# Appendix — South Carolina ex rel. South Carolina Public Service Commission v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1956
- **Citation:** 351 U.S. 944

## Text

INDEX TO APPENDIX
Pas

Opinion of the United States District Court .......... 35

Filed
Jan. 3, 1956
ERNEST L. ALLEN

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF SOUTH CAROLINA

Civil Action No. 5261

State of South Carolina ex relatione South Carolina Public
Service Commission, Complainant,

versus

The United States of America, The Interstate Commerce
Commission, and the Atlantic Coast Line Railroad
Company as the representative of all the railroad com-
panies affected by the report of the Interstate Com-
merce Commission dated June 20, 1955 and by its order
dated September 19, 1955, Docket No. 31291, Defend-
ants.

This cause coming on to be heard before the under-
signed constituting a special District Court of three judges,
convened in accordance with statute; and being heard upon
the pleadings, the record made before the Interstate Com-
merce Commission and the briefs and arguments of coun-
sel; and being submitted by all parties for final decree:

The Court finds the facts to be as set forth in the Re-
port of the Interstate Commerce Commission, and being of
opinion, for the reasons set forth in the written opinion
filed herewith, that the plaintiffs are not entitled to the
relief prayed and that the action should be dismissed:

(35)

36 Strate or S. C. ez rel., APPELLANT, v. U. S. A. et al., APPELLEES

Now therefore, it is ordered that the prayer of the
complaint be denied and that the action be dismissed, and
that the costs hereof be taxed against plaintiffs.

This the 3lst day of December, 1955.

JOHN J. PARKER,
Chief Judge, Fourth Circuit.

U. 8. District Judge, Eastern
and Western Districts of
South Carolina.

ASHTON H. WILLIAMS,

U.S. District Judge, Eastern
District of South Carolina.

On Application for Injunction.
Argued November 4, 1955. Decided.

Before Parker, Circuit Judge, and Timmerman and
Williams, District Judges.

T. C. Callison, Attorney General of South Carolina, and
Irvine F. Belser, General Counsel South Carolina Public
Service Commission, for Complainant; R. B. Gwathmey,
Douglas McKay, U. B. Ellis, Charles P. Reynolds, James
A. Bistline, James B. McDonough, Jr., John H. Lumpkin
and Frank G. Tompkins, Jr., for Defendant Railroad Com-
panies; Stanley N. Barnes, Assistant Attorney General, N.
Welch Morrisette, Jr., U. 8. Attorney, James E. Kilday,
Maurice A. Fitzgerald, Samuel R. Howell, Leo H. Pou,
Robert W. Ginnane, for defendants United States and
Interstate Commerce Commission.

Parker, Circuit Judge:
This is an action to set aside and enjoin the enforce-

ment of an order of the Interstate Commerce Commission
entered under section 13(4) of the Interstate Commerce

APPENDIX 37

Act, 49 U.S. C. A. 13(4),* granting an increase in the intra-
state freight rates for hauling certain commodities on rail-
roads in the State of South Carolina. A court of three
judges has been constituted as required by statute, the case
has been heard upon the record made before the Commis-
sion and the briefs and arguments of counsel and has been
submitted for final decree. The contention of plaintiff is
that the order of the Commission is not supported by sub-
stantial evidence on the whole record that the railroads will
realize any substantial increase of revenue from the in-
crease of rates allowed by the order.

The facts are that the State of South Carolina is
crossed by the great railroads constituting the principal
arteries of commerce in the southeastern section of the
United States and most of the hauling by railroad within
the state is done by these systems. There is not now and
for many years has not been any distinction in the handling
of freight in interstate and intrastate commerce, the bulk
of both interstate and intrastate freight being handled in
the same way and with the same instrumentalities. If there
has been any difference, it is that the cost with respect to
intrastate freight is greater. The Commission found spe-
cifically, and there is no question as to the correctness of the
finding, that ‘‘the conditions incident to the intrastate
transportation of freight in South Carolina are not more
favorable than those incident to interstate transportation of

98 Srare or S. C. ex rel., APPeLLant, o. U.S. A. et al., APPELLEES

freight between points in South Carolina, on the one hand,
and the adjoining states in Southern Territory, on the
other.”’

It has long been the policy of the railroads to maintain
intrastate rates in South Carolina and other southeastern
states on the same level as interstate rates. During the
period of advancing prices which have prevailed since the
second world war, the railroads sought and obtained sev-
eral general increases in interstate rates to meet their need
for additional revenue caused by increased operating costs
in providing the adequate and efficient railway transporta-
tion service required by the Federal Railway Transporta-
tion Act. These increased operating costs were incurred in
the movement of intrastate as well as interstate traffic. To
the extent that intrastate traffic fails to bear its fair share
of the increased operating cost by providing additional rev-
enue commensurate with that provided by interstate traffic,
it places an undue burden on interstate commerce, and to
relieve this burden a petition was filed with the Commis-
sion asking that the intrastate rates on certain commodities
be raised to permit the same percentage increases allowed in
interstate rates.* The Commission thereupon conducted an
extended hearing and filed a lengthy report in which it
reviewed the history of the rates affecting the commodities
involved, as well as the evidence relating thereto and the
contentions of the parties, and made the following findings,
which are crucial to the decision in this case, viz.:

«3. The present intrastate rates and charges in

South Carolina on clay, cotton, in bales, Cottonseed,

cottonseed meal, cottonseed hulls, cottonseed oil, lime-

stone, ground or pulverized, used for agricultural pur-
poses, logs, sand, gravel, crushed stone and related
commodities, road building materials, and pulpwood,
imposed by authority of the State of South Carolina
and under investigation in this proceeding, are gen-
erally lower than the interstate rates and charges on
the same commodities between South Carolina and
points in adjoining States, and traffic thereunder fails

*The South Carolina Public Service Commission allowed the per-
centage increases on all intrastate traffic except on the commodities

to produce its fair share of the revenue required by the
respondents to enable them, under honest, economical,
and efficient management, to provide adequate and effi-
ecient transportation service, and thereby accomplish
the purpose of the Interstate Commerce Act as set
forth in the national transportation policy declared by
the Congress, to develop and preserve a national trans-
portation system adequate to meet the needs of the
ecommerce of the United States, of the Postal Service,
and of the national defense; the burden thus cast upon
interstate commerce is undue in and to the extent that
these intrastate rates and charges are less than they
would be on the basis herein approved; and these intra-
state rates and charges cause, and for the future will
cause, undue, unreasonable, and unjust discrimination
against interstate commerce.

**4. The undue, unreasonable, and unjust discrimi-
nation against interstate commerce herein found to
exist should be removed by applying to the South Caro-
lina intrastate rates and charges, on the commodities
described in finding 3, the same respective increases
which are, and for the future may be, maintained by
the respondents on like interstate traffic between points
in South Carolina and points in adjoining States under
our authorization in Ex Parte Nos. 162, 166, 168 and
175; provided, that no intrastate rate shall be increased
to a level that exeeeds the lowest level of the interstate
rates on like traffic over the same line of railroad to,
from, or through South Carolina.

**5. The establishment of increases in intrastate
rates and charges as provided in finding 4, and of the
increased rates there prescribed, will not result in un-
just or unreasonable rates or charges, nor rates or
charges that are unjust or unreasonable in relation to
the interstate rates and charges, and will substantially
increase the respondents’ revenues.’’

The findings of the Commission are not attacked except
with respect to the finding that the increased rates will sub-
stantially increase the revenue of the railroads. As to this,
plaintiff relies upon testimony, largely the prophecy of in-

ee ae — Ee ee ae ee . a

40 Stare or S. C. ex rel., APPELLANT, v. U. S. A, et al., APPELLEES

terested shippers, that the increased rates will result in the
diversion of traffic to carriers by truck. There is abundant
testimony, however, supporting the findings of the Commis-
sion. Traffic experts of the three great railway systems serv-
ing the state testified unequivocally that, while there might
be some diversion of traffic, the net result of the increase of
rates would be to substantially increase revenues; and this
testimony was not given ex cathedra but was supported by
traffic studies introduced in evidence including a special
four weeks’ study which showed the increase in revenues
due to increase in interstate rates on these commodities and
included a four weeks’ study showing the movement of
these commodities in intrastate commerce and how much the
revenues therefrom would have been increased by applica-
tion of the percentage increases allowed in interstate rates.
Thus the witness Kane, Assistant General Freight Agent of
the Seaboard Air Line Railway Company, testified:

**Q. What comments have you to make on Section
H of your exhibit?

‘*A. The Ex Parte 162 increases became effective
interstate on January 1, 1947, and the other Ex Parte
increases became effective interstate in 1948, 1949 and
1952. Most of the states granted these increases with
relatively few exceptions on intrastate traffic during
these same years. In Section H, I have shown the ton-
nage of each of the excepted commodities transported
by each of the four principal South Carolina railroads
during each of the years 1947 to 1952, inclusive, and
also the revenue which each of these railroads received
from these commodities during each of these years.

**T have also shown the total tonnage of the ex-
cepted commodities and the total revenue received from
these commodities by the four principal South Carolina
railroads during the years 1947 to 1952, inclusive. The
tonnage and revenue received in 1947 is shown as 100
opposite the word ‘Index’, and the tonnage and reve-
nue in the subsequent years have been related to the
tonnage and revenue received in 1947.

“*Tt will be noted that while there has been some
variation in tonnage and revenue from year to year,

the revenue received on each of the excepted commodi-

ties during the year 1952 was greater and in most in-

stances materially greater than that received in 1947.
. . .

**On road aggregates in 1952 tonnage exceeded the
1947 tonnage by 75 per cent and the 1952 revenue ex-
ceeded the 1947 revenue by 77 per cent.

**On pulpwood the 1952 tonnage of the Atlantic
Coast Line Railroad and Charleston & Western Caro-
lina Railroad exceeded the 1947 tonnage by 47 per cent
and the 1952 revenue of these two carriers exceeded
their 1947 revenue by 117 per cent. :

‘‘In my opinion this exhibit proves that the Ex
Parte increases have resulted in very substantial in-
creases in the carriers’ revenues.

**Q. State whether or not, in your opinion, the in-
creases sought in the instant case, if required by this
Commission, will result in an increase in the carriers’
revenues?

‘*A. The traffic officials of the Seaboard have given
very careful consideration to the effect of the increase
here sought on the carrier’s revenues, and they are
convinced these increases, if granted, will result in a
substantial increase in revenues. This conclusion, I
think, is amply supported by the showing made in Sec-
tion H of my Exhibit 3. This section of the exhibit
makes it plain that such diversions of traffic as may be
occasioned by the increased rates do not come any-
where near offsetting the increases in revenue derived
therefrom.’’

