previously and then established at ten cents.
As a result of protests filed by plaintiff and others in
New Jersey the effectiveness of the aforesaid tariff was
suspended and the lawfulness of the proposed increase in
the downtown fare was made the subject matter of a pro-
ceeding instituted by the Interstate Commerce Commission
in Investigation and Suspension Docket No. 4394.
/
original report and order, 227 L.
paramount findings :
(1) ‘‘From the standpoint of the cost of the service
to respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents.’’ 227 I. C. C. 741, 754.
(2) ‘‘If respondent should feel impelled to seck a
further increase in revenue it should consider doing so
on interline traffic.’’ 227 I. C. C. 741, 762.
(3) ‘*The proposed fare of ten cents would be un-
reasonable under the Act and has not been justified.”’
227 L. C. C. 741, 762.
8. Following the promulgation of the report and or-
der of July 11, 1938, 227 I. C. C. 741, as aforesaid, the rail-
road company appealed to the courts to enjoin the same.
It filed its bill in the Southern District of New York seeking
to enjoin the order of the Commission, but said action was
dismissed by the District Court of the Southern District
of New York because of improper venue, the court holding
that proper venue was in the District of New Jersey, Hud-
son & M. R. Co. v. U. S8., 28 Fed. Supp. 137. Thereupon the
railroad company filed its bill in the United States District
(fol. 96] Court for the District of New Jersey. The order of
the Commission accompanying the original report was up-
held by the United States District Court for the District of
New Jersey, Hudson & M. R. C. v. United States, 33 Fed.
Supp. 495, which was affirmed by the Supreme Court, Hud-
son & Manhattan R. Co. v. U. 8., 313 U. 8. 98.
9. Upon petition of the railroad of July 27, 1942, for
further hearing and for leave to publish and charge a ten-
cent fare on the downtown line by reason of alleged changed
conditions, the proceeding was reopened for further hearing
(1) ‘*That under normal circumstances the satura-
tion point in increased fare (referring to the eight-
cent fare) on that traffic (downtown) has about been
(2) ‘‘If respondent (railroad) has availed itself of
the authority granted by our order of January 21,
1942, in Increased Railway Rates, Fares and Charges,
1942, supra, the downtown fare would now be nine cents.
An increase to that amount would be consistent with
that decision.”’
(3) ** While there can be little doubt that under pres-
ent conditions further increase in this (eight-cent)
fare, even to ten cents, would result in additional net
revenue, we are convinced that it would be unreason-
able to expect the entire burden of the revenue increase
to be borne by the downtown local passengers, and that
a substantial portion thereof should be sought through
increased divisions on the interline traffic.’’
(4) ‘‘Moreover, while the fares and charges for
commutation service of carriers serving the New York
metropolitan area are not uniform, those of carriers
other than respondent portrayed on this record afford
stronger support, differences in transportation serv-
ices considered, for either an eight-cent or a nine-cent
fare than for a ten-cent fare on the downtown line of
respondent.’’
11. The railroad on July 8, 1943, filed a petition for re-
consideration and modification of the findings made by the
45
Commission in its report on further hearing, dated June 8,
1943. That petition sought, through the medium of an
affidavit attached thereto and made a part thereof, to secure
modification of the Commission’s order because of an
alleged disability on the part of the railroad to collect the
nine-cent fare on the downtown line with its available fare
collection system. By this petition the railroad sought,
pending the procurement of tokens which were to be sold
at eleven for one dollar with an alternative cash fare of one
dime, that it be authorized to charge, on the downtown
line, a cash fare of ten cents. Such cash fare of ten cents
was to continue in effect indefinitely until necessary tokens
were acquired and alterations were made in the fare-collec-
tion boxes. In connection therewith, the railroad pro-
posed that if its request were granted it would reduce the
fare on the uptown line from ten cents per passenger to
eleven tokens for one dollar, with an alternative cash fare
payable only by a dime.
12. The plaintiff, on July 14, 1943, replied to the rail-
road’s petition and in requesting denial thereof prayed
that if any affirmative action be taken by the Commission,
the proceeding be set for further hearing to give all parties
their requisite day in Court on the new matters herein al-
leged and thereby afford the plaintiff its right of cross
examination.
[fol. 97] 13. On August 3, 1943, upon the facts as afore-
said, without according the parties further hearing, the
Commission issued its report on reconsideration. Such re-
port affirmed the prior conclusion that the proposed fare
of ten cents had not been justified for general application
on the downtown line but permitted an increased local fare
on the downtown line based on the alternative basis of
eleven tokens for one dollar or a cash fare of ten cents, pay-
able by a dime. Such permissive increase was coupled with
the proviso that contemporaneously with the establishment
and maintenance of the increased downtown fare the same
alternative basis, namely, eleven tokens for one dollar or
a cash fare of ten cents, payable by a dime, be established
and maintained on interstate traffic on the uptown line.
14. In so providing for increased fares on the downtown
line whereby the regular patron or so-called commutation
passenger would be required to pay nine and one-eleventh
cents per ride, and the occasional rider ten cents per ride
in lieu of the nine-cent fare theretofore found to be the
reasonable maximum figure, the Commission in its pet
and order of August 3, 1943, stated:
‘‘The proposed alternative basis will not increase
to any material extent the relative transportation bur-
den of the local commuters on the downtown line be-
yond that anticipated by our authority as granted in
the prior report. We there found that it would be
unreasonable to expect the entire burden of the reve-
nue increase to which respondent is entitled to be borne
by the downtown local passengers, and that a substan-
tial portion thereof, for the reasons herein stated,
should be sought through increased divisions on the
traffic interchanged with the Pennsylvania Railroad
Company. In its petition respondent states that it will
undertake to seek promptly such increased divisions on
that traffic as shall be adequate.’’
In the original report and order of the Commission made
July 11, 1938, 227 1.C.C. 471, the Commission found that if
the railroad “should feel impelled to seek a further in-
crease in revenue (over and above an eight-cent downtown
fare therein prescribed) it should consider doing so on
interline traffic.’’ The Commission’s decision containing
such admonition was upheld by the District Court for the
District of New Jersey, Hudson & M. R. Co. v. U. S., supra,
and affirmed by the Supreme Court of the United States,
Hudson & Manhattan R. Co. v. U. S., swpra. A similar di-
rective to the railroad to increase its revenue through an
adjustment of its interline division with the Pennsylvania
Railroad appeared in the Commission’s report and order
of June 8, 1943, 255 IL. C. C. 649 and again in its report
and order of August 3, 1943.
The Commission acted arbitrarily and capriciously in per-
mitting the railroad to increase the burden imposed upon
the local downtown passenger in view of the carrier’s derelic-
tion to abide by the directive of the Commission to obtain
additional revenue from increased divisions from interline
traffic.
