Document: 340 U.S. 419 71 S.Ct. 382 95 L.Ed. 391 UNITED STATES et al.v.ROCK ISLAND MOTOR TRANSIT CO. al. No. 25. Argued Nov. 7, 1950. Decided Feb. 26, 1951. Rehearing Denied April 9, See 341 906, 609. [Syllabus from pages 419-421 intentionally omitted] Mr. Daniel W. Knowlton, Washington, D.C., for appellants. Harry E. Boe, Chicago, Ill., appellee Rock Island Motor transit co. Einar Viren, Omaha, Neb., Omaha Chamber of Commerce. Messrs. Ernest Porter, Des Moines, Iowa, Bert F. Wisdom, Ida Grove, Iowa State Commerce Comm'n. Justice REED delivered the opinion Court. 1 Questions power Interstate Commission to tighten restrictions on operations a railroad's motor-carrier affiliate are raised by this appeal. In Commission's view must be modified in order make them truly auxiliary or supplemental rail service. They conducted (1) under certificate convenience and necessity issued 1941 § 207 Act, 49 U.S.C.A. 307, (2) an 1944 approving acquisition another motor carrier. The contains condition that might impose other terms restrict holder's operation service which is neither nor any relating specific operating rights 2 issues involve basic regulate carriers affiliated with railroads so as assure at all times shall consonant National Transportation Policy, 54 Stat. 899, preceding section 301. has decided policy requires their affiliates train This raises questions how planned achieved. Differences also exist what phases 3 Transit Company, wholly-owned corporate subsidiary Pacific Railroad Company its predecessors, common carrier vehicle engaged transporting property interand intrastate commerce, exclusively, practical purposes, along lines parent corporation Arkansas, Illinois, Indiana, Minnesota, Missouri, Nebraska, Tennessee, Texas Kansas. Many Transit's alongside different localities I.C.C. authorities than here involved. 4 appeal deals additional placed subsequent formal approval purchase operation, upon two acquisitions. first segment so-called White Line Purchase. was process perfecting 'grandfather rights' 206(a), Carrier 306(a), time appellees' agreement purchase. directing issue recognized this. authorized 213, Act 1935, 555, 1, 1938, Docket MC—F—445; reported 5 M.C.C. 451, 15 763. segments Purchase involved those between Silvis, included M.C. 29130, December 3, 1941. That had only following provisions way applicable controversy: 6 'Service intermediate points above-specified routes stations Railway Company. 7 'The abovespecified subject such further limitations, restrictions, modifications we may find it necessary insure supplementary not unduly restrain competition.' 8 second Frederickson Purchase, November 28, 1944, MC—F—2327, 5, 905, acquired, holders necessity, route Atlantic, Nebraska. Neither report contained alike akin these just quoted certificate. No yet been entered no issued. 9 major part Island's truck Chicago Omaha. eastern end operated authority. 10 above since respective dates. Under authorities, states trucking follows: '(a) coordinated rail-service, rates existing appellee's railroad; (b) substitution service, rates; (c) tariffs observed applied time.' On February 1945, directed reopening dockets give reconsideration order, 'solely determine (a) conditions if appear necessary, should imposed performed limited to, of, condition, appears authority granted conditons service.' 11 At reconsideration, modify respects: 12 '1. hereinafter called Railroad. 13 '2. render point station line 14 '3. shipments transported points, through, from, more one said points: Nebr., collectively Davenport Bettendorf, Island, Moline, East Ill. '4. All contractual arrangements us revision, fair equitable parties. 16 '5. Such we, future, Co., 55 567, 597—598, affirming 40 457. 17 It sought relief through §§ 1336 2325 28 U.S.C., 1336, three-judge district court. orders were annulled enforcement enjoined. 90 F.Supp. 516. United States appealed U.S.C. 1253, 1253. We noted probable jurisdiction. 18 objection modifying operates generalized contention changes revokes authority, previously Commission, without failure comply term, limitation functions. Changes revocations made 212(a) 312(a), failures.1 19 hand, takes position there change revocation authorization operate looks being controlled applications approval. understands Declaration 202(a) enacted inception federal regulation 543, 302, preserve inherent advantages transportation public interest. finds support Policy set out 1940 amendments declaring administered recognize rail, water transportation.2 treats 213 1935 present authorizing mergers, consolidations acquisitions within Policy.3 Although 207, providing issuance certificates clause requiring special justification receive rights, proviso former applies rules read into service.4 20 trial court accepted argument. page 519. found undisputed fact modification proceeding, acting 212 but claimed subsequently would service; definition when approved, could changed revoked except 212; proposed interfere full common-carrier predecessors guaranteed clause,' 206, transferred approved Commission. 