The witness Middleton, General Freight Agent of the
Atlantie Coast Line Railroad Company, testified :

**Q. Do you think that, if granted, the increases in
rates sought in this proceeding will produce increased
revenue?

‘*A. I do. The most convincing proof is, I think, to
look at what has happened to our total traffic since the
several Ex Parte increases have been added. Page D-1
of my exhibit shows the total number of cars and tons

42 Strate or S. C. ex rel., APPELLANT, v. U. S. A. et al., APPELLEES

handled by, and the freight revenues of Atlantic Coast
Line for the years 1945 through 1952.

‘*World War II ended in 1945 and the first increase
under Ex Parte 162 became effective in 1946. Using
1945 as a basis of 100, it will be observed that the per-
centage in cars and tons handled since shows a gradual
but erratic increase. The revenues have, however,
shown a much more consistent trend upward. While
there was an increase in both the number of cars and
tons handled in 1946, our revenues were slightly down.
Had even the 6 per cent increase which became effective
July 1, 1946, been in effect during the entire year there
would have been an increase instead. Beginning in 1947
there has been a consistent trend upward in our reve-
nues, except in 1949. This was a year of widespread
strikes, particularly in the coal and steel industry.
Fiven so our revenue was approximately 10 per cent
over 1945, whereas we handled a lesser number of cars
and less tons than in 1945. In 1952 our revenue was 57.6
ner cent over 1945, while the number of cars handled
had increased only 15.4 per cent and number of tons
handled 38.7 per cent.

‘‘No comparable figures are available for South
Carolina intrastate traffic, but, in my opinion, the total
system figures are more pertinent anyway. The system
figures include the movement under interstate rates,
which have been subjected to the full authorized in-
creases and have, therefore, borne the full impact of
competition from other transportation agencies to
which anv traffic could have been diverted account of
increased freight rates.

‘Tt is a fact that some diversion has taken place
ps the result of some of the ex parte increases. Where
such diversion has warranted, adjustments in the rates
heve heen made. Such general adjustments have also
heen given intrastate application, however. so that
these situations have also been met on intrastate traffic.
The sought rates are not higher than on interstate traf-
fie. We do not feel that the sought increases will be self-
defeating but are convinced that they will produce
more end not less revenue.’’

APPENDIX 43

The witness Dilli, Assistant Freight Traffic Manager of
the Southern Railway Company, testified:

**No doubt the question will arise as to the effect
upon rail carriers’ revenues if this Commission should
find that the rates under consideration in this proceed-
ing be increased to the level sought. Exhibit No. 11
shows particular data and, in addition, in the last col-
umn of figures on the right side there is shown the
increased revenue of Southern Railway Company fol-
lowing the several Ex Parte proceedings indicated by
reference marks on the extreme left hand side of the
exhibit. As will be noted, except for the year 1949,
Southern Railway Company’s revenue both as to inter-
state traffic and intrastate and interstate traffic com-
bined has increased each successive year since 1947. As
indicated by reference mark (a), the year 1949, during
which we had a decrease in freight revenue, was
affected by the ‘black days’ in the coal industry along
with other strike conditions in other industries. The
year 1949 was a bad business year for all types of
industry.

‘*If the increases sought in this proceeding are
authorized by the Interstate Commerce Commission
our revenue will be increased.

‘‘Now a word in respect to diversions to other
forms of transportation should the increase be author-
ized. Speaking for the Southern Railway, and I am
sure other railroads in Southern Territory carry out
the same policy as we do, we are constantly alert to all
existing and potential competition confronting us, and
it is ovr continuing purpose to take every available
step to hold traffic to our line so as to produce increased
revenue, and we are capable of exercising our manage-
rial discretion necessary to achieve that objective.’’

It is clear that the foregoing testimony, together with
the exhibits evidencing traffic studies upon which the testi-
mony is hased, furnish ample support for the finding of the
Commission which is assailed. In United States v. Louisi-
ana, 290 U. S. 70, 80, which involved an order raising intra-
state rates and the question as to whether the increased

-—————

44 Strate or S. C. ex rel., APPELLANT, v. U. S. A. et al., APPELLEES

rates would produce increased revenue, the Supreme Court

sustained an order of the Commission based on such testi-

mony in the absence of a formal finding. The court recog-

nized the judgment of the railroad traffic experts as an im-

portant factor for consideration by the Commission, saying:

‘The objection that the finding of unjust discrimi-

nation by the intrastate rates against interstate com-

merce is unsupported by any finding that the increased

rates would produce increased revenue is rested upon

the statement, separated from its context in the Com-

mission’s report, ‘we conclude that no positive finding

in regard to the revenue outcome of the increases can

be justified.’ It is manifest that any finding of undue

prejudice to interstate commerce, based upon the fail-

ure of prevailing intrastate rates to contribute their

fair share to the support of a national transportation

system, must necessarily rest upon a prediction that an

increase of the intrastate rates will result in an increase

of revenue, a prediction involving, especially since

1930, many elements of uncertainty. There are no

formal requirements for the findings to be made by

the Commission in this type of case, see Manufacturers

Ru. Co. v. United States, 246 U. S. 457, 490, and while

the particular form in which they were cast here is not

te he eommended, the report, read as a whole, suffi-

riently expresses the conclusion of the Commission,

hased nnon supporting data, including estimates of ex-

perienced railroad traffic men, to which the report

refers, that the probahilitv of increased revenue was

sufficiently great to make the increase of rates a rea-

sonably exercise of sound managerial iudgment. This,

we think, meets the requirements of the statute.’’
(Emphasis supplied.)

Whether experience with interstate rates is a depend-
able guide in judging the effect of a corresponding increase
in intrastate rates is a matter of expert judgment as to
which the opinion of the railroad traffic experts is cer-
tainly substantial evidence of real value, as their railroads
will bear the loss if the increase of rates which they pro-
pose results in a decrease of revenue. Certainly their opin-

APPENDIX 45

ion is entitled to as much weight as prophecies of traffic loss
by interested shippers who have everything to gain and
nothing to lose by holding intrastate rates at the existing
level. At all events, we cannot say that the evidence upon
which the Commission acted, which consisted not only of
the testimony of these experts but also of the traffic studies
upon which it was based, was not substantial evidence. The
matter involved is largely a matter of expert judgment; and
the Commission is ‘‘a tribunal appointed by law and in-
formed by experience’’ to deal with just such matters.
When it has based its order on evidence which is unques-
tionably substantial, we have no power to substitute our
judgment or the judgment of the state commission for its
judgment on the facts. This is too well settled to admit of
argument. The rule was thus laid down more than forty
years ago in Interstate Commerce Commission v. Union
Pacifie R. Co., 222 U. S. 541, 547:

‘‘In determining these mixed questions of law and
fact, the court confines itself to the ultimate question
as to whether the Commission acted within its power.
It will not consider the expediency or wisdom of the
order, or whether, on like testimony, it would have
made a similar ruling. ‘The findings of the Commission
are made by law prima facie true, and this court has
ascribed to them the strength due to the judgments of
a tribunal appointed by law and informed by exper-
ience.’ Ill. Cent. v. I. C. C., 206 U. S. 441 Its conelusion,
of course, is subject to review, but when supported by
evidence is accepted as final; not that its decision, in-
volving as it does so many and such vast public in-
terests, can be supported by a mere scintilla of proof—
but the courts will not examine the facts further than
to determine whether there was substantiai evidence to
sustain the order.”’

Direetly in point is the ease of Florida v. United States,
292 U. S. 1, 12, wherein the Supreme Court was dealing
with the power of the Commission to raise intrastate rates
to remove the same sort of diserimination against inter-
state commerce as is involved in the ease before us. Chief

46 State or S. C. ex rel., APPELLANT, v. U. S. A. et al., APPELLEES

Justice Hughes laid down the rule here applicable in the
following language:

‘‘The question of the weight of the evidence was
for the Commission and not for the court. The author-
ity conferred upon the Commission by sec. 13(4) of
the Interstate Commerce Act, with respect to intra-
state rates, is not different in its quality or effect from
that given to the Commission to prevent other sorts of
unjust discrimination against interstate commerce.
That authority rests upon the constitutional power of
the Congress, extending to interstate carriers as in-
struments of interstate commerce, to require that these
agencies shall not be used in such manner as to cripple,
retard, or destroy that commerce, and to provide for
the execution of that power through a subordinate
hody. Shreveport case, 234 U. S. 342, 351, 354, 355;
Railroad Commission of Wisconsin v. Chicago, B. é Q.
R. Co., supra. The purpose for which the Commission
was created was to bring into existence a body which,
from its special character, would be best fitted to de-
termine, among other things, whether upon the facts
in a given case there is an unjust discrimination against
interstate commerce. United States v. Louisville &
Nashville R. Co., 235 U. S. 314, 320. That purpose un-
questionably extended to the prohibited discrimination
produced by intrastate rates. In relation to such a dis-
crimination, as in other matters, when the Commission
exercises its authority upon due hearing, as prescribed,
and without error in the application of rules of law,
its findings of fact supported by substantial evidence
are not subject to review. It is not the prince of the
courts to substitute their judgment for that of the
Commission.’’

See also Mississippi Valiey Barge Co. v. United States,
292 U. S. 282, 286; Swayne & Hoyt Ltd. v. United States,
300 U. S. 297, 304. The rule as above stated with respect to
sustaining the order if supported by substantial evidence
is the rule of the Administrative Procedure Act. See
Universal Camera Corp. v. N. L. R. B., 340, U. S. 474; N.
L. R. B. v. Southland Mfg. Co, 4 Cir. 202, F. (2d) 244.

APPENDIX 47

The case of Mississippi Public Service Corp. v. United
States, 124 F. Supp. 809, upon which plaintiff chiefly relies,
was considered and quoted from by the Commission but was
distinguished on the ground that in the present case there
was substantial evidence to support the finding as to the
increased rates producing increased revenue.

Another case upon which plaintiff places great reliance
is State of North Carolina v. United States, 325 U. S. 507;
but that case was distinguished from a case such as this
by the Supreme Court in King v. United States, 344 U. S.
254 on the ground that the order there was based upon the
mere disparity between intrastate and interstate rates and
did not contain the essential findings which were made in
the King case and have been made here.

Of course the estimates of the experts may prove to
be erroneous and the increased rates may not produce in-
creased revenue. If so, application will doubtless be made
for another change in the rates and an appropriate order
will be entered by the Commission ;* but such a possibility
would not warrant our setting aside an order which is un-
questionably supported by substantial evidence on the
whole record now before us.

