Source: https://openjurist.org/321/us/19
Timestamp: 2019-04-26 04:12:42+00:00

Document:
Rehearing Denied Feb. 28, 1944.
See 321 U.S. 803, 64 S.Ct. 614.
Mr. Nye F. Morehouse, of Chicago, Ill., for appellant.
This direct appeal from a statutory three-judge district court involves important problems relating to 'grandfather' rights to a certificate as a common carrier by motor vehicle in a single coordinated rail-motor freight service. The final decree of that court dismissed appellant's petition to set aside an order of the Interstate Commerce Commission, 31 M.C.C. 299. The Commission's order had denied to the Chicago and North Western Railway Company, of which appellant is trustee, a certificate of public convenience and necessity as a common carrier by motor vehicle under the so-called 'grandfather clause' of Section 206(a) of Part II of the Interstate Commerce Act, 49 U.S.C. § 306(a), 49 U.S.C.A. § 306(a).
The essential facts are clear. The Chicago and North Western Railway Company, hereinafter referred to as the railroad, has extensive mileage in nine western states and is a large carrier of freight in less than carload lots. Prior to and since the statutory 'grandfather' date of June 1, 1935, it has supplemented its rail freight service by providing motor vehicle service between various freight stations on its rail lines. There are twenty-three such motor vehicle routes on highways parallel with and roughly adjacent to the railroad's lines. The motor trucks transport less than carload lots of freight in complete coordination with the rail service. The railroad instituted this additional method of transportation in order to furnish an improved and more convenient freight service to the public in certain areas of light traffic and in order to curtail car mileage and way-freight service. Motor vehicle transportation, in other words, is merely a new method of carrying on part of its all-rail freight business in which it had been engaged for many years.
In so substituting motor vehicle service, the railroad has not deemed it advisable to purchase or lease motor trucks or to employ its own personnel in such operations. Instead it has entered into written contracts for this service with motor vehicle operators who also serve customers other than the railroad. But the railroad at all times maintains direct and complete control of the movement and handling of its freight by these operators. It fixes the truck schedules so as to coordinate them with the rail schedules and designates the amount and particular shipments of freight to be moved. The motor vehicle operators issue no billing of any kind and solicit none of the freight transported for the railroad. They have no contractual or other relationships with either the shippers or the receivers of the freight. Their trucks are loaded at the freight stations by railroad employees, sometimes assisted by the truck drivers. After a truck is loaded a manifest is issued by the railroad's agent, which is signed by the truck driver; upon delivery of the freight to the other railroad freight station the manifest is signed by another railroad agent, thus releasing the motor vehicle operator.
With respect to these operations, the Commission found that the railroad did not operate motor vehicles 'either as owner or under lease or any other equivalent arrangement.' The contract provisions were found to 'establish that motor vehicles are to be supplied by the contractors and operated under their direction and control and under their responsibility to the general public as well as to the shippers. It is clear, therefore, that the motor-vehicle operations have been and are those of others as common carriers by motor vehicle in their own right and not those of applicant.' The Commission accordingly denied the railroad's 'grandfather' application. The district court dismissed without opinion the railroad's suit to set aside and enjoin the Commission's order, after finding that the order was lawful and was supported by substantial evidence.
In addition, as we pointed out in United States v. N. E. Rosenblum Truck Lines, Inc., 315 U.S. 50, 53, 54, 62 S.Ct. 445, 447, 448, 86 L.Ed. 671, 'We think it clear that Congress did not intend to grant multiple 'grandfather' rights on the basis of a single transportation service.' Thus where a person holds himself out to the general public to engage in a single transportation service, consisting entirely or partly of motor vehicle operations, he is a 'common carrier by motor vehicle' within the contemplation of the statute. And Congress intended that he alone should receive 'grandfather' rights on the basis of that single service under Section 206(a) of the Act.
The railroad, furthermore, is actively engaged in providing this single coordinated service. As to the motor vehicle operations supplementing its rail service, it is not a mere freight broker or forwarder. Cf. Acme Fast Freight, Inc., v. United States, D.C., 30 F.Supp. 968, affirmed 309 U.S. 638, 60 S.Ct. 810, 84 L.Ed. 993; O'Malley v. United States, D.C., 38 F.Supp. 1; Moore v. United Tates, D.C., 41 F.Supp. 786, affirmed 316 U.S. 642, 62 S.Ct. 1036, 86 L.Ed. 1128. Nor can it be described as the consignor or consignee of the freight so transported by motor vehicle. Cf. Lehigh Valley R. Co. v. United States, 243 U.S. 444, 37 S.Ct. 434, 61 L.Ed. 839. The provisions and actual operation of the contracts with the operators demonstrate the railroad's rigid control over the movement of the freight and its retention of full responsibility to the shippers. The operators are 'independent' only by grace of contract nomenclature. By any realistic test they are mere aids in carrying out a part of the railroad's coordinated rail-motor freight service.
