United States v. New York Central Railroad

Background

A group of large railroads sued to stop an Interstate Commerce Commission order that required Class 1 railroads (those with more than $1,000,000 annual operating revenue) to sell a $90 nontransferable scrip coupon ticket at a 20% discount. Congress amended the Interstate Commerce Act in 1922 to add directions about interchangeable mileage or scrip tickets and possible penalties, after pressure from traveling salesmen who wanted reduced fares. The railroads argued the Commission’s order covered intrastate travel, conflicted with other parts of the law, and rested on a misreading of the amendment; a federal district court enjoined the order, finding the Commission deferred to the statute’s origin instead of making independent factual findings.

Reasoning

The core question was whether the Commission properly relied on the 1922 amendment to impose the 20% reduction. The Commission itself noted that existing financial data did not justify the cut and said potential benefits were speculative, yet it concluded the experiment should proceed because of the perceived spirit of the statute. The Court agreed with the district court that the Commission erred by treating the origin and hoped‑for purpose of the law as if it were an effective command. Because the order was not supported by independent findings that the reduced rate was just and reasonable, it could not be sustained.

Real world impact

By affirming the injunction, the Court blocks enforcement of the Commission’s scrip‑ticket discount order and leaves fare decisions to be made on the usual independent record. Large railroads are not required to sell the specified discounted scrip tickets unless the Commission makes proper factual findings or Congress clearly directs it. The opinion rests on statutory interpretation; the broader constitutional claims were not resolved in this decision.