For the reasons stated, the petition to set aside and
enjoin the enforcement of the order of the Commission will
be denied and the action will be dismissed.

Petition denied and action dismissed.
I econeur.
JOHN J. PARKER,
U.S. Cireuit Judge.

ASHTON H. WILLIAMS,
U. 8. District Judge.

* The railroads have already asked and been allowed to withdraw
—— for a increases as to a few commodities as to which
oe been mstrated that raise in rates would result in loss of

enue.

48 Strate or S. C. ex rel., APPELLANT, v. U. S. A. et al., APPELLEES

Timmerman, District Judge:

I do not agree with the views of my able and distin-
guished colleagues in this case, as such views are expressed
in the opinion of Chief Judge Parker.

There is for consideration and determination this
simple question: Is the conclusion of the Interstate Com-
merce Commission, that revenues of the railroads will be
substantially increased by allowing increased intrastate
freight rates on certain commodities to be shipped wholly
within the State of South Carolina, supported by substan-
tial evidence? I think not.

Evidence, if it is to be regarded as substantial, must
have substance. It cannot be classed as substantial if it is
vague or uncertain, or is the product of guess or surmise,
or is equivocal. The evidence upon which the Interstate
Commerce Commission acted is not only equivocal in many
respects, it is vague and uncertain. I find in the record no
established facts from which there can be drawn legitimate
inferences as to what proportion of the commodities af-
fected by the increased rates will be diverted by reason
thereof from the railroads to other type carriers having
lower rates. I do know as a matter of mathematical cer-
tainty that if the railroads lose twenty-five percent of the
affected commodities the rate on the remaining three-
fourths will have to be promoted by one-third to leave the
railroads’ revenue the same as it was before. I also know
that if the commodities handled are reduced by only one-
fifth that the rate on the remaining four-fifths will have to
be increased by one-fourth to equal the revenue obtained
before the rate was changed; and so on.

If we go in the other direction and reduce the com-
modities by one-third the rate will have to be increased by
one-half for the railroads’ revenue to continue constant.

The substance of the testimony offered by the pro-
ponents of the proposed rate increases is that they guess
or surmise that the increased rates will result in increased
revenue. They have not established any facts from which
it can be concluded that the railroads will suffer only a
certair percentage of diversion by reason of the increased
rates.

APPENDIX 49

On the other hand, the shippers testified that in their
opinion the increased rates would result in decreased rev-
enue to the railroads. That testimony, like the other, is
largely guess and surmise. I find nothing in the record
which warrants giving the railroads’ witnesses preferential
consideration. Both groups of witnesses should be placed
in the same bracket. They both advocate acceptance of their
guesses, as it is natural that they would do. Each group is
undoubtedly biased in favor of its own opinions. If there
was nothing more in this case than merely finding out what
the railroads wanted it would have been unnecessary to
have a hearing. That could have been determined by writing
a letter. To say that if the railroads’ officials have guessed
wrong their guess can be corrected is to beg the question,
for it is also true that if the shippers’ guess is wrong it
too can be corrected. We do have one fact in common in
this case. It is true: Both groups agree that the increased
rates will cause diversion of traffic from the railroads to
other type carriers having lower rates. The only difference
between them is their generalizations as to how much di-
version will be accomplished by the increased rates. Of
course the railroads hope that the increased rates will bring
them increased revenue. This hope undoubtedly prompted
the opinion that they will. I see nothing else in the record
to justify the opinion. The shippers frankly are in favor
of cheaper freight rates, which is natural, and they indicate
that they intend patronizing the carriers that afford them
the cheaper rates. If so, what then becomes of the hope of
the railroads for increased revenue? To repeat, I have
found in the record no established fact or facts justifying
the conclusion that the revenue of the railroads will he
increased, or that the diversion of freight from the rail-
roads to other type carriers will be inconsequential by
reason of the incréased freight rates. I, therefore, dissent.

“~’

TABLE OF CONTENTS

Page
Motion to Affirm 1
The Questions Presented 3
The Findings of the Commission 4

What Constitutes Substantial Evidence in Cases In-
volving the Review of Orders of Administrative
Agencies, and the Weight to be Accorded Findings
Supported by Such Evidence 6

The District Court Followed the Correct Princi-
ples of Law in Upholding the Commission’s

Order 9
The Motion to Affirm Should Be Granted for the
Following Reasons 11

1. The Only Question Presented to the Court Is

a Question of Fact, and This Is Not the

Place to Review Conflicts of Evidence in
Cases Like the Instant Case __. 11

2. An Examination of the Opinion of the District

Court Makes it Apparent That the Commis-

sion’s Finding is Supported by Substantial
Evidence on the Record as a Whole 12

There Is No Conflict Between the Decision of the

District Court in This Case and the Decision in

Mississippi Public Service Commission v. United

States, 124 F. Supp. 809 14
Other Contentions of icoecnni ‘Are Without Sub-
stance . 15

TasBLe or Cases

Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197... 6
Federal Trade Commission v. American Tobacco Co.,

274 U.S. 543 ...:. 15
Florida v. United States, 292 U. S. 1 8,9, 11
Increased Railway Rates, Fares and ee? 1946,

fiat. ee 2,3
Increased Freight Rates, 1947, 270 L Cc. C. 403. | 2,3
Increased Freight Rates, 1948, 276 LC.C. 9. . 2, 3, 16

—8385-7

i INDEX

Page
Increased Freight Rates, 1951, 284 1.C.C. 589, 28S
BRCM I By EE inns vw csc vac tea e deeds 5 2,3
Interstate Commerce Commission v. Union Pacific R.
PTI a rs eo. oad ons 11
King v. United States, 344 U.S. 254............... 3, 6, 16
Louisiana Public Service Commission v. United
eS SS re 14
Mississippi Public Service Commission v. United
States, 124 F. Supp. 809, 349 U.S. 908............ 4,14
N.L.R.B. v. Amercan Insurance Co., 343 U.S. 395... . 12
N.L.R.B. v. Pittsburgh S.S. Co., 340 U.S. 489... ..... 11, 12
N.L.R.B. v. Southland Mfg. Co., 291 F. 2d 244...... 6
O’Leary v. Brown-Pacific-Mazon, 340 U.S. 594...... 9
South Carolina Intrastate Freight Rates and Charges,
296 I.C.C. 159, 136 F. Supp. 897........ 2, 4, 5, 6, 9, 11, 13
United States v. Louisiana, 290 U.S. 70............ 6, 7, 16

Universal Camera Corp. v. N.L.R.B., 340 U.S. 474. 8, 12, 14
OG A HE SI DI vce Sees td eeuwveses 9

Sratutes CiTep

Administrative Procedure Act, 5 U.S.C. Section
NG Dayo SR Ee is Oe «nlp ee 7

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Interstate Commerce Act, 49 U.S.C.:

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SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1955

No. 794

STATE OF SOUTH CAROLINA ex retatione SOUTH
CAROLINA PUBLIC SERVICE COMMISSION,

Appellant,
UNITED STATES OF AMERICA, er at,
Appellees

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF SOUTH CAROLINA

MOTION OF DEFENDANT AND INTERVENING
RAILROADS TO AFFIRM

Pursuant to Rule 16, Paragraph 1(c), of the Revised
Rules of this Court, the defendant and intervening rail-
roads, appellees, move that the judgment of the District
Court be affirmed on the ground that the questions raised
by appellant are so unsubstantial as not to need further
argument.

This is a direct appeal from a final judgment entered on
January 3, 1956, by a specially-constituted three-judge

2

District Court, pursuant to 28 U. S. C. Sections 1336 and
2321 to 2325, dismissing the suit of appellant to set aside
and enjoin an order of the Interstate Commerce Commis-
sion entered in a proceeding entitled ‘‘Docket No. 31291,
South Carolina Intrastate Freight Rates and Charges’’, 296
I. C. C. 159. The case below is reported in 136 F. Supp. 897.
Direct appeal to this Court is authorized by 28 U. S. C.
Sections 1253 and 2101(b), Notice of Appeal was filed on
January 31, 1956, and appellant’s Jurisdictional Statement
was received by these appellees on March 26, 1956.

The aforesaid order of the Interstate Commerce Com-
mission was issued under the power conferred upon it by
Sections 13(3)(4) and 15a(2) of the Interstate Commerce
Act (49 U.S. C. Sections 13(3) (4) and 15a(2)). The Com-
mission found that the South Carolina intrastate rates on
certain commodities? resulted in unjust discrimination
against interstate commerce, and its order required the
railroads operating in that State to increase their rates on
these commodities by the amounts by which their interstate
rates on said commodities had been increased under au-
thority granted by the Commission in Ex Parte No. 162, Ex
Parte No. 166, Ex Parte No. 168 and Ex Parte No. 175.*

In the proceedings just mentioned, the Interstate Com-
merce Commission authorized the railroads to make gen-

1 The commodities involved and the extent to which the South Carolina
Commission had refused to authorize the increases which had been applied
to the interstate rates on said commodities to, from, and between points
in South Carolina are stated in Appendix A to the Commission’s report
(296 I. C. C. 180).

2 The title and citations of the proceedings we have mentioned by num-
ber are: Ex Parte No. 162, Increased Railway Rates, Fares and Charges,
1946, 266 1.C.C. 537; Ex Parte No. 166, Increased Freight Rates, 1947,
270 I.C.C. 403; Ex Parte No. 168, Increased Freight Rates, 1948, 276
I.C.C. 9; and Ex Parte No. 175, Increased Freight Rates, 1951, 284
1.C.C. 589, and 289 I.C.C. 395. In a report dated November 14, 1955,
297 I.C.C. 17, the Commission authorized the railroads to make the Ex
Parte No. 175 increases permanent.

3

eral increases in their interstate freight rates and charges
‘‘for the purpose of providing the carriers with additional
revenue needed to meet increased costs for equipment,
materials, supplies, and wages required to maintain an
adequate and efficient railway service contemplated by the
national transportation policy and by section 15a(2) of the
act’’ (296 I. C. C. 161). These increased expenses were
incurred in intrastate as well as interstate transportation
(296 I. C. C. 161, 178), and the Commission’s reports au-
thorizing increases in the interstate rates show that it con-
templated that substantially the same increases would be
made in the intrastate rates. The South Carolina Public
Service Commission authorized the railroads to increase
their intrastate rates on some commodities but not on
others, the excepted commodities being among those which
move in large volume and produce the most intrastate reve-
nue. The assailed order of the Interstate Commerce Com-
mission simply required the intrastate rates on the excepted
commodities to be increased to the extent the interstate
rates thereon had been increased.*

The Questions Presented

Appellant contends (1) that the finding of the Interstate
Commerce Commission, that the increases required in the
intrastate rates on the commodities involved herein will
increase the railroads’ revenues, is not supported by sub-
stantial evidence and the District Court erred in failing so

3 King v. United States, 344 U.S. 254, 257-258; Ex Parte No. 162, 266
I.C.C. 537, 613; Ex Parte No. 166, 270 I.C.C. 403, 463; Ex Parte No.
168, 276 I.C.C. 9, 13, 113; Ex Parte No. 175, 289 I.C.C. 395, 396, 441.
*The Commission’s order, dated September 19, 1955, does not require
an inerease in the rates on pulpwood to Georgetown, S. C. The pro-
ceeding has been reopened for further hearing with respect to said rates,
and the further hearing is being had under modified procedure. Con-
sequently, the testimony of Messrs. J. E. MeCaffrey and J. P. Hearn,
mentioned on pp. 13 and 14 of appellant’s Jurisdictional Statement, is
entitled to no consideration.