15. To the extent that the Commission permits the rail-
road to deliberately disregard the directive, contained in all
47
of the reports and orders, as aforesaid, requiring the rail-
road to increase its revenues through proper adjustments of
interline accounting with the Pennsylvania Railroad, and in
lieu thereof permits increases in the local downtown fare
notwithstanding the Commission’s own statement, ‘‘that it
would be unreasonable to expect the entire burden of the
revenue increase to which respondent is entitled to be borne
by the downtown local passengers,’’ the Commission acts
arbitrarily, disregards the evidence, and transcends the
authority vested in it in the administration of the Act.
16. The Commission, in authorizing local downtown
fares in excess of the nine-cent fare stated to be the reason-
able maximum charge in the report and order of June 8,
1943, 255 I. C. C. 649, does so wholly because of an alleged
[fol. 98) carrier disability. As to such alleged carrier dis-
ability the plaintiff herein has been deprived of its full
day in Court by not having been given an opportunity to
cross examine witnesses, refute and otherwise present
counter evidence, and the order was entered without due
process of law. To the extent that the Commission con-
sidered such matters in this regard, it acted arbitrarily
and beyond the realms of proper judicial procedure.
17. To the extent that the Commission relegates the right
of the passenger to a reasonable fare to a position subordi-
nate to an alleged carrier disability, the Commission dis-
regards established law, that every passenger is entitled to
a reasonable fare. The carrier’s disability does not justify
the assessment of unreasonable fares or charges.
18. The Commission, in part, justifies the increased down-
town fare by the reduction in the uptown fare from ten
cents to eleven tokens for a dollar or in the alternative
a ten-cent fare payable only by a dime. In so doing the
Commission commits grevious error of law. A passenger is
entitled to a reasonable fare over any branch or line of the
service irrespective of the fares or level of fares on other
services thereof.
19. In requiring the establishment of an uptown fare of
eleven tokens for one dollar or in the alternative a cash
fare of ten cents payable only by a dime and permitting
the establishment of the same fare on the downtown line the
Commission wholly and completely disregards the evidence *
et tate af Sees ee it arrived at the conclusion
t:
‘‘From the standpoint of the cost of the service to
respondent, therefore, as well as of the value of the
service to the passenger, it would seem that if ten cents
is a maximum reasonable fare for the uptown service,
the reasonable fare for the downtown service must be
something less than ten cents’’
and in so doing the Commission disregards and overrules
the Supreme Court of the United States, Hudson & Man-
hattan R. Co. v. U. S., 313 U. 8. 98.
20. The basic findings of the Commission in its report
and order of August 3, 1943, are unsupported by any proba-
tive evidence of record. Such basic findings flow from the
acceptance of the carrier contention of alleged disability.
However, even assuming that the facts were properly and
judiciously in evidence, they are inadequate, as a matter
of law, to support the Commission’s ultimate findings. A
fare in excess of nine cents, theretofore found to be un-
reasonable does not ipso facto become reasonable and
proper because of a carrier disability.
21. On September 13, 1943, the City of Jersey City filed a
complaint in the United States District Court for the Dis-
trict of New Jersey, having for its purpose the enjoining of
the report and order of August 3, 1943. Application was
made, upon filing said bill, for a temporary restraint against
putting into effect said order and a statutory court was duly
established to hear said application.
22. By order dated September 18, 1943, and prior to hear-
ing of the application for a temporary restraint, the Inter-
state Commerce Commission reopened the instant proceed-
ing for further hearing ‘‘to permit any party hereto to
present evidence directed solely to the propriety and law-
fulness of the modifications made by the Commission in its
report of August 3, 1943, on further consideration of its
prior findings and orders of July 11, 1938, and June 8,
1943,”’ and to afford ‘‘any party hereto * °* ° the
right to cross examine adverse witnesses.’’ Such reopening
was occasioned wholly by the filing of the complaint by the
City of Jersey City, as aforesaid, ‘‘out of an abundance of
caution,’’ language of the Interstate Commerce Commission
in its report and order dated November 2, 1943.
cent local downtown fare.
23. This proceeding before the Interstate Commerce Com-
mission was and is wholly and solely a revenue proceeding.
The railroad seeks authorization to increase its existing
fares for the sole purpose of providing additional revenue
which it claims it needs. The railroad’s position, as indi-
cated in the decision ofthe Interstate Commerce Commis-
sion of June 8, 1943, is that:
‘‘under present fares (eight cents on the local down-
town line and ten cents on the uptown line) it would be
necessary for its annual traffic to increase by about
30 per cent over that of 1941 in order to meet the cur-
rent interest requirements on its bonded indebtedness.’’
The plaintiff endeavored to submit proof that the rail-
road’s patronage had been increased by an amount in excess
of 30 per cent, 1943 over 1941, and that no additional revenue
was necessary or could properly be prescribed over and
above that resulting from the existing eight-cent local
downtown fare, but the Commission declined to receive any
proof offered by the plaintiff in this regard. Moreover,
if any additional revenue is needed by the railroad, which
the record disputes, such revenue should be obtained throngh
increased divisions of the interline traffic following the
directives of the Interstate Commerce Commission as set
forth hereinbefore.
24. To the extent that the Commission precluded the
plaintiff from bringing the stale record down to date with
4—767
——
respect to the railroad’s patronage and need for revenue,
the Commission acted arbitrarily and capriciously and de-
prived the plaintiff of its full day in Court with respect
to that reopened proceeding, and denied plaintiff due process
of law under the Federal Constitution.
25. Because of the inability of the parties to the proceed-
ing before the Interstate Commerce Commission to present
testimony and evidence relative to changed circumstances
and conditions, petitions for further hearing were presented
by the protestants before the Interstate Commerce Com-
mission but such petitions were denied on November 2, 1943,
because the Commission stated that:
‘*We have no reason to believe that, if the additional
hearing sought were held, we would feel warranted in
modifying our findings as made in the second report.’’
To the extent that the Commission prejudges and prophe-
sies its findings that would result from a hearing not yet
held the Commission acts arbitrarily, capriciously and be-
yond the scope of proper judicial proceeding, and is guilty
of an abuse of discretion.
