Source: https://supreme.justia.com/cases/federal/us/326/60/
Timestamp: 2019-04-22 04:04:13+00:00

Document:
competitive or unduly prejudicial to existing motor carriers.
Held: that issuance of the certificate was within the statutory authority and administrative discretion of the Commission. Pp. 326 U. S. 62, 326 U. S. 69.
2. In determining whether motor carrier service by a railroad is required by public convenience and necessity, the Commission must weigh the advantage of improved railroad service against any serious impairment of over-the-road motor carrier service. P. 326 U. S. 68.
3. Where an existing rail service may be improved by a unified and limited rail-truck operation, which would not be unduly prejudicial to motor carrier operations, the Commission may authorize such operation by the railroad even though exiting motor carriers might have been utilized. P. 326 U. S. 69.
The Commission here was entitled to conclude that the public will be better served through unified operation by the railroad than by use of the available motor carrier facilities. P. 326 U. S. 73.
4. It is the duty of the Commission, in pursuance of the national transportation policy, to guard against transportation monopolies and to preserve the inherent advantages of all modes of transportation. P. 326 U. S. 73.
5. The Commission did not abuse its discretion in refusing to reopen the proceeding to admit evidence as to the bias of witnesses, in the absence of excuse for failure to adduce such evidence previously. P. 326 U. S. 73.
6. In view of the conclusions here reached, refusal upon the hearing to require production of the contract between the railroad and it subsidiary was not material error. P. 326 U. S. 74.
Appeals from a decree of a district court of three judges enjoining the enforcement of an order of the Interstate Commerce Commission. See 42 M.C.C. 721.
There appeals bring here for review a final judgment of the Special District Court which enjoined the enforcement of an order of the Interstate Commerce Commission. The proceedings below and the appeals here were brought under 28 U.S.C. § 41(28), §§ 43-48 and § 345. The report of the Commission appears under the title Willett Co. of Ind. Inc., Extension -- Fort Wayne-Mackinaw City, 42 M.C.C. 721. The district court did not file an opinion.
The applicant, the Willett Company, is a wholly owned common carrier by motor, subsidiary of the Pennsylvania Railroad Company. Previous to this application, it held motor carrier operating rights for some twenty-five routes which paralleled lines of the Pennsylvania Railroad at other points than these covered by this application. Fort Wayne was included. Willett sought to secure from the Commission in this case certificates of convenience and necessity for seven additional routes extending along the lines of the Pennsylvania Railroad between Fort Wayne, Indiana, and Mackinaw City, Michigan.
The applications were granted after findings that Willett would render service auxiliary to and supplemental of the Pennsylvania's service in the transportation of less than carload freight. The service is to be rendered on railroad billings, and is to employ railroad fixed and clerical facilities. The Commission found that Willett's service would be coordinated with the rail service, and under railroad supervision. 42 M.C.C. 725; 21 M.C.C. at 407. It also found that the present and future public convenience and necessity required those motor carrier operations.
to improve the service of the railroad, the Commission limited the carrier to service which is auxiliary to or supplemental of the rail service of the Pennsylvania. It forbade service to "any point not a station on a rail line of the railroad," and took steps to keep the Commission informed of the contractual arrangements between Willett and the Pennsylvania.
While the routes paralleled the lines of the Pennsylvania in northern Indiana and the southern peninsula of Michigan, the authorization to Willett forbade the transportation by applicant as a common carrier of any shipments from Fort Wayne, Indiana, to Grand Rapids, Michigan, or through or to or from more than one of said points. The purpose of this limitation was to restrict Willett to transportation truly supplemental or auxiliary to the rail traffic. The two cities are break-bulk or key points. Less than carload freight comes to or leaves them in carload lots. When a mixed carload reaches one of these key points, the contents are distributed to the smaller intermediate points of destination as way-freight by "peddler" cars. The Willett Company seeks to take over this "peddler" work, and not to do over-the-road trucking. Such motor-rail coordination has proven successful in improving service and reducing carrier costs.
As a further assurance that Willett might not inadvertently have received privileges beyond the Commission's intention to grant, a right was reserved by the Commission to impose such further specific conditions as it might find necessary in the future to restrict Willett's operation "to service which is auxiliary to, or supplemental of, the rail service."
of fact that there was no proof that the present highway common motor carrier transportation service by certificated carriers was or would be inadequate to serve the public need. The appellants, of course, contest here the soundness of the district court judgment.