+

to find; and (2) that the decision of the District Court in the
instant case is contrary to the decision in Mississippi Public
Service Commission v. United States, 124 F. Supp. 809
(motion to affirm granted, 349 U.S. 908).

Before discussing these questions it is advisable to set
forth the findings of the Interstate Commerce Commission,
and refer briefly to decisions of this Court defining ‘‘sub-
stantial evidence’’ and the scope of judicial review in cases
involving orders of administrative agencies.

The Findings of the Commission

The findings of the Commission appear on pages 179-180
of its report and are as follows:

‘*We find and conclude that—

‘‘1, The conditions incident to the intrastate trans-
portation of freight in South Carolina are not more
favorable than those incident to the interstate transpor-
tation of freight between points in South Carolina, on
the one hand, and the adjoining States in southern ter-
ritory, on the other.

‘*2. The amounts and percentages by which interstate
freight rates and charges between points in South Car-
olina and points in other Sates were increased, as au-
thorized in Ex Parte Nos. 162, 166, 168, and 175, were
and are just and reasonable.

‘*3. The present intrastate rates and charges in South
Carolina on clay, cotton, in bales, cottonseed, cottonseed
meal, cottonseed hulls, cottonseed oil, limestone, ground
or pulverized, used for agricultural purposes, logs,
sand, gravel, crushed stone and related commodities,
road-building materials, and pulpwood, imposed by au-
thority of the State of South Carolina and under in-
vestigation in this proceeding, are generally lower
than the interstate rates and charges on the same com-

5

modities between South Carolina and points in adjoin-
ing States, and traffic thereunder fails to produce its
fair share of the revenue required by the respondents
to enable them, under honest, economical, and efficient
management, to provide adequate and efficient trans-
portation service, and thereby accomplish the purpose
of the Interstate Commerce Act as set forth in the
national transportation policy declared by the Con-
gress, to develop and preserve a national transporta-
tion system adequate to meet the needs of the commerce
of the United States, of the Posial Service, and of the
national defense; the burden thus cost upon interstate
commerce is undue in and to the extent vat these intra-
state rates and charges are less than they would be on
the basis herein approved, and these intrastate rates
and charges cause, and for the future will cause, undue,
unreasonable, and unjust discrimination against inter-
state commerce.

‘*4 The undue, unreasonable, and unjust discrimina-
tion against interstate commerce herein found to exist
should be removed by applying to the South Carolina
in‘rastate rates and charges, on the commodities de-
scribed in finding 3, the same respective increases
which are, and for the future may be, maintained by
the respondents on like interstate traffic between points
in South Carolina and points in adjoining States under
our authorizations in Ex Parte Nos. 162, 166, 168, and
175; provided, that no intrastate rate shall be increased
to a level that exceeds the lowest level of the interstate
rates on like traffic over the same line of railroad to,
from, or through South Carolina.

‘*5. The establishment of increases in intrastate rates
and charges as provided in finding 4, and of the in-
creased rates there prescribed will not result in unjust
or unreasonable rates or charges, nor rates or charges

that are unjust or unreasonable in relation to the inter-
state rates and charges, and will substantially increase
the respondents’ revenues.

‘*The foregoing findings and conclusions are without
prejudice to the right of the authorities of the State
of South Carolina, or any other interested party, to
apply for modification thereof as to any specific intra-
state rate or charge affected thereby on the ground
that such rate or charge is not related to the interstate
rates or charges on like traffic in such a way as to con-
travene the provisions of the Interstate Commerce
Act.”’

The above findings, if supported by substantial evidence,
are adequate to sustain the Commission’s order, and there
is no contention that they are inadequate. King v. United
States, 344 U.S. 254.

What Constitutes Substantial Evidence in Cases Involving
the Review of Orders of Administrative Agencies, and
the Weight to Be Accorded Findings Supported by Such
Evidence.

In Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229,
Mr. Chief Justice Hughes stated:

‘*Substantial evidence is more than a mere scintilla.
It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.’’*

In United States v. Louisiana, 290 U.S. 70, which involved
an order of the Interstate Commerce Commission raising °
intrastate rates and the question whether the increased
rates would produce increased revenue, this Court sus-
tained the order, on basis of the testimony of railroad

5 See also N.L.R.B. v. Southland Mfg. Co., 201 F. 2d 244, 246 (opinion
by Judge Parker).

—— —

7

officials, in the absence of a formal finding by the Commis-
sion. In an opinion by Mr. Justice Stone, the Court stated
(p. 80):

‘‘The objection that the finding of unjust discrimina-
tion by the intrastate rates against interstate commerce
is unsupported by any finding that the increased rates
would produce increased revenue is rested upon the
statement, separated from its context in the Commis-
sion’s report, ‘we conclude that no positive finding in
regard to the revenue outcome of the increases can be
justified.’ It is manifest that any finding of undue
prejudice to interstate commerce, based upon the fail-
ure of prevailing intrastate rates to contribute their
fair share to the support of a national transportation
system, must necessarily rest upon a prediction that an
increase of the intrastate rates will result in an in-
crease of revenue, a prediction involving, especially
since 1930, many elements of uncertainty. There are
no formal requirements for the findings to be made by
the Commission in this type of case, see Manufacturers
Ry Co. v. United States, 246 U.S. 457, 490, 38 S. Ct. 383,
62 L. Ed. 831, and while the particular form in which
they were cast here is not to be commended, the report,
read as a whole, sufficiently expresses the conclusion
of the Commission, based upon supporting data, in-
cluding estimates of experienced railroad traffic men,
to which the report refers, that the probability of in-
creased revenue was sufficiently great to make the in-
crease of rates a reasonable exercise of sound mana-
gerial judgment. This, we think, meets the require-
ments of the statute.’’ (Italics supplied.)

Section 10(e) of the Administrative Procedure Act (5
U.S.C. Section 1009(e)) provides that in determining
whether or not the order of an administrative agency is

supported by substantial evidence, the Court shall review
‘‘the whole record.’’ This means, as stated in Universal
Camera Corp. v. N.L.R.B., 340 U.S. 474, 488, that:

‘‘The substantiality of evidence must take into account
whatever in the record fairly detracts from its weight.”’

But ‘‘the requirement for canvassing ‘the whole record’
in order to ascertain substantiality’’ was not intended to
negative the function of the Commission

‘*as one of those agencies presumably equipped or in-
formed by experience to deal with a specialized field
of knowledge, whose findings within that field carry
the authority of an expertness which courts do not
possess and therefore must respect. Nor does it mean
that even as to matters not requiring expertise a court
.may displace the Board’s choice between two fairly
conflicting views, even though the court would justifia-
bly have made a different choice had the matter been
before it de novo.’’ (340 U.S. 488.)

It has long been settled that the question of the weight
of the evidence is for the Commission and not for the court,
and that:

‘¢ * * * The purpose for which the Commission was
created was to bring into existence a body which, from
its special character, would be best fitted to determine,
among other things, whether upon the facts in a given
case there is an unjust discrimination against inter-
state commerce. United States v. Louisville & Nash-
ville R. Co., 235 U.S. 314, 320, 35 S. Ct. 113, 59 L. Ed.
245. That purpose unquestionably extended to the pro-
hibited discrimination produced by intrastate rates. In
relation to such a discrimination, as in other matters,
when the Commission exercises its authority upon due

hearing, as prescribed, and without error in the appli-
cation of rules of law, its findings of fact supported by
substantial evidence are not subject to review. It is not
the province of the courts to substitute their judgment
for that of the Commission.’’ Florida v. United States,
292 U.S. 1, 12.

The statement last quoted was made by Mr. Chief Justice
Hughes in a case, like the instant case, which involved the
validity of an order of the Interstate Commerce Commis-
sion, under Section 13(4) of the Interstate Commerce Act,
requiring an increase in intrastate rates in order to remove
unjust discrimination against interstate commerce.

The necessity for considering the record as a whole to
determine substantiality has not changed the rule that find-
ings of administrative agencies supported by substantial
evidence must be accepted by the courts. O’Leary v.
Brown-Pacific-Maxon, 340 U.S. 504, 508; Voris v. Eikel, 346
U.S. 328, 333-334.

The District Court Followed the Correct Principles of Law
in Upholding the Commission’s Order

The opinion of the District Court was written by Hon-
orable John J. Parker, Chief Judge of the Circuit Court of
Appeals for the Fourth Cirenit. The learned judge stated
(136 F. Supp. 899-900) :

‘*The findings of the Commission are not attacked
except with respect to the finding that the increased
rates will substantially increase the revenue of the
railroads. As to this, plaintiff relies upon testimony,
largely the prophecy of interested shippers, that the
increased rates will result in the diversion of traffic to
carriers by truck. There is abundant testimony, how-
ever, supporting the findings of the Commission.
Traffic experts of the three great railway systems serv-

10

ing the state testified unequivocally that, while there
might be some diversion of traffic, the net result of the
increase of rates would be to substantially increase
revenues; and this testimony was not given ex cathedra
but was supported by traffic studies introduced in evi-
dence including a special four weeks’ study which
showed the increase in revenues due to increase in in-
terstate rates on these commodities and included a four
weeks’ study showing the movement of these commodi-
ties in intrastate commerce and how much the revenues
therefrom would have been increased by application of
the percentage increases allowed in interstate rates.’’

