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In re Proposal of New Jersey and New York Railroad Co.

Decided: November 18, 1952.

IN THE MATTER OF THE PROPOSAL OF THE NEW JERSEY AND NEW YORK RAILROAD COMPANY TO DISCONTINUE THE OPERATION OF TRAIN NUMBER 613


Freund, Stanton and Conlon. The opinion of the court was delivered by Conlon, J.c.c. (temporarily assigned).

Conlon

Peter Duryea, trustee of the property of the New Jersey and New York Railroad Company (hereinafter referred to as the Railroad) appeals from an order of the Board of Public Utilities Commissioners dated March 5, 1952, denying permission to discontinue the operation of the westbound evening train number 613 which leaves Jersey City at 4:45 P.M. daily except Saturdays, Sundays and holidays.

The operation of the train has had prior consideration by the utility board. On November 9, 1950, on application of the Railroad, the board permitted it to discontinue the operation of Train number 632, which was a non-passenger train operating as the return (eastbound) movement of Train number 613, and, without prejudice, denied permission to discontinue Train number 613. An application for a rehearing was denied on May 17, 1951. The present application was instituted by a letter of the Railroad dated June 20, 1951.

The Railroad extends in a northerly direction from a connection with the Erie Railroad 1.3 miles south of Carlstadt to Spring Valley, New York, a distance of 23.2 miles. It owns no rolling stock or motive power, and under an agreement with the Erie Railroad the latter's equipment is operated between Jersey City and Spring Valley, a distance of 30.7

miles, i.e. , 7.5 miles over the main line of the Erie and 23.2 miles over its own line. It has been in reorganization since June 30, 1938 under section 77 of the Bankruptcy Act, until 1941 in the District Court for the Northern District of Ohio and since then in the District Court for the District of New Jersey.

The Railroad contends on this appeal that the finding of the utilities board was erroneous in two respects, one as to the law and the other as to the facts. Its first contention is that since its entire operation is being conducted at a loss, the requirement that it continue the operation of a train which is unprofitable and which contributes heavily to that loss is unreasonable and confiscatory. It thus projects the contention that where the entire operation of a railroad is carried on at a loss, it has the right to discontinue a train which is itself unprofitable without regard to the element of public convenience and necessity, and it argues that a contrary conclusion would be an invasion of its constitutional rights in that the enforced operation of the train would constitute confiscation of its property without due process. Many cases are cited in support of the proposition. Railroad Commission of Texas v. Eastern Texas Railroad , 264 U.S. 79, 44 S. Ct. 247, 68 L. Ed. 569 (1924); Bullock v. Florida ex rel. Railroad Commission of Florida , 254 U.S. 513, 41 S. Ct. 193, 65 L. Ed. 380 (1921); Brooks-Scanlon Co. v. Railroad Commission of Louisiana , 251 U.S. 396, 40 S. Ct. 183, 64 L. Ed. 323 (1920); Mississippi Railroad Commission v. Mobile & Ohio R.R. , 244 U.S. 388, 37 S. Ct. 602, 61 L. Ed. 1216 (1917); Crawford v. Duluth St. Ry. Co. , 60 F.2d 212 (C.C.A. 7 1932); State of Iowa v. Old Colony Trust Co. , 215 F. 307, 312, L.R.A. 1915 A , 549 (C.C.A. 8 1914). A review of these cases discloses that none of them bears out the appellant's contention. Most of them present situations in which the railroad was seeking the discontinuance of an unprofitable branch line. The others are cases in which the degree of public convenience and necessity was weighed against the financial loss to the railroad.

The appellant also urges as authority the decision in Pennsylvania-Reading Seashore Lines v. Board of Public Utility Commissioners , 5 N.J. 114 (1950). In that case the railroad applied to discontinue the operation of two trains, one running in each direction between Woodbury and Penns Grove, a branch line of the railroad. They were the only passenger trains operated by the railroad on the branch and apparently had been kept running so that the road might not subject itself to the forfeiture of its franchise, it appearing that the branch conducted a profitable frieght business. The trains carried five or six passengers each, and the utility board made a factual finding to the effect that public convenience and necessity did not require their continuance, but declined to order their abandonment under the principle established in O'Connor v. Board of Public Utility Commissioners , 129 N.J.L. 263 (E. & A. 1942), which held that the railroad by reason of its franchise had a contractual obligation to the State to operate some passenger service and the utility board was without jurisdiction to erase this obligation from the railroad's agreement. In reversing the O'Connor case, speaking for the court, Chief Justice Vanderbilt held:

"It was specifically found by the Board after a public hearing on due notice that the continued operation of such service was not required by public necessity or convenience. Its order was founded solely on the ground that the decision in the O'Connor case left the Board without discretion; that under the statutes as there construed it was mandatory for the railroad to continue to operate passenger trains, even though such operation was entirely unnecessary and could only be carried on at a continued and substantial loss. If the situation were such that the branch line was serving a real public need of passengers or the railroad as a whole was making a profit although this particular branch was operating at a loss, the problem would be an entirely different one; in either of these events, to order the railroad to continue service might not be arbitrary and unreasonable in view of all the circumstances. But here the branch line serves no public need for passenger service and not only the branch line but the entire railroad has been operating at a loss for a considerable number of years."

This determination is not applicable to the present situation. In the first place, there was found a complete lack of

the element of public convenience and necessity, and further than that there was involved the discontinuance of all of the passenger service on a branch line. Here there is involved the discontinuance of a single train on the Railroad's main and only line. This latter ...


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