26. The Order of the Interstate Commerce Commission
dated June 8, 1943, is in itself illegal and reflects conclusions
arbitrarily made without proper support in the record,
in that the Commission authorized an increase in fares from
eight to nine cents predicated upon an aileged revenue
need of the carrier without in effect finding that revenue
was needed and that such revenue should be obtained from
[fol. 100] the local downtown passengers. As a matter of
fact, the Commission found that any increase in revenue
should be provided by the joint interline traffic through
the medium of increased divisions to the Hudson & Manhat-
tan Railroad. Moreover, the Commission predicated its
order of June 8, 1943, authorizing the increase from eight
to nine cents upon the fact that it had previously authorized
railroads operating in interstate commerce, parties to a
proceeding before it known as Exparte 148, Increased Rail-
way Rates, Fares and Charges, 1942, 248 I. C. C. 545, ‘‘to
increase passenger fares by an amount of 10 per cent and
freight rates by an amount of 6 per cent.’’ The defendant,
Hudson & Manhattan Railroad Company was named origi-
nally as a party in Ex Parte 148, but upon its own motion
the railroad company was eliminated as a party to the pro-
51
ceedings and this, upon the ground that the railroad com-
pany refused to be bound by any order which the Interstate
Commerce Commission might make in those proceedings
predicated upon the evidence produced therein. Subse-
quent to the Interstate Commerce Commission decision in
Ex Parte 148, and upon petitions filed by interested parties,
the Interstate Commerce Commission found that the rail-
road carriers operating in interstate commerce in the United
States no longer required increased revenues and that
accordingly there was no justification for the maintenance
of the Ex Parte 148, increases. Accordingly the Interstate
Commerce Commission ordered the railroads to cancel from
their tariffs the 6 per cent increase authorized on freight
traffic. Concurrently, the Commission found that while the
rail carriers offered no justification for the continuance
of the 10 per cent increase on passenger fares, nevertheless,
it deemed its continuance in the interest of the National
Defense program in that the removal of the 10 per cent
increase in passenger fares, which was no longer justified,
would tend to attract and otherwise induce augmented pas-
seager patronage to the railroads, which was not desirable,
and in order to discourage any increase in transportation
of passengers the Interstate Commerce Commission con-
tinued the 10 per cent increase on passenger traffic.
Notwithstanding the facts stated above, the Interstate
Commerce Commission in its order of June 8, 1943, in this
ease predicated the increase in the railroad local down- |
town fare from eight to nine cents upon the statement that
‘‘an increase to that amount would be consistent with that
decision,’’ referring to the decision in Ex Parte 148. Such
en however, is not consistent with that decision in
that:
(a) The Hudson & Manhattan Railroad Company
was not a party to the proceeding in Ex Parte 148;
(b) The revenue position of the Hudson & Manhattan
Railroad is specifically set forth in the record in this
a and does not justify any increase in fares;
an
(c) The record in this proceeding establishes, and all
parties agree, that the traffic of the Hudson & Manhat-
tan Railroad is predominantly that of commuters oc-
cupying a situation wholly distinct and different from
EOP A
a
the general passenger patronage of railroads generally
in the United States, and acco such commuter
traffic cannot be treated in the t of conditions
affecting railroad passenger patronage generally in
the United States. Commuter traffic cannot be cur-
— by levy in the form of increased and exorbitant
ares.
27. Plaintiff further alleges and charges that in making
its findings of November 2, 1943, wherein the Commission
reiterated the findings previously made by it in its report
and order of August 3, 1943, the Commission merely went
through the motions of giving protestants its day in Court.
The Commission’s findings authorizing an increase in the
local downtown fare to an alternative fare basis of eleven
tokens for one dollar or a cash fare of one dime conditioned
upon the establishment and manitenance of the same alter-
native fare basis on the uptown line was predicated, (1)
upon the alleged inability of the railroad to collect a nine-
{fol. 101] cent fare in its present coil collecting facilities,
and (2) upon the fact that such alternative fare basis is the
only practical method of collecting fares to be used uni-
versally on the railroad. The testimony in evidence upon
which these findings were made were nebulous in character
and fraught with contradictions.
The Commission in finding ihat it is impracticable for
respondent to collect a cash fare of nine cents does so
in the face of testimony and evidence of the railroad that it
is physically possible so to do with the existing mechanical
devices merely by removing the fare-counting mechanism
presently contained in the collecting devices. The Com-
mission entirely and completely disregards this evidence as
it does also the fact that rapid transit lines throughout
the country make fare collections in coin receptacles that
do not have counting devices. To the extent that the Com-
mission disregarded this evidence and testimony and re-
fused to make any findings with respect to the railroad’s
ability to collect the nine-cent fare in its present mechanism
it acted arbitrarily, capriciously and beyond the scope of its
delegated authority, and was guilty of a gross abuse of
discretion.
28. While finding that the alternative fare collection is the
only practical method available to the railroad for universal
application on its facilities, the Commission completely dis-
regards and discards the railroad’s own testimony of record
that such token arrangements cannot possibly be used on its
intrastate facilities. To the extent that the Commission
disregards and discards this evidence and testimony, it com-
mits grievous error of fact and law.
29. The prescription by the Interstate Commerce Commis-
sion of a uniform scale of fares on both the uptown and down-
town lines completely disregards and overrules the previous
findings made by it, the Federal Courts and the United:
States Supreme Court on precisely the same factual situa-
tion. To this extent the Commission acted arbitrarily,
capriciously and beyond the scope of its delegated authority.
In so doing the Commission entirely disregarded the facts
of record which portray the related services accorded to
the passenger, the cost of the service to the railroad, and the
value of the service to the passenger.
30. In view of all of the facts hereinbefore set forth the
orders of the Commission of June 8, 1943, and November 2,
1942, were arbitrary and capricious without foundation in
law, based upon errors of law, and without adequate findings
or any evidence to support them and contrary to the evi-
dence of record, and in violation of the Interstate Com-
merce Act, and in violation of the specific interpretations of
the governing law, made by the Federal Courts, including
the United States Supreme Court, and accordingly the Com-
mission acted in so arbitrary and unreasonable a manner as
to render its orders, although within the form of its dele-
gated power, void.
31. The effectiveness of transportation fares on the down-
town line in excess of the reasonable maximum fare of eight
cents will create an undue and unjust burden upon the local
downtown passenger in violation of the Interstate Com-
merce Act, and unless the enforcement, operation and execu-
tion of the Commission’s orders of June 8, 1943, and No-
vember 2, 1943, are restrained will cause plaintiff and the
members of its body politic great damages as aforesaid
for which plaintiff has no adequate remedy at law.
32. Attached hereto and made a part hereof, as Exhibits,
are the following:
Exhibit No. 1. The report and order of the Interstate
Commerce Commission dated July 11, 1938, reported at
227 I. C. C. 741.
{fols. 102-170] Exhibit No. 2. The report and order of the
Interstate Commerce Commission dated June 8, 1943, re-
ported at 255 I. C. C. 649.
Exhibit No. 3. The report and order of the Interstate
Commerce Commission dated August 3, 1943.
Exhibit No. 4. The petition of the Hudson & Manhattan
Railroad Company dated July 8, 1943, for Reconsideration
and Modification of the Findings Made by the Commission
in its Report on Further Hearing.
Exhibit No. 5. Reply of Protestants dated July 14, 1943,
to the petition of the Hudson & Manhattan Railroad Com-
pany dated July 8, 1943.
Exhibit No. 6. Order of the Interstate Commerce Commis-
sion, dated September 18, 1943, reopening the proceeding
for further hearing and circumscribing the plaintiff’s right
to produce evidence.