Then, after reviewing the evidence and quoting from this
Court’s opinion in United States v. Louisiana, supra, he
continued (136 F. Supp. 902-903) :

‘‘Whether experience with interstate rates is a de-
pendable guide in judging the etfect of a corresponding
increase in intrastate rates is a matter of expert judg-
ment as to which the opinion of the railroad traffie ex-
perts is certainly substantial evidence of real value, as
their railroads will bear the loss if the increase of rates
which they propose results in a decrease of revenue.
Certainly their opinion is entitled to as much weight
as prophecies of traffic loss by interested shippers who
have everything to gain and nothing to lose by holding
intrastate rates at the existing level. At all events, we
cannot say that the evidence upon which the Commis-
sion acted, which consisted not only of the testimony
of these experts but also of the traffic studies upon
which it was based, was not substantial evidence. The
matter involved is largely a matter of expert judgment;
and the Commission is ‘a tribunal appointed by law
and informed by experience’ to deal with just such
matters. When it has based its order on evidence which

Ne ee OP ee ae ee OY OD ACI RE eS ———

11

is unquestionably substantial, we have no power to sub-
stitute our judgment or the judgment of the state com-
mission for its judgment on the facts. This is too well
settled to admit of argument.’’

Judge Parker next quoted from this Court’s opinions in
Interstate Commerce Commission v. Union Pacific R. Co.,
222 U. S. 541, 547, and State of Florida v. United States,
292 U. S. 1, 12, and stated (136 F. Supp. 903-904) :

‘** * * The rule as above stated with respect to

sustaining the order if supported by substantial evi-
dence is the rule of the Administrative Procedure Act,
5 U. S. C. A. Section 1001 et seq. See Universal
Camera Corp. v. N. L. R. B., 340 U. S. 474, 71 S. Ct. 456,
95 L. Ed. 456; N. L. R. B. v. Southland Mfg. Co., 4 Cir.,
201 F. 2d 244.”’

The Motion to Affirm Should Be Granted for the Following
Reasons

1. The Only Question Presented to the Court Is a Question
of Fact, and This Is Not the Place to Review Conflicts
of Evidence in Cases Like the Instant Case

We have shown that the District Court applied the cor-
rect principles of law in deciding the instant case. This
being so, the only question remaining is one of fact, i. e.,
is the Commission’s finding, that the railroads will receive
increased revenue from the increased rates, supported by
substantial evidence on the record as a whole. Appellant
is asking this Court to review the entire record consisting
of 889 pages of testimony and 51 exhibits to determine this
question of fact. But in NW. L. R. B. v. Pittsburgh S. S. Co.,
340 U. S. 489-503, the Court stated:

‘‘This is not the place to review a conflict of evidence
nor to reverse a Court of Appeals because were we in
its place we would find the record tilting one way rather

12

than the other, though fair-minded judges could find it
tilting either way. It is not for us to invite review by
this Court of decisions turning solely on evaluation of
testimony where on a conscientious consideration of
the entire record a Court of Appeals under the new
dispensation finds the Board’s order unsubstantiated.
In such situations we should ‘adhere to the usual rule
of noninterference where conclusions of Circuit Courts
of Appeals depend on appreciation of circumstances
which admit of different interpretations.’ Federal
Trade Comm’n v. American Tobacco Co., 274 U. S. 548,
544.’

See also Universal Camera Corporation v. N. L. R. B.,
supra, at pages 490-491, and N. L. R. B. v. American Insur-
ance Co., 343 U. S. 395, 401-410.

2. An Examination of the Opinion of the District Court
Makes it Apparent That the Commission’s Finding Is
Supported by Substantial Evidence on the Record as
a Whole

After this case was argued before the District Court, that
court gave the parties the privilege of filing supplemental
briefs on the sole question whether the finding of the Com-
mission, that the increases required in the intrastate rates
on the involved commodities would increase the railroads’
revenues, was supported by substantial evidence. Such
briefs were filed. The opinion of the court shows that it
gave careful consideration to this evidence, much of which
is quoted or summarized in its opinion. After quoting and
summarizing the evidence, the court stated (136 F. Supp.
902) :

‘“‘Tt is clear that the foregoing testimony, together
with the exhibits evidencing traffic studies upon which

13

the testimony is based, furnish ample support for the
finding of the Commission which is assailed.”’

In view of the fact that the evidence is summarized in
the opinion of the District Court, as well as in the report
of the Commission, we shall not undertake to discuss it
here. We do call attention to certain statements in the
court’s opinion and to findings of the Commission which
lend added weight to the conclusion that the increased rates
will increase the railroads’ revenues:

(a) *** * * The Commision found specifically, and
there is no question as to the correctness of the finding,
that ‘the conditions incident to the intrastate trans-
portation of freight in South Carolina are not more
favorable than those incident to interstate transporta-
tion of freight between points in South Carolina, on the
one hand, and the adjoining states in Southern Terri-
tory, on the other.’ ’’ (136 F. Supp. 898, and I. C. C.
Finding 1.)

(b) ‘*The establishment of increases in intrastate
rates and charges as provided in finding 4, and of the
increased rates there prescribed will not result in un-
just or unreasonable rates or charges, nor rates or
charges that are unjust or unreasonable in relation to
the interstate rates and charges * * *.”? (I. C. C.
Finding 5.)

(c) ‘It has long been respondents’ [the railroads’]
policy to maintain rates intrastate in South Carolina
and other southern States on the same level as the in-
terstate rates.’’ (296 I. C. C. 177-178.)

(d) ‘** * * Competition of the several transporta-
tion agencies, rail, truck, and barge, is not confined to
intrastate traffic but obtains also in the movement of
interstate traffic.”’ (296 I. C. C. 178.)

14

There Is No Conflict Between the Decision of the District
Court in This Case and the Decision in Mississippi Pub-
lic Service Commission v. United States, 124 F. Supp.

809.

Appellant relies principally upon an allegec conflict be-
tween the decision of the District Court in the instant case
and the decision in Mississippi Public Service Commission
v. United States, 124 F. Supp. 809, as justifying an exten-
sive consideration .by this Court of the question whether
the Commission’s finding is supported by substantial evi-
dence. But there is no real conflict between the two de-
cisions—certainly none of sufficient general importance to
warrant this Court’s burdening itself with a considera-
tion of the lengthy record involved.

Where decisions depend on questions of fact, they will
vary according to the evidence submitted in each case.
A holding in one case that the Commission’s finding is sup-
ported by substantial evidence, and a holding in another
that its finding is not so supported, do not create a con-
flict of decision, particularly where the proper standard
for determining the substantiality of the evidence has been
followed. In Universal Camera Corp. v. N.L.R.B., supra,
it was stated (p. 491) that:

‘“‘This Court will intervene only in what ought to be
the rare instance when the standard appears to have
been misaporehended or grossly misapplied.’’ (Italics

supplied.)

The Mississippi case and Louisiana Public Service Com-
mission v. United States, 125 F. Supp. 180, involved orders
of the Interstate Commerce Commission, under Section
13(4) of the Interstate Commerce Act, requiring certain
intrastate rates in both states to be increased by the amounts
of general increases authorized and applied to the inter-
state rates to, from, and between points in those states.
In each case the Commission made substantially the same

15

findings, and its orders required the intrastate rates on
many of the same commodities to be increased by the same
amounts in each of these adjoining states. In one case the
District Court held that the Commission’s findings were
not supported by substantial evidence and its order should
be enjoined. But in the other, another District Court held
that the Commission’s findings were supported by sub-
stantial evidence and its orders should not be enjoined.
This Court granted motions to affirm in both cases.®

It is plain, therefore, that the Court does not regard dif-
ferent decisions of district courts with respect to questions
of fact as creating a conflict of decision which it should
resolve.
The Interstate Commerce Commission and the court be-
low considered the decision in the Mississippi case (296
LC.C. 178, 136 F. Supp. 904). Both distinguish the instant
case from the Mississippi case on the ground that here the
evidence supporting the Commission’s finding is substan-
tial. This conelusion is not only correct, but the question
of its correctness is of insufficient general importance to
justify an examination of a lengthy record by this Court.

See Federal Trade Commission v. American Tobacco Co.,
274 U.S. 543.

Other Contentions of Appellant Are Without Substance

Appellant seeks to make much of the fact that the rail-
roads withdrew their request for increases in the rates on
cement and cotton. The request for increases in the rates
on these commodities was withdrawn because the railroads
reduced the rates.ori said commodities and established the
reduced rates for application both interstate and intrastate
within the South, including South Carolina (296 LC.C,
160, 161).

A reduction in the rates on two commodities does not
show that increased rates on the remaining commodities

*The motions to affirm were granted in 348 U.S. 885 and 349 U.S. 908.

PEELE KOE nen

16

will not increase railroad revenues, and neither does it
detract from the weight to be accorded the Commission’s
finding. What is does show is that the railroads are alive
to the competition with which they are faced and are not
asking for increases which will cause the loss of traffic.
Viewed in this light, the reductions add strength to the
Commission’s finding that increases in the rates on the
involved commodities will produce increased revenue.

It may be added that both the Commission and the rail-
roads realized that the latter could not take advantage of
the full amounts of the increases authorized in the rates on
all commodities in Ex Parte Nos. 162, 166, 168, and 175, and
that some revision of the rates on particular commodities
might be necessary from time to time. Increased Freight
Rates, 1948, 276 I. C. C. 9, 112. The railroads were ex-
pected to revise, and have revised, their state and interstate
rates when necessary to prevent the diversion of traffic.
Such revisions were made after the Commission’s order,
under Section 13(4) of the Interstate Commerce Act, re-
quiring increases in the Florida intrastate freight rates,
but the order order was upheld by this Court. King v.
United States, supra, at page 272.

Appellant also emphasizes the fact that neither the Com-
mission nor the railroads undertook to state the amount by
which the railroads’ revenues would be increased by the
increased rates. But, as pointed out in United States v.
Louisiana, supra, the effect of an increase in rates upon
railroad revenues ‘‘must necessarily rest upon a predic-
tion.’’ (290 U. S. 80.) In that case the Court upheld an
order of the Commission requiring an increase in intrastate
rates, although the Commission’s report contained the
statement that ‘‘we conclude that no positive finding in
regard to the revenue outcome of the increases can be
justified.’”’ (Ibid.). It is, therefore, obvious that no state-

REPEC ELSA Ae I SE SET BREE oO —

r nee
17

ment in dollars of the amount of the increased revenue is
necessary.

In the instant case the railroads conducted a traflic study
and showed in dollars the increase in revenue which would
be produced by the increased rates if said rates were ap-
plied to the traffic that moved during the period the study
was made. (296 I. C. C. 162.) Experienced traffic officials
testified that the increased rates would result in a substan-
tial increase in revenues, and that such diversions as might
occur would not ‘‘come anywhere near offsetting the in-
creases in revenue derived therefrom.’’ (136 F. Supp. 900,
902.) This evidence was sufficient.