The Interstate Commerce Commission insists that its order authorizing the issuance to Willett of the certificates of convenience and necessity for the specified routes is valid. It bases its contention on the statutory provisions which authorize the Commission to act in regulation of motor carriers and asserts its compliance with them. Under the Interstate Commerce Act, part II, Sec. 206(a), 49 Stat. 551, no motor vehicle subject to the act may operate on the highways without a certificate of public convenience and necessity. Section 207(a) provides for issuance of the certificate on application if the proposed service "is or will be required by the present or future public convenience and necessity." No other provisions are here involved. The entire subsection appears below. [Footnote 1] A finding of public convenience and necessity was made, 42 M.C.C. at 726, but that ultimate finding must have been based on the proper statutory criteria, and must have had the necessary factual findings to support it.
Public convenience and necessity is not defined by the statute. The nouns in the phrase possess connotations which have evolved from the half-century experience of government in the regulation of transportation. When Congress, in 1935, amended the Interstate Commerce Act by adding the Motor Carrier Act, it chose the same words to state the condition for new motor lines which had been employed for similar purposes for railroads in the same act since the Transportation Act of 1920, § 402(18) and (20), 41 Stat. 477. Such use indicated a continuation of the administrative and judicial interpretation of the language. Cf. Case v. Los Angeles Lumber Co., 308 U. S. 106, 308 U. S. 115. The Commission has assumed, as its duty under these earlier subsections, the finding of facts and the exercise of its judgment to determine public convenience and necessity. This Court approved this construction. Chesapeake & Ohio R. Co. v. United States, 283 U. S. 35, 283 U. S. 42. Cf. Gray v. Powell, 314 U. S. 402, 314 U. S. 411-412. The purpose of Congress was to leave to the Commission authoritatively to decide whether additional motor service would serve public convenience and necessity. Cf. Powell v. United States, 300 U. S. 276, 300 U. S. 287. This, of course, gives administrative discretion to the Commission, cf. McLean Trucking Co. v. United States, 321 U. S. 67, 321 U. S. 87-88, to draw its conclusion from the infinite variety of circumstances which may occur in specific instances. The disputants here do not clash over the power of the Commission to determine the need for the new service or that it will serve the public convenience and necessity. The evidence is ample and uncontradicted that delivery by motor of less than carload freight to way stations is a more adequate, efficient, and economical method for railroads than by "peddler" car. They join issue on the Commission's determination as to the carrier which will render that service. Shall it be by the railroad, through the use of its trucking subsidiary, or by the existing common carriers by motor?
The National Transportation Policy has recently been authoritatively summarized by Congress. That declaration requires administration so as to preserve the inherent advantages of each method of transportation, and to promote "safe, adequate, economical, and efficient service." [Footnote 2] Such broad generalizations, while well expressing the Congressional purpose, must frequently produce overlapping aims. In such situations, the solution lies in the balancing by the Commission of the public interests in the different types of carriers with due regard to the declared purposes of Congress. Cf. ICC v. Inland Waterways Corp., 319 U. S. 671, 319 U. S. 691; United States v. Pennsylvania R. Co., 323 U. S. 612.
in appropriate places, operate trucks. However, since the preservation of the inherent advantages of motor carriers is of equal importance with efficiency under the national transportation policy, the Commission must weigh the needs of the railroad against disadvantages to the motor carriers to find the balance of public convenience and necessity in determining whether to grant a railroad application for motor operation where these certificates are required. Cf. Texas v. United States, 292 U. S. 522, 292 U. S. 530.
