88 stations case

Palmer v. Massachusetts
Supreme Court of the United States
Argued October 11, 1939 Decided November 6, 1939
Full case name	Palmer et al, trustees, v. Massachusetts
Citations	308 U.S. 79 (more)
Case history
Prior	United States Circuit Court of Appeals for the Second Circuit
Holding
District Court was without power to order discontinuance of intrastate railroad service
Court membership
Chief Justice Charles E. Hughes Associate Justices Pierce Butler Harlan F. Stone · Owen Roberts Hugo Black · Stanley F. Reed Felix Frankfurter · William O. Douglas
Case opinion
Majority	Frankfurter, joined by Hughes, McReynolds, Stone, Roberts, Black, Reed
Butler took no part in the consideration or decision of the case.
Laws applied
Bankruptcy Act of 1898 § 77

The 88 stations case was a 1935–40 controversy and court case involving the Old Colony Division of the New York, New Haven and Hartford Railroad. The New Haven entered bankruptcy in 1935; the next year, it ended the 1893 lease of the unprofitable Old Colony Division, but continued operating those lines by court order. The Old Colony and New Haven closed 88 stations in Massachusetts (plus five in Rhode Island) on July 18, 1938, ending passenger service altogether on some lines. In May 1939, the Old Colony filed to abandon all freight and passenger service on its lines. In November 1939, the Supreme Court of the United States ruled in Palmer v. Massachusetts that a district court did not have authority to order the discontinuance of intrastate passenger service. Thirty-two of the stations were reopened in 1940, with 40 percent of service cut in lieu of total abandonment.

History

Background

The

The New Haven's 99-year lease of the Old Colony was treated as equivalent to ownership, with the Old Colony fully integrated into the New Haven system.^[2]: 498 Redundant routes were cut, and both public and internal documents used only the New Haven name. By the 1930s, the New Haven's largest freight terminal and only steam locomotive shop were both on the ex-Old Colony system; more passengers entered Boston on Old Colony lines than entered New York on the New Haven.^[2]: 499

Short-distance passenger service in New England peaked around 1900, and began falling as electric streetcars and then automobiles took traffic. Increased freight traffic during World War I further reduced passenger operations.

Cases such as Munn v. Illinois (1876) and Wabash, St. Louis & Pacific Railway Co. v. Illinois (1886) had established the rights of the state and federal governments to regulate railroads to protect the public interest. Interstate service was largely regulated by the federal Interstate Commerce Commission (ICC), which had limited intrastate authority – it could prevent a railroad from abandoning service on a line, but could not regulate the quantity of service provided. State agencies, such as the Massachusetts Public Utilities Commission (PUC), had more regulatory power over intrastate service.^[2]: 497

Prior to 1933, railroad reorganizations rarely had negative effects on users (passengers and freight shippers), as receivership typically involved a deferment of debts rather than cuts to service. Management changes and a reduction in deferred maintenance sometimes even resulted in improved service for users.^[2]: 495 The Act of March 3, 1933 (the final day of Herbert Hoover's presidency) added three new sections to the Bankruptcy Act of 1898; Section 77 brought railroads under the Bankruptcy Act for the first time.^[3] Major amendments on August 27, 1935, attempted to streamline the bankruptcy process, as the complexity of railroads had resulted in protracted proceedings.^[4] The Depression and automobile competition made increasing revenues near-impossible, while the Railway Labor Act disallowed wage reductions. Since only major corridors tended to be profitable, lesser-used lines and stations were increasingly targeted for elimination during bankruptcy proceedings.^[2]: 496

New Haven bankruptcy

On October 23, 1935, the New Haven petitioned the United States District Court for the District of Connecticut to begin bankruptcy proceedings under Section 77. The court appointed trustees for the railroad, who "tentatively" continued paying the Old Colony lease.^[2]: 499 The public largely saw the proceedings as a chance for the New Haven to escape its early-20th-century debt; Old Colony stock rose from 39 to 70 by March 1936.^[2]: 499 On June 1, 1936, the trustees rejected the Old Colony lease based on studies that found it unprofitable. As the Old Colony was merely a "bookkeeping device" with all railroad operations directed by the New Haven, the court ordered on June 3 that the New Haven continue to operate the Old Colony but on the Old Colony's account.^[2]: 499 The court also approved the Old Colony's petition to enter the same reorganization proceedings as the New Haven; on June 18, the three New Haven trustees were also designated trustees of the Old Colony.^[2]: 500