For the foregoing reasons, it is manifest that this appeal
presents no new or substantial questions of law and that
the only question presented is one of fact. The Commis-
sion’s finding of fact is supported by substantial evidence,
as the District Court held. These appellees, therefore, urge
that this Court grant the motion to affirm the judgment of
the District Court.

Respectfully submitted,

James B. McDonoveg, Jr.,
Seaboard Air Line Railroad Building,
Norfolk, Va.;
Ricuarp B. GwaTHMeEY,
Atlantic Coast Line Railroad Building,
Wilmington, N. C.;
James A. BIsTLInE,
Southern Railway Company Building,
Washington, D. C.;
CHart: * P. Reynowps,
Shoreham Building,
Washington, D. C.;
Attorneys for Defendant and Inter-
vening Railroads, Appellees.

April 18, 1956.

18

CERTIFICATE OF SERVICE

I, Charles P. Reynolds, one of the attorneys for the rail- -
road appellees herein, and a member of the Bar of the
Supreme Court of the United States, hereby certify that on —
the 18th day of April, 1956, I served copies of the foregoing
Motion to Affirm on the several parties thereto as follows: ~

1. On the State of South Carolina, in duly addressed
envelopes, with first-class postage prepaid, to its respective —
attorneys as follows: 3

T. C. Callison, Atiorney General,

Columbia, S. C.

Irvine F. Belser, General Counsel for the
South Carolina Public Service Commission,
306 Barringer Building,

Columbia, S. C.

2. On the United States of America, by mailing a copy in
duly addressed envelopes, first-class postage prepaid, to the
Solicitor General, Department of Justice, Washington 26, |
D. C., to Stanley N. Barnes, Esq., Assistant Attorney Gen-
eral, and Maurice A. Fitzgerald, Esq., Department of Jus-
tice, Washington 25, D. C., and by mailing a copy to”
N. Welsh Morrisette, Jr., Esq., United States Attorney for
the Eastern District of South Carolina, Columbia, S. C.

a copy in a duly addressed envelope, first-class postage pre- ~
paid, to Robert W. Ginnane, Esq., its General Counsel, an¢ 4
to Samuel R. Howell, Esq., its Associate General Counsel, -
at the offices of the Commission, Washington 25, D. C. 3
(Signed) CHarues P. Reyno.ps,
Attorney for Defendant and Inter-
vening Railroads, Appellees,
940 Shoreham Building,
Washington 5, D.C.
(8385-7)

SO SG dg co Cee a aa a eke ee tee eee ee

Page
SE Svenevaspevevdcoutysbutheese’ cveceecaue 3
heat AGEs ees vaVG Ee NGERtE Ch adeede 8
CITATIONS
Cases:
King v. United States, 344 U.S. 254............5. 3

Louisiana Public Service Comm. v. United States,

125 F. Supp. 180, affirmed per curiam, 348 US.

a na suas eeewiées5 Sikes tees nN 7
Mississippi Public Service Comm. v. United States,

124 F. Supp. 809, affirmed per curiam, 349 US.

DN ee aires scidkavcukukeevatcvesahewws os 6,7
National Labor Relations Board v. Pittsburgh S.S.
en ane anviss dvaubaen’y e 6
New England Divisions Case, 261 U.S. 184...... 6
North Carolina v. United States, 128 F. Supp. 718,
affirmed per curiam, 350 U.S. 805............. 7
Radio Corp. v. United States, 341 U.S. 412 ...... 6
South Carolina Intrastate Freight Rates and
i Cee, Man ty eedee viccereteses 3
United States v. Detroit & Cleveland N. Co., 326
as Wie Se wedGk va tkeencencdbegesssess 6
United States v. Louisiana, 290 U.S. 70.......... 5
United States v. Pierce Auto Freight Lines, 327
anes Wicbende vate anese caNess ine. 6
Universal Camera Corp. v. Labor Board, 340 U.S
STE UiT eS clove paves tes e¥ ea ee rei eneebe? 6
Statutes:

Interstate Commerce Act, 24 Stat. 379, as amended
49 U.S.C. 1 et seq.:

Section 13(4) ...cscscccccvccssssecvveess 3

(1)

Authe Supreme Gourtof the United States

OcroBER TERM, 1955

No. 794

STaTE OF SouTH CAROLINA EX REL. SOUTH CAROLINA
PuBLic SERVICE COMMISSION, ET AL., APPELLANTS

Vv.

UnIitrep STATES OF AMERICA, INTERSTATE COMMERCE
CoMMISSION, ET AL.

ON APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF SOUTH
CAROLINA

MOTION TO AFFIRM

Pursuant to Rule 16, paragraph 1(c), of the
Revised Rules of this Court, appellees United
States of America and Interstate Commerce Com-
mission move that the judgment of the district
court be affirmed.

This is a direct appeal from a final judgment
(dated December 31, 1955, and filed January 3,
1956) of a three-judge district court convened
pursuant to 28 U.S.C, 2284, 2325, dismissing a
complaint seeking to set aside an order of the

(1)

UD Fine to oe - en ee ere ——— ay

4 STATE OF S. C., APPELLANT, v. U. S. A. et al., APPELLEES

intrastate operations, and of the high standard of certainty
required for orders of the Interstate Commerce Comiis-
sion interfering with state-made freight rates?

2. Did not the Court below misapprehend the proper
standard in basing its conclusion wholly on the opinion of
traffic experts and interstate operations and in disregard-
ing the contrary evidence of the shippers and the findings
of the South Carolina Public Service Commission?

II. Case of United States v. Louisiana Does Not Sup-
port Appellees’ Case.

Both counsel for the railroad companies in their argu-
ment (pages 6-7) and counsel for the Interstate Commerce
Commission in their argument (page 5) cite and quote from
the United States v. Louisiana case above cited (290 U. 8.
70, 78 L. ed. 181) as though that case supported their posi-
tion and as though it held that the testimony of railroad
traffic experts ‘‘constituted substantial evidence to support
the Commission’s finding’’.

It is submitted that that case when properly analyzed
and considered does not offer any real support to the ap-
pellees’ contention in this case.

It did not involve any question as to whether the evi-
dence supporting the order of the Commission was sub-
stantial.

The principal question involved in that case was
whether the order of the Interstate Commerce Commission
was defective as not containing a specific finding as to the
reasonableness of each individual rate. The Court below
had reversed the order of the Interstate Commerce Commis-
sion for failure to make a specific finding as to each indi-
vidual rate, but the Supreme Court reversed the order of
the District Court; this Court holding that the statute ‘‘does
not, in terms, command the Commission to find that each

TE APES ong
oan PIS oe —

Pees. a tae a

STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 5

rate prescribed under § 15a is just and reasonable, as pre-
requisite to a general increase in rates’’ (78 L. ed. 186)
and that the provisions thereof ‘‘cannot rightly be con-
strued to require the Commission as a condition of any
action by it to find the réasonableness of each individual
rate’’ (78 L. ed. 186). (Emphasis added.)

Apparently the District Court had also reversed the
order of the Commission upon the theory that the order
of the Commission was ‘‘unsupported by any finding that
the increased rates would produce increased revenues’’;
this objection, as stated by this Court in its opinion being
‘*rested upon the statement, separated from its context in
the Commission’s report ‘we conclude that no positive find-
ing in regard to the revenue outcome of the increases can
be justified’ ’’ (78 L. ed. 188). (Emphasis added.)

This court thereupon proceeded to show that there
were other findings of the Commission expressly holding
that the increased rates would produce increases in the
revenue (78 L. ed. 188) and hence concluded that ‘‘the re-
port read as a whole’’ meets the requirements of the statute.

The language from this case relied upon and quoted
by counsel for the Appellees and by the Court below was
really used ‘‘arquendo”’ by this Court and was in effect
merely dicta.

There was no question there involved as to the suffi-
ciency of the evidence to constitute substantial evidence.
The case did not hold that opinions of traffic experts based
upon interstate operations constituted substantial evidence
of the results to be expected in intrastate operations.

It is elementary that the language used in any opinion
must be construed with relation to the questions and facts
involved.

It is also to be noted that this case was decided in 1933,
long before the enactment of the Administrative Procedure

allie Ninid lieth ot ee cae at ee tae ee

~

6 State or S. C., APPELLANT, v. U. S. A. et al., APPELLEES

Act (1946) which imposes upon the Court the duty to re-
verse orders of administrative boards which are not sup-
ported by substantial evidence and which imposes a greater
responsibility upon the courts than had previously been
exercised by them in reviewing orders of such commissions
(See Universal Camera Corporation case hereinafter dis-
cussed).

It is earnestly and confidently submitted that the above
cited United States v. Louisiana case when properly con-
sidered and analyzed offers no real support to the appellees
in this case.

III. Majority Opinion of District Court Misapprehends
Standard Established by Universal Camera Corporation
Case.

Counsel for the appellees in their Motions to Affirm
also cite and quote from the Universal Camera Corporation
case, 340 U. S. 474, 95 L. Ed. 456, and its companion case
N. L. R. B. v. Pittsburgh S. 8. Co., 340 U. S. 480-503, 95
L. Ed. 479, as though such cases support their views in the
case at bar.

It is submitted, however, that both of those cases when
properly considered and analyzed really support the ap-
pellant’s position in this case and that the decision of the
Court below clearly violates the principles laid down in
those cases.

Both those cases involved an ultimate consideration by
the Courts of the entire record before the administrative
agency and a reversal by the Courts of the agency’s order
thereon.

The Universal Camera Corporation case, after fully
discussing the matter, clearly lays down the principle that
the reviewing court must, under the Administrative Pro-
cedure Act, consider not only the evidence supporting the

ent

State or S. C., APPELLANT, v. U. S. A. et al., APPELLEES 7

order of the commission, but also the contrary evidence,
and further that the court must take a greater responsibil-
ity for the reasonableness of orders of such commissions
hereafter and that a failure so to do constitutes reversible
error.

The case involved an order of the National Labor Re-
lations Board which had held the Universal Camera Corpo-
ration guilty of unfair labor practices. Upon appeal by the
corporation to the Court of Appeals for the Second Circuit,
that Court upheld the order of the Board, failing to take
into consideration the contrary report of the Examiner.
Upon appeal to the United States Supreme Court, the judg-
ment of the Court of Appeals, as well as the order of the
Board, was reversed.

This Court, in an opinion by Justice Frankfurter, fully
discussed the history of the legislation culminating in the
Administrative Procedure Act of 1946 and held that it was
the purpose and intention of Congress by the passage of
that Act to require the courts to take and assume more re-
sponsibility for the reasonableness and fairness of orders
by administrative agencies and to reverse such orders un-
less ‘‘upon examination of the whole record’’ they were
found to be supported by substantial evidence. It was par-
ticularly pointed out in the Court’s opinion that it was the
duty of the courts not only to consider the evidence tending
to support the order of the agency, but also to consider and
weigh the evidence to the contrary; in this respect the prin-
ciple established being somewhat different from that which
had heretofore heen applied by some of the courts (See 95
L. Ed. 464).

