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U.S. Supreme Court

Railroad Retirement Board v. Alton Railroad Co., 295 U.S. 330 (1935)

Railroad Retirement Board v. Alton Railroad Co.

No. 566

Argued March 13, 14, 1935

Decided May 6, 1935

295 U.S. 330


1. The power of Congress to regulate interstate commerce is subject to the guaranty of due process in the Fifth Amendment. P. 295 U. S. 347.

2. A railroad's assets, though dedicated to public use, remain the private property of its owners, and cannot be taken without just compensation. P. 295 U. S. 357.

3. There is no warrant for taking the property or money of one interstate carrier and transferring it to another without compensation, whether the object of the transfer be to build up the transferee or to pension its employees. P. 295 U. S. 357.

4. A declaration in a statute that invalid provisions shall not operate to destroy it entirely creates a presumption of severability, but cannot empower the court to rewrite the statute and give it an effect altogether different from that sought by the measure viewed as a whole. P. 295 U. S. 361.

5. The Railroad Retirement Act of June 27, 1934, is unconstitutional because it contains inseverable provisions that violate the due process clause, and because it is not, in purpose or effect, a regulation of interstate commerce within the meaning of Art. I, § 8. Pp. 295 U. S. 347, 295 U. S. 362.

6. This Act purported to establish a compulsory retirement and pension system for all interstate carriers by railroad. A fund, to be deposited in the national treasury and administered by a governmental Board, was to be created and kept up by enforced contributions from all the carriers and their employees. The sums payable by employees were to be percentages of their current compensation, and the sums payable by each carrier double the total payable by its employees. The Board was to determine chanrobles.com-red

Page 295 U. S. 331

from time to time the percentage requisite to produce the necessary funds; but, pending its action, the Act fixed each employee's annual contribution at 2% of his compensation. The Act was sought to be sustained as a measure to promote efficiency, economy, and safety in the operations of interstate railroads.

That the Act violates the due process clause is shown by the following considerations:

(1) All persons who were in carrier service within one year prior to the passage of the Act (about 146,000) would be entitled under it to pensions, whether reemployed or not. Among them would be those who had been discharged for cause, or had been retired, or had resigned to the other gainful employment, or whose positions had been abolished, or whose employment was temporary. These person were not in carrier service at the date of the Act, and it is certain thousands of them never again will be. To place such a burden upon the carriers is arbitrary in the last degree, and the claim that such largess would promote efficiency or safety in the future operation of the railroads is without rational support. P. 295 U. S. 348.

(2) If any one of the million or more living persons who left the service more than a year before the date of the Act were reemployed by any carrier at any time, for any period, and in any capacity, his prior service would count, under the Act, in computing the annuity payable upon his attaining 65 years of age. This provision would impose vast future burdens never contemplated by the earlier contracts of employment, and would take from the railroads' future earnings to pay for services already fully compensated; as to some of the railroads, it constitutes a naked appropriation of private property upon the basis of transactions with which the owners of the property were never connected. The contention that economy, efficiency, or safety of operation would be thereby increased is without rational basis. P. 295 U. S. 349.

(3) Upon attaining 65 years of age, any person who had been in carrier service, however briefly, and even though he had been discharged for speculation or gross negligence, would be entitled to a pension. In thus substituting legislative largess for private bounty, the Act, instead of improving the kind of "morale" among the employees which works for efficiency, loyalty, and continuity of service, would surely destroy it. P. 295 U. S. 351.

(4) Were the Act upheld, thousands of employees in the service at its date would at once become entitled to annuities without chanrobles.com-red

Page 295 U. S. 332

having contributed to the fund. This enormous exaction is plainly irrelevant to efficiency and safety of operation. The claim that it would prevent incompetent men being kept in service is a bare assumption, without evidence to support it. P. 295 U. S. 352.