Exhibit No. 7. The report and order of the Interstate
Commerce Commission dated November 2, 1943.
(Sgd.) Arthur Potterton.
Sworn and subscribed to before me at Jersey City
this November 15, 1943. (Sgd.) Ann G. Hogan,
Notary Public of New Jersey.
{fol.171] Is rae Untrep Srares District Covrr
[Title omitted]
Notice or Morton ror Leave to Fimz anp Serve Petition
(Comptaint)—Filed November 19, 1943
To: the Attorney General of the United States, at Wash-
ington, D. C., and Hon. Charles M. Phillips, United States
Attorney for the District of New Jersey, Attorneys for
United States of America;
Daniel W. Knowlton, Esq., Chief Counsel and E. M. Reidy,
Assistant Chief Counsel, Attorneys for Interstate Commis-
sion ;
Collins & Corbin, Esqs., John Finerty, Esq., and John E.
Buck, Esq., Attorneys for Hudson & Manhattan Railroad
Company ;
Charles A. Ruoney, Esq., Attorney for City of Jersey City.
Please Take Notice, that the undersigned will move this
Court on behalf of the intervenors, Office of Price Adminis-
tration and Director of Economic Stabilization, on the 19th
day of November, 1943, at 10:30 o’clock in the forenoon,
or as soon thereafter as counsel can be heard, at the Court
Room of the United States District Court for the District
of New Jersey, Post Office Building, Newark, New Jersey,
upon the complaint filed herein and upon all proceedings
heretofore had herein for an order granting leave to inter-
venors to file and serve the annexed petition (complaint),
and for such other and further relief as to this Court may
be just and proper in the premises.
Respectfully submitted, Fred M. Vinson, Director of
the Office of Economic Stabilization, by Chester
Bowles, Price Administrator of the Office of Price
Administration. Henry Hart, Jr., Acting General
{fol. 172] Counsel. David F. Cavers, Assistant
General Counsel; Harry R. Booth, Utilities Coun-
sel; Robert S. Keebler, Attorney, Office ef Price
Administration, Washington, D. C.
Nathan L. Jacobs, District Enforcement Attorney,
Newark Office of Price Administration.
{fol.173] Iw tae Unrrep Srares Distraict Covrr
[Title omitted]
Petition or Frep M. Vinson, Dmector or tHe Orrice or
Economic Srapiization, py Cuester Bowes, Price Ap-
MINISTRATOR OF THE OrFice oF Price ADMINISTRATION,
ror Leave To [nTerveNg, For aN IwreRLocutTory Insunc-
TION AND ror Orner Retrer—Filed November 19, 1943
Comes Fred M. Vinson, Economic Stabilization Director,
by Chester Bowles, Price Administrator of the Office of
Price Administration, and petitions the court that he be
granted leave to intervene and become a party to the pro-
ceeding under the amended and Supplemental Complaint
filed by the plaintiff herein; and in this connection your
petitioner shows that:
1. By virtue of Executive Order No. 9250 issued October
3, 1942, the Director of the Office of Economic Stabilization
is the agency designated by the President to receive notice
of any increase in the rates or charges of common carriers
or other utilities, pursuant to the Emergency Price Control
Act of January 30, 1942, as amended October 2, 1942 (Pub-
lic Laws 421 and 729, 77th Congress, 2nd Session); and
your petitioner Fred M. Vinson is the duly appointed and
acting Director of said Office of Economic Stabilization.
2. By Directive No. 1 issued by the Economic Stabilization
Director on October 14, 1942, the Price Administrator of the
Office of Price Administration was designated as the repre-
sentative of said Director to receive notices of increases
in common carrier or other public utility rates and charges,
with authority to intervene and participate in proceedings
before Federal, State and municipal authorities in connec-
tion with proposed increases in such rates and charges;
and the said Chester Bowles is the duly appointed and acting
Price Administrator of said Office of Price Administration.
3. Said Price Control Act (as amended) was enacted
pursuant to the war power of the federal government, and
{fol. 174] provides that prices, wages and salaries shall be
stabilized so far as practicable on the basis of the levels
which existed on September 15, 1942, with adjustments
only to the extent necessary to aid in the effective prose-
cution of the war or to correct gross inequities; that such
policy is imperative in order to safeguard the national
economy against the devastating effects of inflation during
the war emergency, when employment and consumer pur-
chasing power are at unprecedented levels and when the
available supply of consemers’ goods is drastically cur-
tailed ; that, in the application of said policy, price increases,
however justifiable if viewed apart from their effect upon
our national economy, may not be authorized during this
critical emergency unless required io further the war effort
or to correct gross inequities.
4. Pursuant to the aforesaid policy of the Congress the
Price Administrator has fixed the prices of commodities
essential to the life and welfare of our people, has stabilized
rents, and has rationed scarce and vital commodities; that
such steps have been necessary war measures despite the
fact that sacrifices and hardships have resulted in many
cases.
5. In stabilizing common carrier and other public utility
rates and charges at September 15, 1942 levels by prohibit-
57
ing all general increases in such rates and charges unless
and until 30 days’ notice had been given to the President’s
designee and his timely interventicn to protest such in-
creases consented to, Congress intended that the existing
regulatory agencies would carry out the stabilization pro-
gram in the public utility and common carrier fields, that
no increases would be made contrary to or without full
effect to the stabilization legislation and policies.
6. The aforesaid Executive Order No. 9250, issued by the
President on Octeber 3, 1942, requires that ali government
departments shall cooperate in the execution of the stabili-
zation policy enacted by the Congress on October 2, 1942;
said order stating in part:
The guiding policy of the Director and of all depart-
ments and agencies of the Government shall be to
stabilize the cost of living in accordance with the Act of
October 2, 1942; and it shall be the duty and responsi-
bility of the Director and of all departments and
agencies of the Government to cooperate in the execu-
tion of such administrative programs and in the de-
velopment of such legislative programs as may be neces-
sary to that end. The administration of activities re-
lated to the national economic policy shal! remain
with the departments and agencies now responsible
for such activities, but such administration shall con-
form to the directives on policy issued by the Director.
Subsequently on April 8, 1943 the President issued Execu-
tive Order No. 9328, in which he directed the responsible
(fol. 175] agencies of the government to take immediate
and urgent steps ‘‘to prevent increases in wages, salaries,
prices and profits, which, however justifiable if viewed apart
from their effect upon the economy, tend to undermine the
basis of stabilization.’’ Said order states in part:
The attention of all agencies of the Federal Govern-
ment, and of all State and municipal authorities, con-
cerned with the rates of common carriers or other public
utilities, is directed to the stabilization program of
which this order is a part so that rate increases will be
disapproved and rate reductions effected, consistently
with the Act of October 2, 1942, and other applicable
federal, state or municipal law, in order to keep down
CU eee ear eee Oe papas oe
stabilization program.
pa both under its own statute and under the
October 2, 1942 to give full force and effect to the govern-
ment’s stabilization program and to deny any rate increase
increase was necessary after giving full and complete con-
sideration to the improvement in the company’s operations,
revenues and income as a result of the war and the restric-
tions imposed on competitive forms of transportation.