The foregoing statement is clearly shown by the fol-
lowing quotations, passim, from the opinion of the Court:

**So far as the history of this movement for en-

larged review reveals, the phrase ‘upon the whole rec-
ord’ makes its first appearance in this recommendation

A PS er

A , B n

ee ee ee re

a et i EP a i

8 STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES

of the minority of the Attorney General’s Committee.
This evidence of the close relationship between the
phrase and the criticism out of which it arose is im-
portant, for the substance of this formula for judicial
review found its way into the statute books when Con-
gress with unquestioning—we might say even uncrit-
ical—unanimity enacted the Administrative Procedure
YY aah

The Committee reports of both houses refer to
the practice of agencies to rely upon ‘suspicion, sur-
mise, implications, or plainly incredible evidence’, and
indicate that courts are to exact higher standards ‘in
the exercise of their independent judgment’ and on
consideration of ‘the whole record’.’’? * * * (95 L. Ed.
464-465.) (Emphasis added.)

‘*From the legislative story we have summarized,
two concrete conclusions do emerge. One is the identity
of aim of the Administrative Procedure Act and the
Taft-Hartley Act regarding the proof with which the
Labor Board must support a decision. The other is
that now Congress has left no room for doubt as to the
kind of serutiny which a court of appeals must give
the record before the Board to satisfy itself that the
Board’s order rests on adequate proof.’’ * * *

‘*Whether or not il was ever permissible for courts
to determine the substantiality of evidence supporting
a Labor Board decision merely on the basis of evidence
which in and of itself justified it, without taking into
account contradictory evidence or evidence from which
conflicting inferences could be drawn, the new legis-
lation definitely precludes such a theory of review and
bars its practice. The substantiality of evidence must
take into account whatever in the record fairly de-
tracts from its weight. This is clearly the significance
of the requirement in both statutes that courts con-
sider the whole record. Committee reports and the
adoption in the Administrative Procedure Act of the
minority views of the Attorney General’s Committee
demonstrate that to enjoin such a duty on the review-
ing court was one of the important purposes of the

ineeeineiiaia nei adede nena SNES eR rp . we el
~

ee care pe.

STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 9

movement which eventuated in that enactment. * * *

(95 L. ed. 467.)

**The legislative history of these Acts demonstrates
a purpose to impose on courts a responsibility which
has not always been recognized.’’ * * * (95 L. ed. 468.)

**We conclude, therefore, that the Administrative
Procedure Act and the Taft-Hartley Act direct that
courts must now assume more responsibility for the
reasonableness and fairness of Labor Board decisions
than some courts have shown in the past. Reviewing
courts must be influenced by a feeling that they are
not to abdicate the conventional judicial function.’’
* * © (95 L. ed. 468.)

‘*The Board’s findings are entitled to respect; but
they must nonetheless be set aside when the record
before a Court of Appeals clearly precludes the Board’s
decision from being justified by a fair estimate of the
worth of the testimony of witnesses or its informed
judgment on matters within its special competence or
both.’’ * * * (95 L. ed. 468-469.)

The Court concluded this portion of its opinion by say-
ing that the Court ‘‘will intervene only in what ought to
be the rare instance when the standard appears to have
been misapprehended or grossly misapplied’’ (95 L. Ed.
469). The Court then proceeded to show that the Court of
Appeals had misapplied the proper standard by treating
the special examiner’s findings as being ‘fas unassailable
as a master’s’”’ and by failing to give proper weight to the
examiner's report and hence this Court reversed the order
of the Court of Appeals and also the order of the National
Labor Relations Board.

Likewise, in the companion case of the National Labor
Relations Board v. Pittsburgh Steamship Company, 340 U.
S. 496-508, 95 L. Ed. 479, the Supreme Court affirmed a
judgment of the United States Court of Appeals for the
Sixth Cireuit reversing an order of the Board for failure
of the evidence to support the Board’s order.

—

10 State or S. C., APPELLANT, v. U. S. A. et al., APPELLEES

This Court expressly commented upon the fact that its
final judgment was based upon ‘‘consideration of the opin-
ion below in the light of a careful reading of the entire
record’’ (95 L. Ed. 482) and further that the Court below,
whose judgment it was affirming, ‘‘painstakingly reviewed
the record and unanimously concluded that the inferences
on which the Board’s findings were based were so over-
borne by evidence calling for contrary inferences that the
findings of the Board could not, on the consideration of the
whole record, be deemed to be supported by ‘substantial’
evidence’’ (95 L. Ed. 482).

We submit that it is clearly demonstrable that the prin-
ciples laid down in the foregoing cases have been violated
by the decision of the Court below in this case.

It is clear, it is submitted, that Judge Parker in writ-
ing the majority opinion of the Court below misappre-
hended the test laid down by the Administrative Procedure
Act and by the Universal Camera Corporation case above
cited in that he failed to give any proper consideration to
the contrary evidence of the shippers and to the contrary
findings by the South Carolina Public Service Commission.

This is apparent from the fact that Judge Parker in
his opinion only quotes from and relies upon the opinions
of the railroad companies’ witnesses and finally concludes
by saying, ‘‘Whether experience with interstate rates is
a dependable guide in juding the effect of a corresponding
increase in intrastate rates is a matter of expert judgment
as to which the opinion of the railroad traffic experts isi
certainly substantial evidence of real value, as their rail-
roads will bear the loss if the increase of rates which they
propose results in a decrease of revenue’’. (Emphasis
added.)

In other words, he says in effect that the opinion of
the railroad traffic experts is ‘‘certainly substantial evi-

StaTE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 11
dence of real value’’ without indicating that in valuing
such opinions it is necessary to consider the contrary evi-
dence, as is required in the Universal Camera Corporation
case. Moreover, it is apparent from the reading of his opin-
ion that he did not give any proper consideration, or any
consideration at all, to the contrary evidence of the ship-
pers or to the findings of the South Carolina Public Service
Commission, which according to the decision in the Missis-
sippi case, affirmed by this Court, ‘‘detracts heavily against
the findings of the Interstate Commerce Commission, whose
testimony is taken before an examiner’’ * * *.

It is manifest that if the question at issue is to be de-
termined solely by the opinion of the railroad traffic experts
based upon the results in interstate commerce and if such
evidence is to be considered ‘‘certainly substantial evidence
of real value’’ then, of course, there is no purpose or sense
in considering the contrary evidence of the shippers and
the contrary findings of the South Carolina Public Service
Commission. Judge Parker’s opinion amounts to saying in
effect that the question is to be determined wholly on the
evidence offered by the railroad companies. But this is
directly in the face of the decision in the Universal Camera
Corporation case that the Court must take into considera-
tion the evidence leading to a contrary conclusion, and this
is what was done in the Mississippi case which correctly
followed the principle laid down in the Universal Camera
Corporation case.

It is therefore clear, it is submitted, that the opinion
of Judge Parker violates and misapprehends and misap-
plies the principle laid down in the Universal Camera Cor-
poration case.

It is also noteworthy that all the cases relied upon and
quoted from by Judge Parker in his opinion as sustaining
his conclusion (Interstate Commerce Commission v. Union

we a a ee ee Te . cor

EE PA DANES RI, BRE Ga ID Wee eae Pinms cme

12 STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES

Pacific R. Co., 222 U.S. 541, 547; Florida v. United States,
292 U. S. 1, 12; Mississippi Valley Barge Co. v. United
States, 292 U.S. 282, 286; Swayne & Hoyt Ltd. v. United
States, 300 U. S. 297, 304) were decided long before the
enactment of the Administrative Procedure Act and before
the decision in the Universal Camera Corporation case,
which decision largely discredits the previous decisions re-
lied upon by Judge Parker.

IV. The Mississippi Case is Controlling and Requires
Reversal.

Both counsel for the Government and counsel for the
railroad companies in their Motions to Affirm seek to dis-
tinguish the case at bar from the Mississippi case cited and
relied upon by us (124 Fed. Sup. 809, affirmed by the United
States Supreme Court, 99 L. Ed. 502).

They both, however, apparently overlook the fact that
the opinion in that case was affirmed by the United States
Supreme Court.

Counsel for the Government in their argument in this
Court (page 6) claim there is no conflict ‘‘for the facts and

the evidence were not the same in the two cases’’.

They do not, however, in their argument point out any
essential differences in the facts and the evidence. We sub-
mit that the facts in the two cases were essentially the
same, as shown in our Jurisdictional Statement.

This argument, moreover, represents a shift of posi-
tion on the part of the counsel for the Interstate Commerce
Commission and for the Justice Department. In their writ-
ten argument filed in the District Court in this case, coun-
sel for those departments expressly stated that ‘*The Com-
mission and the United States have not accepted as cor-
rect statements of the law all that was said in the majority
opinion in the Mississippi case, including several state-

—_~—— a ee

StaTE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 13

ments indicating that findings of fact made by the Missis-
sippi Public Service Commission were entitled to greater
weight than the contrary findings made by the Interstate
Commerce Commission. (Emphasis added.) In this state-
ment by counsel there was no contention that the facts
or evidence in the two cases were essentially different.
Hence, it follows that the foregoing statement of counsel
for the Government in their argument in the District Court
must be interpreted as meaning that they do not accept as
correct statements of the law what was said by the court
in the Mississippi case as applied to the facts of that case,
which were essentially the same as the facts in the case
at bar.

For our part, we cannot believe that the United States
Supreme Court could have affirmed the Mississippi case
without meaning to affirm and approve the ruling of the
District Court contained in the following language:

‘“‘The Court in reviewing an order of the Inter-
state Commerce Commission has the duty to study
the entire record and it is the function of the Court to
determine from the whole record whether or not there
was substantial evidence before the Commission upon
which its order could be based. If there were no sub-
stantial evidence then it is the duty of the Court to
set aside such order and enjoin its enforcement. Con-
gress in enacting in 1946 the Administrative Procedure

Act, 5 U. S. C. A. § 1001 et seq., made it mandatory

that the reviewing court should set aside an order

that was unsupported by substantial evidence and

that it should review the whole record in making the

determination. The Supreme Court of the United
States in Universal Camera Corporation v. N. L. R. B.,
340 U. S. 474,, 71 S. Ct. 456, 95 L. Ed. 456, held that
in determining what is substantial evidence that the
Court must take into consideration whatever in the
record fairly detracts from its weight. Under the de-
cision in that case it is the duty of the reviewing court
when it cannot conscientiously find that the evidence

TOP SRI SE RE CNY RAE Bm TR aes M7

me .

supporting the order of the Commission is substantial,
when viewed in the light that the record in its entirety
furnishes, including the body of the evidence opposed
to the Board’s view, to set aside the order of the Com-
mission.