(5) The Act would allow any employee who had served 30 years to retire on pension (reduced 1/15 for each year he lacked of 65), without regard to his competency, and wholly at his own option. This again adds to the carriers' burden without promoting economy, efficiency, or safety of their operations. P. 295 U. S. 352.

(6) The Act would credit those who were in carrier employment at the date of its passage with their past service without requiring them to make corresponding contribution. There can be no constitutional justification for thus arbitrarily imposing upon the carriers vast additional liabilities in respect of transactions which were long ago closed and fully paid for on a basis of cost to which the carriers' rates and their fiscal affairs were adjusted. P. 295 U. S. 353.

(7) The provision entitling representatives of employee organizations to retire from carrier service and receive pensions by paying in future amounts equal to the sum of the contributions of an employee and of an employer is arbitrary and unreasonable. P. 295 U. S. 354.

(8) The scheme of pooling the contributions of all the carriers and treating all as though there were one employer operates unconstitutionally (a) by discrimination against carriers having relatively few, if any, superannuated employees (p. 295 U. S. 355); (b) by requiring solvent carriers to contribute for employees of the insolvent (p. 295 U. S. 356); (c) by forcing carriers to pay for past service of employees of carriers no longer in existence (p. id.), and (d) by forcing them to insure repayment, to employees or their estates, of the amounts of the employees' contributions (p. id.).

(9) The provisions of the Act which disregard the private and separate ownerships of the several carriers, treat all as a single employer, and pool their assets regardless of their individual obligations and of the varying conditions found in their respective enterprises cannot be reconciled with due process of law. P. 295 U. S. 357.

That the Act is not a legitimate exercise of the power to regulate interstate commerce results from the considerations following:

(10) Its declared purposes to provide "adequately for the satisfactory retirement of aged employees;" "to make possible greater employment opportunity and more rapid advancement;" to provide

"the greatest practicable amount of relief from unemployment

Page 295 U. S. 333

and the greatest possible use of resources available for said purpose and for the payment of annuities for the relief of superannuated employees,"

have obviously no reasonable relation to the business of interstate transportation. P. 295 U. S. 362.

(11) As for the other declared purpose -- viz., to promote efficiency and safety in interstate transportation -- it is clear from overwhelming evidence and from the face of the Act that, though the plan might bring about social benefits to employees, it can have no relation to the promotion of efficiency, economy, or safety by separating the unfit from the industry. P. 295 U. S. 363.

(12) The power of Congress to regulate interstate commerce at the expense of the carriers cannot be extended to regulations related merely to the social welfare of the worker upon the theory that, by engendering contentment and a sense of personal security, they will induce more efficient service. P. 295 U. S. 367.

(13) Safety Appliance Acts, Employers' Liability Acts, and Workmen's Compensation Acts afford no precedent or justification for the Act here in question, which seeks to attach to the relation of employer and employee a new incident, without reference to any existing obligation or legal liability, solely in the interest of the employee, with no regard to the conduct of the business or its safety or efficiency, but purely for social ends. P. 295 U. S. 368.

(14) Assuming that a pension system established voluntarily by a carrier may, by exciting the loyalty of employees, promote efficiency and continuity in service, it is palpable that this attitude and those effects are destroyed when the pension becomes an imposition planned by Congress and forced upon all employers in favor of all employees, without regard to how long they have served, or how long for any one employer. P. 295 U. S. 371.

(15) The fact that carriers, for their own purposes, have adopted voluntary pension systems cannot extend the power to regulate interstate commerce, and thus enable Congress to compel all carriers to accept any pension system it devises. P. 295 U. S. 373.


Certiorari, 293 U.S. 552, to review a decree of the Supreme Court of the District of Columbia enjoining the Railroad Retirement Board and its members from enforcing the Railroad Retirement Act. When the writ issued, the case was pending on appeal in the United States chanrobles.com-red

Page 295 U. S. 334

Court of Appeals for the District. The writ was therefore directed to that court. chanrobles.com-red

Page 295 U. S. 344


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