8. Pursuant to the aforesaid Act of October 2, 1942, and
procedural regulations thereunder, the defendant Hudson &
Manhattan Railroad Company under date of November 9,
- 1942, served formal notice on your petitioner of its applica-
tion pending before the Interstate Commerce Commission
under ‘‘ Investigation and Suspension Docket No. 4394’’ for
authorization of a 10-cent fare on its downtown line betweer
Hudson Terminal, New York, New York, and Jersey City
and Hoboken, New Jersey, and consented to his timely in-
tervention and in such proceeding.
Your petitioner intervened as a protestant in said pro-
ceeding, filing a written brief and participating in the oral
agreement in opposition to any increase in the existing 8-cent
fare, on the ground that stich increase would be inflationary
and in violation of the standards imposed by the Interstate
Commerce Act and the national policy of economic stabiliza-
tion; notwithstanding which, the Commission on June 8,
1943, made its report and order authorizing said carrier to
increase its downtown fare from 8 to 9 cents.
9. Your petitioner likewise participated in the supple-
[fol. 176] mental proceeding arising out of the carrier’s peti-
tion filed July 8, 1943, for ‘‘reconsideration and modifica-
tion’’ of the Commission ’s June 8 order, wherein the carrier
t authorization to substitute a uniform cash fare of 10
cents and an alternative token fare (on the basis of eleven
tokens for one dollar), in lieu of the authorized 9-cent down-
town fare and the 10-cent uptown fare, on the ground that
physical limitations of the fare collection boxes used by
said carrier made it impossible to collect and count a 9-cent
cash fare on the downtown line without causing serious pub-
lic inconvenience through stoppages and detentions of pas-
sengers.
In his answer filed July 19, 1943, to the carrier’s supple-
mental petition aforesaid, your petitioner opposed the pro-
posed modification in rates en the ground that such modifi-
cation would result in additional inflation, and your peti-
tioner requested that the Commission reconsider its June
8 order and restore the downtown fare to the 8-cent level,
stating:
In view of Petitioner’s tremendously improved current
earnings, it is requested that this Commission recon-
sider its previous modification of its original order,
and return Petitioner’s downtown fares to the original
level of 8 cents. This will serve the national program
to keep down the cost of living.
Your petitioner further opposed entry of a supplemental
order by the Commission modifying its June 8 order as pro-
posed, unless after notice and hearing, in conformity with
the requirements of due process of law.
10. Upon the entry by the Commission on August 3, 1943,
of a supplemental report and order authorizing the further
increase in the downtown fare as proposed in the carrier’s
aforesaid petition, your petitioner was prepared to file an
intervening petition in the proceeding instituted upon the
Original Complaint of the plaintiff City of Jersey City
herein; but refrained from doing so when the Commission
on September 18, 1943, issued an order reopening the pro-
ceeding before it for further hearing ‘‘to permit any party
hereto to present evidence directed solely to the propriety
and lawfulness of the modification made by the Commission
in its report of August 3, 1943.’’ -
Your petitioner excepted to the restrictions and limita-
tions imposed by the Commission’s aforesaid order for sup-
plementa' hearing, insisting at the outset of the hearing
and repeatedly throughout the hearing that same should be
broad enough to include evidence of the carrier’s revenues,
expenses and earnings since the closing of the original
hearing in the proceeding.
Your petitioner further excepted to the arbitrary inter-
pretation given by the trial examiner to the Commission’s
[fol. 177] order of September 18 reopening the hearing, who
refused to receive any testimony with respect to the carrier’s
revenue except testimony relating strictly to the difference in
revenue resulting from the authorized cash fares, on the
one hand, and the combination cash and token fares, on the
other.
Attached hereto as Exhibit A and made a part hereof are
excerpts from the record of said supplemental hearing show-
ing the narrow scope of said hearing and the restrictive
rulings of the examiner, under which your petitioner was
denied a full and fair hearing, as is required by said Act
of October 2, 1942.
Attached hereto as Exhibit B and made a part hereof is
a ‘*Condensed Income Statement’’ of said carrier covering
the months of July 1942 and July 1943 and the first seven
months of 1942 and 1943, respectively; which exhibit was
excluded from the record and which demonstrates not only
the rapidly improving financial position of the carrier, even
after all of its alleged operating expenses, but also that at
-the existing 8 cent fare the company is earning more than
the Commission anticipated the carrier would at the 9 cent
fare in its order of June 8, 1943. The exhibit also proves
that had the entirely unwarranted $20,000 per month self-
insurance cost been eliminated, the carrier would earn at
the existing 8 cent fare far in excess of all interest charges,
a condition not anticipated at the 9 cent fare, by the Com-
mission in said order.
11. Even on the basis of the evidence contained in the
record of supplemental hearing, improperly restricted as
it was, your petitioner showed:
(a) That the number of revenue passengers has increased
from 65,847,289 in 1941 (Ex. No. 5-R, skeet 1) to 83,500,000
based on evidence submitted by the Company (estimated
on the basis of 8 months’ operations) in 1943 (R. 2214).
(b) That no diversion of passengers is expected by the
Company as a result of the increased fares, because of pre-
vailing war conditions (R. 2055).
(c) That the carrier’s estimate that 90 percent of its pas-
sengers will use the token fares is grossly excessive; and on
61
the basis of the only probative evidence in the record, the
ATA Study,’ a token utilization of 38.8%+2.8% can be
expected in over 95 out of 100 instances, under the toker:
system proposed by company. Also, a spot check to
bring the ATA Study to date, indicates that the ATA
Study applies to the carrier under current conditions. A
simple calculation, based on facts in the record will show
that unless 74% or more of all of the passengers purchase
tokens, the carrier will derive a financial advantage by
[fol. 178] the substitution of the cash and token fare system
for the previously authorized 9 cent fare. The Commis-
sion’s calculation of a possible 79% token utilization (Order
Sheet 7) is the result of errors in arithmetical calculation,
and has no support whatever in the record.
(d) That the carrier has been guilty of laches in failing
to prosecute its just claim against the Pennsylvania Rail-
road Company for a more equitable reapportionment of in-
terline fares, to which reapportionment the Commission
itself stated in its 1938 rate order the carrier must look for
additional revenue in lieu of seeking to increase its down-
town fare above the 8-cent level (R. 2105-2112).
12. Because of the restrictive scope of the supplemental
hearing held pursuant to the Commission’s order of Sep-
tember 18, 1943, your petitioner on October 14, 1943, filed
with the Commission a written motion for modification and
amendment of said order and for the reopening of the
proceeding to permit your petitioner to introduce the evi-
dence excluded by the examiner at said supplemental hear-
ing and such additional evidence as might be necessary in
order to bring said record, now in an obsolete and stale con-
dition: and originally closed on September 19, 1942, down to
date. A copy of said Motion, marked Exhibit C, is attached
hereto and made a part hereof.