Substantial evidence is a legal term and presents
to the court for adjudication a question of law.’’ * * *
(124 Fed. Sup. 814.)

‘‘Substantial evidence is a term that cannot be
defined definitely, but whether the evidence in a partic-
ular case amounts to substantiality must be determined
from the facts of each case as it arises.”’

The order in this case when viewed in the light
of the entire record and all of the circumstances lead-
ing up to its passage and giving weight to all things
that detract from the sufficiency of the evidence is not
supported by substantial evidence and must be set
aside and its enforcement enjoined.’’ * * * (124 Fed.
Sup. 815.)

‘*Different conditions, circumstances and _ situa-
tions in different states require and justify different
results in fixing intrastate rates. The findings of a
state commission which is familiar with such condi-
tions in the state, with the location of competing high-
ways and other forms of carriers, when its opinion
differs from the Interstate Commerce Commission’s
findings detracts heavily against the findings of the
Interstate Commerce Commission, whose testimony is
taken before an examiner. * * * * *

The testimony of the various witnesses who are
shippers of many of the products involved herein dem-
onstrates that if the rates are permitted to stand as
fixed by the Interstate Commerce Commission, the in-
come of the railroads will be reduced rather than in-
creased. Many of these are shippers themselves and
testified positively and unequivocally that it would
be economy for them to use their own individual trucks
or private carriers by truck, who are unregulated so
far as rates are concerned in Mississippi.’’ * * * * (124
Fed. Sup. 815-816.) -

14 StTaTE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES

—

StaTe oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 15

‘‘The testimony of the various witnesses and ex-
perts who testified for the carriers along with their
many exhibits, opinions and tests has not been over-
looked but their testimony has been fully weighed in
the light of the entire record and proceedings in this
cause and when viewed in this light the testimony fails
to show substantially sufficient to uphold the order
here under attack and the findings that were made by
the Interstate Commerce Commission.’’ * * * (124 Fed.
Sup. 516.)

**On all of the commodities involved in the contro-
versy the competition by carriers is keen and would
come not only from regulated trucks for hire but from
unregulated trucks and from trucks owned and oper-
ated by the shippers themselves. This is clearly shown
by the record and by positive testimony and over-
whelmingly overthrows and overrides the opinions of
the experts.’’ * * * * (124 Fed. Sup. 817.)

The foregoing language from the Mississippi case is as
apt and apposite to the facts in the case at bar as though
expressly written for this case. It certainly holds and es-
tablishes as a matter of law that results in interstate op-
erations, if in the face of contrary evidence of intrastate
shippers and contrary findings by state commissions, do
not constitute substantial evidence of the results to be ex-
pected from intrastate operations.

Counsel for the Government in their argument (pp.
6-7) and also counsel for the railroads in their argument
(pp. 14-15) claim in effect that this Court should sustain the
judgment below because this Court affirmed the judgment
in the case of Louisiana Public Service Commission v.
United States, 125 F. Supp. 180 (E. D. La.), affirmed per
curiam (November 1954) 348 U. S. 885; counsel for the
Government claiming that the cases involved ‘‘somewhat
similar evidence’’.

It is submitted, however, that there is no showing
whatsoever in the official report of that case (125 F. Supp.

16 State or S. C., APPELLANT, v. U. S. A. et al., APPELLEES

pp. 180-183) or in the argument of counsel for appellees
that the cases involved really similar evidence.

Moreover, and more important, there was no indication
of the Court’s opinion in that case, as there was in the
opinion of the majority of the Court in the case at bar,
that the Court had confined its consideration to the evi-
dence offered by the railroads and had concluded that the
ultimate question ‘‘is a matter of expert judgment as to
which the opinion of the railroad traffic experts is certainly
substantial evidence of real value’’. It is thus plain that
while the Court in the Louisiana Public Service Commission
case apparently properly considered the whole record and
applied the proper standards, the majority of the Court in
the case at bar misapprehended the standard and decided
the case wholly upon the evidence offered by the railroad
companies.

In this respect the two cases are vitally and essentially
different.

Moreover, it is to be noted that the decisions in the
Mississippi case, both by the District Court and this honor-
able Court, were at a later date than the decision in the
Louisiana Public Service Commission case, and hence if
there be any conflict between the two, the decision in the
Louisiana Public Service Commission case must be con-
sidered to have been modified by the decision in the Missis-
stppi case which was affirmed by this honorable Court on
April 15, 1955.

It is earnestly and respectfully submitted that logically
it is impossible to have affirmed the judgment in the Mis-
sissippi case without reversing the judgment in the case
at bar.

Strate or S. C., APPELLANT, v. U. S. A. et al., APPELLEES 17

V. Summary and Conclusion.

Finally it is submitted that both on authority and on
reason and logic, the decision of the Court below must be
reversed.

The Mississippi case, following the Universal Camera
Corporation case, expressly holds that ‘‘substantial evi-
dence is a legal term and presents to the court for judica-
tion a question of law’’ (Fed. Sup. 124, page 814) and
further that ‘‘different conditions, circumstances and situ-
ations in different states require and justify different
results in fixing intrastate rates’’. The affirmance of the
said judgment by the Supreme Court, it is submitted,
amounts to the establishment by this Court as a matter of
law that the results obtained from interstate operations
cannot be considered as substantial evidence of the results
to be expected from intrastate rates.

But on this very point, Judge Parker’s opinion in the
Court below expressly holds that whether experience with
interstate rates is a dependable guide in judging the effect
of a corresponding increase in intrastate rates is a matter
of expert judgment as to which the opinion of the railroad
traffic experts is certainly substantial evidence of real value.
Thus Judge Parker’s opinion makes the conclusion wholly
dependent upon the opinion of the railroad traffie experts.
This judgment goes squarely in the face of the decision in
the Mississipp? case as affirmed by this Court.

It seems to us too clear for argument that Judge
Parker in his opinion has also disregarded the contrary evi-
dence and has misapprehended and misapplied the stan-
dards laid down in the Universal Camera Corporation case
and in the Mississippi case.

The same result follows by application of the princi-
ples of logic to the decision of the Court below.

18 STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES

The syllogistic reasoning underlying the decision of the
Court below and the opinion of the traffic experts upon
which that decision was based, is as follows:

The evidence shows that in interstate operations in-
creased rates have produced increased revenues; hence it
follows that in intrastate operations in the state of South
Carolina increased rates will produce increased revenues.

However, when it is realized that the evidence shows
that conditions in the different states in intrastate com-
merce are essentially different from the conditions in in-
terstate commerce, it is obvious that the result as stated
is unsound.

It is as though one should argue that because a race
horse can run a mile on a race course in less than two min-
utes, the race horse can also run a mile across country,
across ditches and fences and woods, in less than two min-
utes. The fallacy of such reasoning is too apparent for
argument.

In the case at bar there are at least three factors which
destroy the validity of the reasoning and argument under-
lying the decision of the Court below, such factors being:

1. The uniform testimony of the shippers, who were in
position to control the shipment of the commodities in ques-
tion, to the effect that if the rates were increased as sought
such shippers would divert their traffic to trucks and that
the railroad’s revenue would be decreased rather than in-
creased.

2. The finding by the South Carolina Public Service
Commission, who are familiar with local conditions in the
State of South Carolina, with the roads and the truck com-
petition, that the effect of the increase in rates would be to
decrease rather than increase the freight revenue; and:

3. The fact that the railroad companies themselves,
with the approval of the Interstate Commerce Commission,

- = —

STATE oF S. C., APPELLANT, v. U. S. A. et al., APPELLEES 19

after the taking of evidence in this case, found and con-
cluded that notwithstanding the evidence as to the increase
in revenue in interstate operations in cement and cotton,
cement being the largest single item concerned, it was nec-
essary to withdraw the request for the increase in cement
and cotton rates in order to continue to meet the truck com-
petition.

It is apparent, it is submitted, that the Court below did
not give any proper consideration to these factors in reach-
ing its conclusions as to the substantiality of the evidence,
but on the contrary based its decision wholly on the opin-
ion of the railroad company experts. Hence the Court below
misapprehended and misapplied the standard and its deci-
sion should be reversed.

By way of postcript, and in reply to the suggestion
contained in the argument of appellees railroads (page 11)
to the effect that we are asking the Court to review ‘‘the
entire record consisting of 889 pages and 51 exhibits’’, and
in reply to a similar suggestion by counsel for the Govern-
ment in their argument (page 6), we may say that at the
conclusion of the argument in the District Court, that Court
invited counsel for the appellees to submit the testimony
which they considered pertinent.

In response to this invitation, counsel for the United
States and for the Interstate Commerce Commission sub-
mitted a mimeographed statement containing ‘‘I Evidence
in support of increases’’ (pp. 6-17), 12 pages, and ‘‘IT Evi-
dence against increases’’ (pp. 18-29), 12 pages—total, 24
pages. Counsel for the railroad companies submitted a like
mimeographed statement entitled ‘‘The Evidence Upon
Which the Defendant Railroads Rely’’ (pp. 2-15)—14
pages. Counsel for the Atlantic Coast Line Railroad Com-
pany submitted a special statement entitled ‘‘Testimony of
Witnesses Showing That Increased Rates Would Substan-

OO a a ee eT Te et

20 STaTeE or S. C., APPELLANT, v. U. S. A. et al., APPELLEES

tially Increase Respondents’ Revenues on Pulpwood’’, said
statement consisting of 12 mimeographed sheets.

It is therefore apparent that in the determination of
this case there could be no real necessity for this Court to
review the entire record. The evidence on the disputed issue
is in fact undisputed and is fairly and fully set forth in our
Jurisdictional Statement.

In the face of the foregoing we do not see how counsel
for the railroads can fairly contend that it is necessary for
this Court to review an entire record consisting of 889
pages.

Moreover, it seems to us, as we have already shown,
that Judge Parker in his opinion has misapprehended the
standard and the function of the courts and that the judg-
ment on its face should be reversed, without any extensive
examination of any evidence.

Respectfully submitted,

T. C. CALLISON,
Attorney General,

IRVINE F. BELSER,
Assistant Attorney General
and General Counsel for S.

C. Public Service Commis-
sion, |
Attorneys for Appellant.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0859%3A2. Public record. Not legal advice.