21 A glance supra, 425 426, 386, 387, shows disadvantages Transit. cannot carry general all-motor own billings rates, joint local.5 haul traffic 'key points,' Moines Bettendorf-Rock Island-Moline center. Furthermore, rests threat possible future need shown application hold operations, changing conditions, then reasonably determined needed keep parent's alleges bar participation affected now produce gross revenue million dollars year. As damage Transit, enforced, admitted, proof amount dispensed with. 22 With situation stated mind, take up question validity action case. 23 Statutory Authority.—The limit carriers, whether original after 5(2), Act. Section 206 gives discretion according statutory standards authorize requested operations. 'requirements, rules, regulations Commission'. 24 practice beginning both geographically6 functionally.7 same true railroad affiliates. think certificate, deems restriction useful protecting competition, require railroad-affiliated perform services use carriage primarily fashion known Congress before enactment regulatory legislation field.8 logical method maximum development agencies—rails motors—as coordinate accordance later incorporated prefixed 1940, 899. Specific requirements 213(a) amended note supra. forbidden enable 'to advantage operations'.9 25 spate cases can cited practice, some specifically Congress' attention prior Act.10 knowledge granting deemed reenacted 5(2) 1940. furtherance otherwise resources soon over-the-road competition impossible, unregulated transport, feared, have crippled railroads. adjunct transportation, hoped-for advancements land supervised motors rails materialize. control bulk concentrated type operation. Complete domination envisaged each form transportation.11 26 indicated text 4, reads requirement. Thus consistent attitude toward maintained. relies understanding directions each', motor, water; reliance justified Whittington amendment stating 'all enforced carrying declaration policy.' 27 But acquisition, does necessarily imply designed bring about desired coordination, acquired developed So far case concerned, provision, above, 423—424, making continuance avoid undue restraint competition. like v. Parker, 326 60, 65 1490, 89 2051, occasioned comment 'if determines balance shifts otherwise, injury impairment exceeds efficient correct tendency restoration movement requirement otherwise.' Id., 71—72, 1496. Parker right railway subsidiaries utilized, determination reservation valid. Its effect comes ruling interests methods each, even though disadvantage system other. duty Policy. 66, 1493. When interest preservation motors, basis, they (see 899 5(2)(b) allowing railroads, reserve remain supplemental. expected able once essential maintain required balance. reservation, course, provide unfettered will. violate 212, suspension, holders' willful lawful offend against provision 'shall until suspended terminated', provides. asserts unconnected plan operation; indeed originally independently large. What allow will continue 29 consolidation section, permits 'with contingent finding lack Then 'upon modifications, reasonable'. 30 208 specify rendered' 'there shall, thereafter, attached exercise privileges reasonable terms, limitations * require'. 216(c) 217(a) establish otherwise. Sections 208, 217(a), 308, 316(c), 317(a), do our override modes retained, findings conditions. seem conflict 5(2)(b), based voluntary action. And pause over rail-owned transform contract definitions 203, 303. 31 language hold, enforce out, turn five 425—426, fairly character contemplated procedure provisions. 32 Auxiliary Supplemental.—The sets generally met applicants certificates. discussed merger 'public interest' operations'.12 33 words 'auxiliary of'13 taken There carriers. Their connotation gathered context employed used phrase beginning. Appellees urge meaning issued, 34 assert did transport either billing route. requirement, argue, adequately complied restricting 'which Company.' appellees contend, functioning geographical concept mind when, 1941, To assertion, call supplementary' affiliates, Pennsylvania Truck Lines, Inc.