This motion was overruled and disallowed by the Com-
mission in its ‘‘Second Report on Further Hearing’’ issued
on November 2, 1943, whereir the Commission granted the
petition of the carrier to substitute uniform token and cash
fares on its downtown and uptown lines in lieu of the there-
tofore authorized cash fares.
‘Committee on Fare Structures Beport, American
Transit Association, 1937 Proceedings, Exhibit 142.
13. Your petitioner contends that in its rulings,
and order aforesaid the Commission denied to your -
tioner the right to a full and fair hearing to which he is
entitled under the Act of October 2, 1942, aforesaid and
under the standards properly applicable to hearings and
proceedings before said Commission.
14. Your petitioner contends that in said rulings, find-
ings and orders the Commission acted arbitrarily, capri-
ciously and in violation of the standards imposed by the In-
terstate Commerce Act and by the aforesaid Act of October
2, 1942, and orders and directives thereunder, which the
Commission was obligated to follow in its dete.mination of
just and reasonable rates under the emergency now pre-
vailing.
In addition to its denial to your petitioner of a full and
fair hearing, the Commission erred as a matter of law, even
on the basis of the record before it:
[fol. 179] (a) In issuing its findings and order of June 8,
1943, authorizing an increase in the defendant carrier’s
downtown fare from 8 to 9 cents despite the facts that said
carrier’s normal competitors are subject to rigid wartime
restrictions and its revenues and earnings are greater than
they have been at any time since 1937.
(b) In failing to give due weight to the fact that, because
of the great and continuing increase in the carrier’s traffic
and earnings during the war period, its earnings under the
8-cent fare may reasonably be expected to exceed, during
the remaining war period, the amount which the Commis-
sion found adequate and reasonable in its 1938 rate order
and also in its rate order of June 8, 1943.
(c) In failing to find that the carrier’s special War Dam-
age Reserve is unjustified as an operating expense and that
such amount should in fact be considered a part of the car-
rier’s net income.
(d) In accepting the carrier’s contention, contrary to the
evidence and on the basis of assumptions not supported by
the record and despite the fact that all evidence as to cur-
rent net earnings was excluded from the record, that the
earrier’s proposed alternative basis of cash and token fares
can be expected to yield ‘‘no greater gross or net revenues
than would result under cash fares of 10 cents uptown and
9 cents downtown, if both of such fares were collectible.’’
(e) In finding in its Second Report on November 2, 1943,
that the proposed token fare will result in no increase in
the average cost per passenger above the level of fares
theretofore authorized, since for the majority of riders,
i. e. downtown riders, the fare is increased from 9 cents to
at least 91/11 cents, and up to a maximum of 10 cents. In
any event, the average fare to this majority of riders is
bound to be in excess of 9 1/11 cents.
(f) In finding, on the unsupported opinion of the carriers
officers that only the irregular or occasional passenger will
pay the 10-cent fare.
(z) In finding, despite the fact that the record contains
no evidence whatever on the subject, that the 10-cent cash
fare compares favorably with the charges made for similar
service by railroads generally.
(h) In authorizing an increase in the downtown fare
beyond the level which the traffic would bear during nor-
mal times (see Hudson & Manhattan Railroad Company v.
United States, 313 U. 8. 98) merely because wartime re-
strictions on alternative and competitive lines of transpor-
[fol. 180] tation, and the increased volume of traffic due to
the war, have made it possible for the carrier to exact the
higher fare without diminution of business.
(i) In failing to adhere to the sound conclusion reached
in its 1938 rate order, that the carrier must look for addi-
tional revenue to a reapportionment of the interline fares
rather than to any increase in its downtown fare above the
8-cent level; and in ignoring and condoning the carrier’s
laches and derelictions in failing to prosecute its claim for
such reapportionment, as directed by the Commission in
said 1938 rate order.
(j) In finding that an increase in the downtown fare may
be compensated by a decrease in the uptown fare; and in
equalizing said fares, contrary to the Commission’s uni-
form prior findings that the carrier’s uptown and downtown
fares require a rate differential in favor of the downtown
fare.
(k) In holding that the effect of the increase authorized
in the downtown fare upon the cost of living ‘‘will be so
(m) Because the Commission’s findings and order were
based upon a stale record in disregard of the rapidity of
economic changes brought about by the war and, in particu-
lar, in disregard of the effect of the curtailment of com-
petitive forms of transportation caused by war measures,
upon the operations, revenues, and income of the company.
15. The orders of the Commission of June 8, 1943, and
November 2, 1943, are arbitrary and capricious, without
foundation in law, based upon errors of law, upon errone-
ous statutory standards and without adequate findings or
any evidence to support them and contrary to the evidence
of the record and in violation of the Act of October 2 and
the Interstate Commerce Act and in denial of the right of
your petitioner under the Act of October 2, 1942, and the
Constitution of the United States to a full and fair hearing
and accordingly said orders are arbitrary, unreasonable,
illegal, and void.
16. In issuing its reports and rate orders of June 8 and
November 2, 1943, aforesaid, the Commission committed
[{fol. 181] the further errors enumerated in the Amended
and Supplemental Complaint of the plaintiff filed herein,
which your petitioner adopts and reiterates by reference.
17. Unless said orders of June 8, 1943, and November 2,
1943, are restrained, your petitioner will be caused great
and substantial injury in the performance of their duties
under the stabilization legislation.
Wherefore, your petitioner prays:
First : That this petition be heard by a three judge court at
the earliest available date ; and that upon a hearing thereon,
the court issue an order granting leave to your petitioner to
intervene and become a party herein.
Second: That pending the final hearing of this cause, the
court issue an interlocutory and permanent injunction and
restraint enjoining the defendants from so much of said
orders of June 8 and November 2, 1943, as permits the estab-
lishment of any local interstate fare in excess of eight cents
for transportation on the downtown line.
Third: That upon final hearing the court adjudge, order
and decree that said orders of June 8 and November 2,
1943, insofar as they permit the establishment of any local
interstate fare in excess of eight cents for transportation
on the downtown line, are, and have at all times been, in
violation of the Act of October 2, 1943, enacted by the Con-
gress; and said orders are and have at all times deen, be-
yond the lawful authority of said Commission, and wholly
null and void ; and that said orders be perpetually set aside
and annulled and the enforcement thereof perpetually en-
joined.
Fourth: That the Court grant to your petitioner such
other and further relief as may be proper in the premises.
Respectfully submitted, Fred M. Vinson, Director of
the Office of Economic Stabilization; By Chester
Bowles, Price Administrator of the Office of Price
Administration; Henry M. Hart, Jr., Acting Gen-
eral Counsel, David F. Cavers, Assistant General
Counsel ; Harry R. Booth, Utilities Counsel ; Robert
8S. Keebler, Attorney, Office of Price Administra-
tion.