Thus the railroad clearly is undertaking to transport freight by an 'other arrangement,' as those words are used in the original statutory definition of 'common carrier by motor vehicle.' Cf. Chairman Eastman's concurring opinion in Missouri Pacific R. Co. Common Carrier Application, 22 M.C.C. 321, 333. Even more clearly, under the amended definition, the railroad is holding itself out to the general public to engage in the transportation of freight by motor vehicle as part of its coordinated rail-motor freight service. In short, it is a common carrier by motor vehicle within the meaning of the Act. And the application of the Congressional intention not to grant multiple 'grandfather' rights in such a situation becomes clear. The railroad alone is entitled to common carrier 'grandfather' rights as to the motor vehicle service forming an integral part of its unified freight service. Any other conclusion would authorize the wholesale granting of twenty-three 'grandfather' permits to the various motor vehicle operators on the basis of this single transportation service offered by the railroad—a result which ascribes to Congress 'an intent incompatible with its purpose of regulation.' United States v. N. E. Rosenblum Truck Lines, Inc., supra, 315 U.S. 54, 62 S.Ct. 448, 86 L.Ed. 671. We need not decide whether these operators are entitled to 'grandfather' permits as to other freight transported over their routes. But only the railroad acquired 'grandfather' rights as to the freight which they transport as an integral part of the railroad's coordinated rail-motor service.
One who arranges for another to do some hauling for him may or may not enter the hauling business. The question whether the one or the other is the entrepreneur has occupied the courts from an early day. Holmes, Agency (1891), 5 Harv.L.Rev. 1, 15—16. The Commission has drawn upon that body of law concerning independent contractors for the purpose of determining whether in case of line-haul transportation the carrier dealing directly with the shipper or the one performing the actual motor transportation was the common carrier entitled to grandfather rights under the Act. That is to say it has held, and consistently so, that the carrier which exercised direction and control of the actual motor-vehicle operations and assumed responsibility therefor to shippers and to the general public was the one who was in 'operation' during the specified period as a 'common carrier by motor vehicle' within the meaning of the grandfather clause. § 206(a). That test has been applied whether the carrier dealing directly with the shippers was a common carrier by motor vehicle (Dixie Ohio Express Co., 17 M.C.C. 735, 738—741; J. T. O'Malley, 23 M.C.C. 276, 279) or a common carrier by rail. Willett Company of Indiana, Inc., 21 M.C.C. 405, 408; Missouri Pac. R. Co., 22 M.C.C. 321, 326—327. It has been applied after as well as before the 1940 amendments.1 Boston & Maine Transportation Co., 30 M.C.C. 697, 704—705. And in applying the test to railroad applicants it has placed them on a parity with motor vehicle applicants. Boston & Maine Transportation Co., supra. And see Crooks Terminal Warehouse, Inc., 34 M.C.C. 679. There have been disagreements within the Commission whether particular applicants satisfy the test. Missouri Pac. R. Co., supra; Boston & Maine Ransportation Co., supra. But there has been no disagreement over the propriety of the control and responsibility test itself.
The control and responsibility test provides a fair measure of the grandfather rights. He who shows that he has been and is an independent contractor has established his claim to the transportation business as clearly as any connecting carrier. The fact that the transportation service offered is closely integrated and held out to the public as such does not mean that segments of the line-haul operation may not comprise separate enterprises. To attach grandfather rights to the separate segments is not to grant multiple rights. It is to allow those rights to follow ownership of the enterprise. I see no other way to effectuate the Congressional policy of preserving through the grandfather clause the position which motor vehicle operators 'struggled to obtain in our national transportation system.' United States v. Carolina Freight Carriers Corp., 315 U.S. 475, 488, 62 S.Ct. 722, 729, 86 L.Ed. 971. To conclude that the present arrangement is a mere agency is to disagree with the Commission in its application of the control and responsibility test. To rest grandfather rights on the integrated rail-motor service which appellant offers the public is to grant it rights based on another man's business. To grant appellant these grandfather rights on the basis of a holding out is to give to the 1940 amendment an effect which Congress concededly did not intend.2 I do not believe that Congress intended to put applicants such as appellant in a preferred position.
Section 203(a)(14) as amended by the Transportation Act of 1940, 54 Stat. 898, 920, 49 U.S.C.A. § 303(a)(14). No change in the legislative intent with respect to the definition of common carriers by motor vehicle of the type involved in this case was evidenced by this amendment. See 86 Cong.Rec. 11546.

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