On June 1, 1937, the New Haven submitted its reorganization plan, under which the Old Colony would be acquired at a rate of two New Haven shares per Old Colony share. Old Colony shareholders demanded a higher rate, leading the ICC to examine the value and costs of the Old Colony to the greater New Haven system. The trustees produced a formula to segregate the earnings and costs of the Old Colony to establish charges for continued operation. The ICC approved the formula, albeit with substantial doubts about the validity of its results, on April 15, 1938. The court approved it on May 25; the Old Colony did not appeal.^[2]: 500 Abandonments of several minor lines during this time deprived the Old Colony of connecting traffic, as did the July 1937 discontinuance of Fall River Line steamship service between New York City and the South Coast.^{[5][2]: 501}

Station closures case

The railroad attempted to close 22 low-ridership stations effective September 27, 1937, and removed them from public timetables.^[6][a] The Massachusetts Public Utilities Commission (PUC) rejected the closures because they were improperly filed, and the stations remained open; passenger counts were taken at most of the stations in October.^[6] On November 18, the PUC ordered that the 22 stations be restored to timetables effective November 29, and remain open for at least 30 days afterward.^[7] The same day, the railroad filed a new petition with the PUC to abandon 14 of the stations.^[8][b] On December 28, 1937, the Old Colony trustees filed with the PUC to abandon passenger service to 74 additional stations in Massachusetts, bringing the total to 88, while retaining freight service.^{[9][2]: 501}

The railroad filed the proposed new schedules on January 31, 1938; the PUC began "lengthy" hearings.^{[10][2]: 501} All passenger service was to end on the Randolph Branch, the Cape Main Line between Yarmouth and Provincetown, the Newport Secondary between Newport and Fall River (including five additional stations in Rhode Island), the Dorchester Branch, the Wrentham Branch, the Charles River Branch, between West Roxbury and Dedham, and between North Easton and Taunton; some minor stations would be closed on lines that retained service.^[11][10][12] Fifty-eight of the stations were on Old Colony lines; ten were on B&P lines, and 25 on NY&NE lines.^[11]

On June 20, 1938, the trustees and a bondholders committee petitioned the court to allow closure of the 93 stations regardless of the PUC outcome. The PUC (which had not yet finished its hearings) appeared in the hearing but did not call or cross-examine witnesses, and did not argue whether the court had jurisdiction in the matter. On July 7, Judge Carroll C. Hincks issued an order allowing the railroad to close the stations; the PUC appealed, and the state formed a legislative committee to investigate the matter.^[2]: 501 The 93 stations were closed effective Sunday, July 17, 1938.^[12][13]

The PUC, doubtful the validity of Hicks' order, selected the Yarmouth–Provincetown service – the most disruptive of the closures – as a test case.

On November 28, 1939, the PUC issued an order that the 88 stations in Massachusetts be reopened by December 10.[16]^[17] The New Haven and the PUC reached an agreement on December 5 under which the order would be stayed for 30 days and that the PUC would allow some lesser-used stations to close, in exchange for the railroad agreeing to reopen some stations. After hearings, the PUC ruled on February 21, 1940, that the railroad must restore service to 32 of the 88 stations, with the remaining 56 allowed to permanently close.^[18] Service was restored to 25 stations – including Readville–Boston service on the Dorchester Branch, and service on the Charles River Branch as far as Caryville – on March 11, 1940.^[19] Many of the station buildings had been abandoned or sold, with small wooden shelters provided instead.^[20] Seven additional stations on the Yarmouth–Provincetown segment reopened around June 24 for summer seasonal service.^[18][19]

Abandonment proposal

On July 18, 1938, the court approved the New Haven charging the Old Colony over $11 million (equivalent to over $187 million in 2023) in operating costs under the segregation formula.^{[21][2]: 500} The Old Colony could not appeal the charges because it had not appealed the formula earlier in the year.^[2]: 500 By this point, Old Colony stock was below 50 cents.^[2]: 501

On May 31, 1939, with Palmer v. Massachusetts pending, the Old Colony filed an amended reorganization plan calling for the abandonment of all passenger service in the "Boston Group" – the primary group of lines into Boston, including the Greenbush, Plymouth, and Middleborough lines and the shared mainline north of Braintree. At that time, 121 daily trains were operated on those lines.^[2]: 501 Freight service on some lines of the Boston Group would continue, though others would be fully abandoned.^[22] The New Haven simultaneously filed its own amended plan which stated that it was not willing to directly acquire the Old Colony unless all Boston Group passenger service was discontinued, but did wish to directly acquire the B&P.^[2]: 501 The New Haven would continue to operate passenger trains from the South Coast and Cape Cod, which together lost one-third of what the Boston group did, reaching Boston via Taunton and the B&P mainline.^[22][23] It would purchase the Old Colony's lines in Cape Cod and west of Boston (which collectively made a profit on freight), as well as the South Boston Market Terminal; the New Haven and Old Colony would split the latter's share of the Union Freight Railroad.^[9][23]