[fols 182-196} Duly sworn to by Harry R. Booth. Jurat
omitted in printing.
{fol. 198] Exazart ‘‘C’’ ro Petrrion
Berore THE Interstate Commence CoMMISSION
I. & 8. Docket No. 4394
Passencer Fangs, Hupsow & Mannatran Ratinoap
Motion of Fred M. Vinson, Economic Stabilization Director,
by Prentiss M. Brown, Price Administrator, Protestant
herein, for Modification and Amendment of Commission’s
Order of September 18, and for Reopening
Now comes Fred M. Vinson, Economic Stabilization Di-
rector, by Prentiss M. Brown, Price Administrator, pro-
testant herein, and moves for modification and amendment
of the Order of the Commission entered on September 18,
1943, reopening the above-entitled proceeding, and in sup-
port thereof states:
1. On July 8, 1943, the Commission entered its report and
order in the above-entitled cause approving an increase in
fares for the Hudson and Manhattan Railroad on its down-
town lines from 8 cents to 9 cents, said increase to remain in
effect for the duration of the war and six months thereafter.
On July 8, the railroad filed a petition for reconsideration
and modification of the findings made by the Commission
requesting permission to institute cash fare of ten cents,
eleven tokens for one dollar, for both its downtown and
uptown lines.
2. On July 19, 1943, your protestant filed a brief with this
Commission requesting the Commission to deny the request
o} the company to increase its fares on its downtown lines,
and to reopen the proceeding for the purpose of determining
waether the improvement in the traffic, revenues, and in net
earnings of said railroad since the war and as a result of
conditions arising out of the war, were not so great that no
increases above the existing 8-cent fares would be necessary.
3. On September 18, 1943, the Commission entered an
order in the above-entitled cause which provided in part as
follows:
It is ordered, that this proceeding be reopened for
further hearing to permit any party hereto to present
evidence directed solely to the propriety and lawfulness
4. At the of the hearings, Examiner Koch, who
was desi as the Examiner in the above-entitled cause,
stated as follows (R. 2034-2035) :
The order of the Commission of September 18, 1943,
i “ar iad lteter oaatea
quoting :
and orders of July 11, 1938, and June 8, 1943;
That wording is plain that the evidence at this further
hearing must be directed solely to the propriety and
lawfulness of such modifications as were made in the
prior findings of the report of August 3.
Those modifications were from a finding that a nine-
cent downtown fare had been justified, as made in the
report of June 8, to a finding as made on August 3, that
an alternative downtown fare of 11 tokens for $1 or a
cash fare of a dime had been justified with the proviso
that contemporaneously the same alternative basis
shal] be maintained on the uptown lines.
In every other respect the prior findings of June 8
were affirmed.
Therefore, this further hearing under the Commis-
sion’s order is restricted to evidence bearing upon the
issue of whether or not those modifications in the prior
finding, which had approved the downtown fare of 9
cents, shall stand.
We are not here retrying the lawfulness of the pres-
ent 9-cent fare.
Said examiner further limited the scope of the hearing
(R. 2149, 2215).
5. Counsel for the Stabilization Director and the Price
Administrator, protestant herein, excepted to the ruling of
the Examiner limiting the scope of the hearing (R. 2035-
2036).
6. At the came bearing (IR 2144, £2.) couhesl cought to ex-
amine a company witness in connection with the annual
charge ¢ f approximately $240,000, representing war damage
reserve, to determine whether such charges were necessary
or required in view of change in war conditions, but objec-
tions to such cross-examination were sustained by the Ex-
aminer (R. 2145-2225).
7. Examiner Koch refused to admit or permit to be
marked for identification an exhibit showing the income and
[fol. 200] expenses of the railroad upon its own figures for
the first seven months of 1943 and first seven months of
1942, and offered by a witness for the ear (R. 2446-
2447).
8. Counsel for the protestant stated if given an oppor-
tunity to demonstrate by presentation of evidence at the
hearing, he would show that the earnings of the company,
as a result of the war, at an 8-cent fare and for the full year
of 1943 would exceed the amount which the Commission
found to be adequate and reasonable in its 1938 order or
its order of June 8, 1943, authorizing an increase (R. 2448
ff.). Such opportunity was denied.
9. While protestant prepared and presented testimony
within the narrow scope of the reopened proceeding and
the limited tithe allowed for the preparation of such testi-
mony, protestant’s request for additional time to present
and prepare sach testimony was denied by said Examiner.
10. The record upon the previous hearing was closed
on September 19, 1942 (R. 1928) and hence is incomplete on
the effect of the war and time restrictions relating to com-
petitive forms of transportation upon the revenue and in.
come of the company.
11. Protestant believes that the increase in rates over and
above 8 cents on the downtown lines of respondent is not
necessary, that the company’s earnings under the existing
70
fares is adequate and that the increase in fares over and
above the fares in effect on September 15, 1942, is con-
trary to and in conflict with the national stabilization pro-
gram and policies of the government and will interfere with
the efforts and duties of protestants to keep down the cost
of living under such legislation. The denial by the ex-
aminer of the right to introduce evidence, and the order
of September 18, 1943, limiting the scope of the hearing,
denies your protestant the right to a full and fair hearing
to which he is entitled under the Act of October 2, c. 578, 56
Stat. 765, 50 U. 8. C. (App.).
Wherefore, protestant requests the Commission to
and amend its order of September 18, 1943, to eliminate the
restrictions heretofore imposed upon said reopened hear-
ing, to reopen said proceeding for the purpose of receiving
testimony and exhibits with respect to the revenues, income
and expense of the company, in order that said record be
brought up to date; including evidence and exhibits relating
to the right and need of the company for an increase in
[fols. 201-202] rates, charges and revenues over and above
those in effect on September 15, 1942, under the Interstate
Commerce Act, and the Act of October 2, 1942.
Respectfully submitted, Fred M. Vinson, Economic
Stabilization Director; Prentiss M. Brown, Price
Administrator, Office of Price Administration, by
. George J. Burke, General Counsel; David F.
Cavers, Assistant General Counsel; Harry R.
Booth, Utilities Counsel.
October 14, 1943. Office of Price Administration, Wash-
ington, D. C.
Certificate of Service .
I hereby certify that I have served the foregoing docu-
ment upon all parties of record in this proceeding by mail-
ing a copy thereof properly addressed to each of their
attorneys of record.
Dated at Washington, D. C., this 14th day of October
1943.
Harry R. Booth, Utilities Counsel,
[fol. 203] Ixy rae Unrrev States Disraicr Court
[Title omitted]
It appearing to the Court that Fred M. Vinson, Economic
Stabilization Director, by Chester Bowles, Price Adminis-
trator, of the Office of Price Administration, having moved
this Court on November 19th, 1943 by notice of motion
dated the 16th day of November, 1943, for an order granting
leave to said petitioners to intervene and become a party
plaintiff herein; and for such other and further relief as to
this Court may seem just and proper in the premises, and
the motion having duly come before this Court on the 24th
day of November, 1943.