—Barker Freight, 101 113, October 8, 1936.14 Later, March 6, 1937, below.15 permitted lines, states, Inc., Extension Lebanon, Ohio, 47 837, January 1948.16 also, Southern Company—Valley 39 441, 447.17 35 supplemental' Barker thereafter geographical. This, says, explanation p. 11, order.18 1943, defined Transport Application, 41 721.19 notes Valley case, came Pacific, considers disapproved denial & Pacific. 584—585. evidently produced difference Commission.20 36 charged tightened 'concept 583. refused accept assumption therefore discuss proceeding partially revoking held: 'We conclude solely purpose enabling intent evidenced division including found; cause complaint misled prejudice decision herein, constitutes described greater detail, revised prejudice; element unfairness operations.' 585. examiner's 1938 recommended 'that rates.' eliminated. 458; 576 ff.; 516, 518. file District Court concluded matter law Prior transaction plaintiff's service' prohibit rendition directly shipping addition lieu railroad.' 37 sure. view, subordinate capacity aids better cheaply rather competing Undoubtedly consistently rail-affiliated forego tariffs. Key break relatively new. 5. Rail leave serve communities service.21 Those divergences, however, discretionary supervisory endowed because deal multitudinous variable situations arise given adjust limits 208. continually evidenced, certification intention 38 new mark policy; condemned Seatrain 329 424, 428, 67 435, 437, 91 396. Without relying differences 429—432, 437— 439, believe inapplicable circumstances. 'commodities generally.' For 'in cars only' 'except cars' freight carried rails, 425, minimizes added whole expressed aid phrase, perhaps too summary, Though difficult define precisely, content Co. 721, 726, n. 19, While varied imposed, rail-connected act coordination not. Circumstances change. Different circumstances carriage. particular time. long falls supplemental, hamper companies physical facilities—stations, terminals, warehouses—their personnel capital enterprises encompass much roads desire. announced permit development.22 covered Purchase.—The statement facts Fredericksons possessed clause.' agreed order. 'operating report.' 5(2)(a) stated, entitled covering previously-described portion Nos. MC—530 (Sub-No. 1), herein unified confirmed duplications eliminated; *.' 'previously-described granted' covers 'a motor-vehicle commodities regular between' named points. irregular certain commodities. These latter purchased. purchased rights. anything limiting finding, 'will consummated six years three hereinbefore discussed. 42 posed similar Has place ordered certificate? solve problem determining finality tentative approach consummation requirements. follows, priori, foregoing decision. leaves unanswered carrier's itself. If undertaken answer await fully argument affected. Our reasons holding validly insert follow. 43 Closings loans purchases nice timing adjustments. industry familiar complexities closings involving clearances impositions underlying mortgages partition obligations among syndicates lenders purchasers, secure various classes obligees reorganizations simple borrowings trusteed equipment. business risks sale ahead final commitment separate entity. request doubtless not, closing escrow simultaneously 44 experience problems service.23 objected immediately put condition. stressed trucks, occurred applicant precedents inclusion 45 maintains final; result written statute. decisions Commission,' argues reflect 'finality action.'24 bear point. both, said, many words, final. Smith Bros. added: decision, sufficient reason therefor controversy determined, duly regularly becomes effective, terminate expressly marked off limited. antecedent essentially procedural character, aside, modified, vacated, marks entry judgment decree proceeding.' P. 472. 46 slight bearing weighs side interlocutory sentence referred reads: 'But, certificates, while 'orders' time, 432, statute, validates Until fixed delivery applicant, frame persists. 48 that, rights,' freedom seller's privileges; absence defeats Since reject premise. Other Objections.—A number objections presented considered briefly merit notice. 'Grandfather basis necessity. sellers' contend sellers broader allowed purchaser 'substantial parity bona fide operations' infringed service.25 holder possesses. Because described, conditioned purchaser's willingness narrower seller. 50 Finally, franchise; invested large sums equipment deprives due law. previous took obtained railroad, thereto, makes obvious nothing deprived contested 51 reversed remanded dismiss complaint. 