On June 12, 1939, the trustees filed for a September 24 discontinuance of all passenger service in the Boston Group, as well as to Cape Cod (which had not been slated for discontinuance in the May proposal).^[24] This resulted in an "uproar of confusion, resentment, and panic" from the public and the Massachusetts government.^[2]: 502 Dever, alleging that the New Haven had betrayed the public trust and failed to prove the claimed losses on the Old Colony, threatened to revoke the franchise of the New Haven in the state.^{[25][2]: 502} On June 14, the ICC unexpectedly announced that the proposed abandonment would not be considered as part of the ongoing reorganization, but would instead require separate proceedings.^[26]

In late August, the state legislature and the railroad agreed to postpone any discontinuance until January 1, 1940.^{[27][2]: 502} In September 1939, the New Haven proposed to cut most Old Colony passenger service. Boston–Braintree service would continue to operate, with three trips each serving Campello, Whitman, and Hingham at peak hours. Service to Greenbush, Plymouth, Middleborough, Hyannis, and Woods Hole would be replaced by buses, as would all off-peak service south of Braintree.^[28]

In November 1939, the trustees filed with the ICC to outright abandon freight and passenger service on the entire Boston Group.^[29][30][31] Under a December deal between the New Haven and a legislative commission, Boston Group service was reduced from 121 to about 80 daily trips effective January 7.^[32] As PUC hearings continued into 1940, the railroad continued to advocate for its September proposal with only limited service beyond Braintree.^[33] In March, the PUC approved schedules with 72 daily trains.^[34] These schedules, which eliminated most midday and evening service past Braintree, took effect on April 1.^[35]

The ICC began abandonment proceedings on March 16, 1940.^[2]: 502 On February 18, 1941, the ICC refused abandonment of the Boston Group, forcing the Old Colony to continue operations.^[36]: 12 (Passenger service on one short line in the Boston Group, the West Quincy Branch, was separately discontinued by PUC approval in September 1940.^[37]) Whether to incorporate the Old Colony into the New Haven, and whether the Old Colony should be required to continue passenger service, continued to be argued as part of the reorganization.^[36][38]

Later changes

Most of the reopened stations did not remain in service for long. Provincetown service ended after the 1940 summer season, and three stations (Forest Hills, Boylston Street, and Jamaica Plain) also closed that year.^[39]: 409 Caryville service was cut back to West Medway in September 1941.^[1]: 46 Dorchester Branch service ended on March 12, 1944, with nine stations closed.^[1]: 46 Ferry Street station reopened sometime after 1940.^[40]

Increased passenger and freight traffic during World War II lifted the fortunes of the New Haven.^[1]: 13 The reorganization continued; the railroad was ultimately required to continue Old Colony passenger service unless losses exceeded $850,000 in a single calendar year.^[38] The New Haven emerged from bankruptcy on September 11, 1947, and fully acquired the Old Colony a week later; the B&P was kept as a separate New Haven-owned company.^{[38][1]: 13} Palmer v. Massachusetts had been just one of eight Supreme Court cases generated by the reorganization.^[41]: 862 Losses on the Old Colony reached the critical value in October 1948; after threatening to discontinue all service, the New Haven cut back to a 26-train peak-only schedule on the Boston Group in March 1949.^{[38][1]: 13, 96}

Under the 1951–1954 presidency of Frederic C. Dumaine Jr., the New Haven increased passenger service, using new Budd Rail Diesel Cars to reduce costs.^[1]: 13 Boston service reached 86 trains in April 1954.^[1]: 96 As losses mounted, Boston-area railroads made major cuts in the late 1950s. All service to Taunton, Fall River, and New Bedford (which now used the B&P rather than the original Old Colony mainline) ended in 1958.^[1]: 36 All remaining year-round Old Colony Division service ended on June 30, 1959, though limited seasonal service continued for several more years.^{[42][1]: 96} The Massachusetts Bay Transportation Authority (MBTA) was founded in 1964 to subsidize remaining suburban service. West Medway service was cut back to Millis in 1966, and ended entirely the next year. East Foxboro station closed in 1977.^[42]

Locations of the 93 stations

Detail from a 1940 map of the New Haven Railroad, showing its lines in Eastern Massachusetts

References