Now therefore, on reading and filing
herein, dated November 16, 1943 and
hibits thereto annexed and on proof
service thereof, and on all the pleadings and proceedings
heretofore filed herein, and due consideration ha
had,
It is:
Ordered, Adjudged and Decreed that the motion of the
petitioners Fred M. Vinson, Economic Stabilization Di-
rector, by Chester Bowles, Price Administrator of the Office
of Price Administration for an order granting said peti-
tioner leave to intervene herein, as a party plaintiff be and
the same hereby is granted as of the 19th day of November
1943.
Thomas F, Meaney, Judge.
[fol. 204] [File endorsement omitted.]
i
Bes
it
&
i
[fol. 205] I~ rue Unsrren Sratres District Covart
[Title omitted]
Answer or Derenpant, Hupsow & Mawnattan Rataoap
Compayy, To Amenpep Comptatst—Filed December 6,
1943
Hudson & Manhattan Railroad Company, one of the de-
fendants in the above entitled suit (hereinafter called the
plaint a misrep
sion’s report, findings and order of July 11, 1938 therein
referred to. For the true nature of such findings
and order, the Court is respectfully ref to the copy
thereof attached to the complaint as Exhibit No. 1.
IV. Admits the allegations of paragraph 8 of the com-
plaint.
V. Admits the allegations of paragraph 9 of the com-
plaint but for full and complete information as to the Com-
mission’s report, findings and order of June 8, 1943 the
Court is respectf referred to the copy thereof attached
to the complaint as bit No. 2.
VI. Denies the allegations of paragraph 10 of the com-
plaint as constituting a misrepresentation of the Commis-
sion’s report, findings and order of June 8, 1943 with re-
spect to the matters referred to in said paragraph. For
the true nature of the Commission’s report, findings and
order of June 8, 1943 with respect to such matters the Court
is respectfully referred to the copy thereof attached to the
complaint as Exhibit No. 2.
VIL. Admits the allegations of paragraph 11 of the com-
plaint but for full and complete information as to the nature
of the Railroad Company’s petition referred to in said para-
graph the Court is res ully referred to the copy of the
petition attached to the complaint as Exhibit No. 4.
VIIL. Denies the allegations of paragraph 12 of the com-
plaint as constituting a misrepresentation of the plaintiff's
reply of July 14, 1943 to the railroad’s petition therein
[fol. 206) referred to. For the true nature of such reply
sion the Court is respectfully referred to the exhibits al-
ready specified, attached to the complaint, and for the true
nature of the decisions of said courts, the Court is respect-
fully referred to the official reports, as cited in said para-
graph.
XI. Denies the allegations of paragraphs 15 to 20, both
inclusive, of the complaint.
XII. Denies the allegations of paragraph 21 of the com-
plaint as constituting a misrepresentation of the complaint
of the City of Jersey City of September 13, 1943 therein
referred to, hereinafter called the ‘‘original complaint’’.
For the true nature of such original complaint the Court
is respectfully referred to a copy thereof «ttached to this
answer as Exhibit A. The Railrgad Company further de-
nies that any application was ever made upon said original
complaint for a temporary restraint against putting into
effect the findings and order of the Commission of August
3, 1943 or the fares therein authorized, and denies that a
statutory court was ever duly established to hear such an
application, but admits that an application was made and
a statutory court convened for the purpose of hearing an
application for an interlocutory injunction based upon such
original complaint.
XII. Denies the allegations of paragraph 22 of the com-
plaint as constituting a misrepresentation of the Commis-
sion’s order of September 18, 1943, of the nature of the
onsaameene
74
plaintiff’s application to this Court preceding said order,
of the proceedings and hearing before the F xaminer under
said order, and of the Commission’s report, findings and
order of November 2, 1943. For the true nature of the Com-
mission’s order of September 18, 1943 and its report, find-
ings and order of November 2, 1943, the Court is respect-
fully referred to Exhibits No. 6 and No. 7 attached to the
complaint. For the true nature of the alleged application
for a temporary restraint referred to in said paragraph, the
Court is respectfully referred to paragraph XII of this
answer. For the true nature of the proceedings and hear-
ing before the Examiner, the Court is respectfully referred
to a transcript of such proceedings and hearing offered by
the plaintiff as Exhibit P-1 on the hearing of an application
to this Court for an interlocutory injunction based on the
complaint herein.
XIV. Denies the allegations of paragraph 23 of the com-
plaint as constituting a misrepresentation of the nature
of the proceedings before the Commission therein referred
to, of the grounds upon which the Railroad Company in
such proceedings sought an increase in its fares, of the re-
port of the Interstate Commerce Commission of June 8,
1943 in this respect, and of the nature of the proof which
said paragraph alleges the plaintiff sought to submit to the
Commission and which proof it alleges the Commission
refused to receive.
For the true nature of the proceedings before the Com-
mission and of the grounds upon which the Railroad Com-
pany in such proceedings sought to increase its fares, the
[fol. 207] Court is respectfully referred to the reports, find-
ings and orders of the Commission in such proceedings at-
tached, as aforesaid, to the complaint and to the transcript
of the evidence, and to the exhibits in such proceedings in-
troduced by plaintiff as Exhibit P-1 on the hearing before
this Court of an application for an interlocutory injunction
based on the complaint. For the true nature of the evidence
which it is alleged in said paragraph the plaintiff sought
to introduce before the Commission and which it is alleged
the Commission declined to receive, the Court is respect-
fully referred to the subsequent allegations of this answer
with respect thereto as contained in sub-paragraph (h) of
paragraph XXII hereof.
75
XV. Denies the allegations of paragraph 24 of the com-
plaint.
XVI. Denies the allegations of paragraph 25 of the com-
plaint and particularly that the plaintiff ever presented to
the Commission any petition for further hearing as therein
alleged. For the true nature of the conduct of the plain-
tiff in this respect and the Commission’s action with respect
thereto, the Court is respectfully referred to subsequen’
allegations of this answer as contained in subparagraphs
(i), (j), (k) and (1) of paragraph XXII hereof.
XVII. Denies the allegations of paragraph 26 of the
complaint as constituting a misrepresentation of the report,
findings and order of the Commission of June 8, 1943, of
the report, findings and orders of the Commission in Ex
Parte 148, Increased Railway Rates, Fares & Charges,
1942, cited in said paragraph, and of the relation of the
Railroad Company to the proceedings in Ex Parte 148.
For the true nature of the Commission’s report, findings
and order of June 8, 1943 with respect to the allegations
of paragraph 26 of the complaint, the Court is respectfully
referred to the copy of such report, findings a
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