52 BLACK, DOUGLAS, JACKSON BURTON dissent affirm Court's opinion. manner Sec. 212(a), 1238, 924: 'Certificates, permits, licenses effective date specified therein, terminated provided. Any permit, license may, thereof, revoked, part, complaint, initiative, notice hearing, suspended, changed, rule, promulgated thereunder, license: M.C.C., 457, 473: 'It opinion, Kansas City nearly decade regulations, healthy promotion economical sound several short accomplishment purposes forming national policy, where unusual prevail, every grant acquire definitely 213(a), 556: 'Provided, person therewith 5(8) I, enter unless promote remains 906. appreciate, unlike undertaking prove proposes, measure applicant. mean easy another, considering ignore circumstance whose ordinarily inconsi(s)tent principles policy. vehicle, prove, burden, very railroad. Where fails show negativing fact, supply justified.' 471, 473—474; cf. 221, 237. deduce (1), challenge statement, record interpretation. 581 ff. 726; infra. 207: passengers routes, termini, engage charter Crescent Express Lines States, 320 401, 64 167, 88 127. Bus Operation, 140 685, 745, 749; Coordination Transportation, 182 263; 336 see Report Federal Coordinator Regulation Agencies Railroads, S., Doc. 152, 73d Cong., 2d Sess., ff., 35. Legislation, H.R.Doc.No.89, 74th 1st Sess. 6. Proviso Commissioner Eastman, Hearings Subcommittee Committee Commerce, Senate S. 3606, 75th 3d 23: consideration your committee, feeling example, ought all. pointed opposition vehicles great doing. men, feel trains become obsolete; handle small economically conveniently done train; terminal flexible unit locomotive switching cars, economy statements Sen. Wheeler, 79 Cong.Rec. 5655, Rep. Sadowski, 12206. Cf. 2051. 212(b). E.g., 53d Annual 107, 1939; 9; 51st 68—69. Appendix B brief 39, 450, 422, collected 120 cases, 1936 vol. Reports, dealing reference standard. Meck Bogue, Unification, Yale L.J. 1376, 1408 101, 111: 'While doubt could, command, expand improve partnership numbers ample independent operators territory furnishing competitive convinced healthful free opportunity go kind strictly with, quoted, evidence done. judgment, extraordinary extent control. Improvement furnished flow concerns generally. financial soliciting easily field greatly hampered restricted, ultimate public.' brings variant to' interchangeably of.' rendered Incorporated, event pertinent pending us, confined parallel adjacent lines.' appendix, construed include rendering interchanging at, 15. 'Under performs distinct types substittued public. involves commodities, quantity, bills lading rates. Substituted hearing January, most radiate Pittsburgh Columbus. Independent extending principally Applicant agents representatives who shippers performance 200 units 500 substituted definite confine Although, times, formerly sometimes indication reports intended for, combination carriers.' scope retained report. Hence, parties proceedings amplify Approved Except indicated, nonapproved compete itself, established carrier, invade substantial degree already served 'Approved best illustrated trucks peddler way-freight commonly 'station-to-station' 'Condition (same supra) petitioner railway. improved instead means fulfilling railway's transport. Petitioner's status having direct dealings Willett Extension—Ill., Ind., Ky., 405. railway, hence 2. Condition I movements handling lading. accomplished performing partly 3. petitioner's and, accordingly, properly party containing participate directory option. participating carriers; substituting 726. Transport, 24; Extension, Eldon, 349, 361; Co.—Purchase—White Line, 478. 'As shortly applied, disposition practically rail-motor However, Frisco Transp. Co.—Purchase—Reddish, 132, continuing quite recently, reserving followed. departure treat territorial substantive right.' 469. Extension—Wellman, 643. 584. Resources Planning Board, (1942), H.R.Doc. 883, 77th pp. 155, 156: 'In highly dynamic state industry, folly agencies strait jacket. Each mode needs grow times. drastic move allocate arbitrarily achieve indirect private forced Government. develop newer revive old weakening monopolistic occupied improving expanding offered users. unfortunate halt reverse trend, thus back hands clock earlier 'Certain handled key Atlantic Highway serving via pursuant M. Frt., restricted.' Pac. R. Co.—Purchase—J. H. Frederickson, etc., 824 (no printed report). 396; Boulevard 77 594, 595; Revocation Certificate, 465, derived Alton 315 15, 22, 62 86 586; followed Carolina Freight Carriers Corp., 475, 481, 722, 971.

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