"The motor carrier service proposed by applicant, operated in close coordination with the railroad's service, will effectuate a reduction in cost, and will result in an increase in efficiency in the transportation over the routes herein considered, which will inure to the benefit of the general public. Furthermore, it does not appear that the restricted service would be directly competitive or unduly prejudicial to the operations of any other motor carrier. . . ."
and trucks gave promise of better cooperation than would be obtained by arm's-length contracts or agreements. While the evidence shows that there were operating truck lines in the area which individually could serve all the way-stations by securing extensions to their present routes, it also shows that no motor carrier is now in a position to render this complete service. Cf. Kansas City S. Transport Co., Inc., Com. Car. Application, 10 M.C.C. 221, 232. The Commission on this evidence had a basis to conclude that a railroad subsidiary offered the most satisfactory facilities for making less than carload deliveries to way-stations.
competitive or unduly prejudicial to the already certificated motor carriers, 42 M.C.C. 725, 726, we hold that the Commission had statutory authority and administrative discretion to order the certificate to issue. The public is entitled to the benefits of improved transportation. Where that improvement depends in the Commission's judgment upon a unified and limited rail-truck operation which is found not "unduly prejudicial" to motor carrier operations, the Commission may authorize the certificate even though the existing carriers might arrange to furnish successfully the projected service.
meet this situation that the key-point or break-bulk rule, which is employed here, was developed. Kansas City Southern Transport Co., Inc., Common Carrier Application, 28 M.C.C. 5, 9, 11, 22 (par. 3), 25 (App. B).
This key point requirement is one factor of differentiation between this certificate and the normal over-the-road motor certificate of convenience and necessity. Other differentiations are found in the limitation of service to rail station points and the condition that the Commission reserved the right to impose such other requirements as might be found necessary to restrict the rail subsidiary to coordinated rail service, instead of permitting general competition with motor carriers in over-the-road service.
Commission later determines that the balance of public convenience and necessity shifts through competition or otherwise, so that injury to the public from impairment of the inherent advantages of motor transportation exceeds the advantage to the public of efficient rail transportation, the Commission may correct the tendency by restoration of the rail movement requirement or otherwise.
projected service may be better rendered by the railroad or existing motor carriers. In the absence of power to compel coordination between the modes of transportation and in the presence of the probable gains in operative efficiency from unified management, we think the Commission, in view of the limitations on the railroad's motor service, is entitled to conclude that the public will be better served by the rail operation than by use of the available motor carrier facilities. The alternative to the existence of this discretion is that the language of the Interstate Commerce Act, part II, forbids the granting to railroads of a certificate of convenience and necessity for the operation of motor trucks, under specially limited certificates, when there are certificated motor carriers, independent of railroad authority or supervision, with whom arrangements for the service might be made by the rail carriers. There is no such prohibition in terms. Any such implication is negated by the discretion to grant certificates conferred on the Commission by the Act.
Protestants, the appellee motor carriers, point out that, under this interpretation, in every case of an application by a rail carrier or its wholly owned subsidiary for a certificate of convenience and necessity to operate a motor line to render service at way-stations, the Commission will have power, under facts and with limitations in the certificate, previously described, to grant the certificate. This is true. It must be expected, however, that the Commission will be as alert to perform its duty in protecting the public in the maintenance of an efficient motor transportation system as it is in protecting that same public in the successful operation of its rail system. The Commission is trusted by Congress to guard against the danger of the development of a transportation monopoly. 49 U.S.C. § 5(2)(a) and (b). It has the duty to preserve the inherent advantages of each mode of transportation.
bias of the railroad witnesses. No valid reason for failure to bring out the alleged bias at the trial is suggested.
We pass also, without further discussion, the appellees' complaint of material error in the refusal to produce the contract between the Pennsylvania and Willett at the hearing. It does not seem material in view of our conclusions. The Joint Board directed that the contract be filed as a "late exhibit."
* Together with No. 508, United States v. Parker, doing business as Parker Motor Freight, et al., also on appeal from the District Court of the United States for the Southern District of Indiana.
"Sec. 207. (a) Subject to section 210, a certificate shall be issued to any qualified applicant therefor authorizing the whole or any part of the operations covered by the application if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this part and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise, such application shall be denied: Provided, however, That no such certificate shall be issued to any common carrier of passengers by motor vehicle for operations over other than a regular route or routes, and between fixed termini, except as such carriers may be authorized to engage in special or charter operations."
"It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof, and to encourage fair wages and equitable working conditions -- all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy."
"The reason for that proviso was that, at the time when this act was under consideration by your committee, there was a feeling on the part of many that railroads, for example, ought not be permitted to acquire motor carriers at all. It was pointed out in opposition to that view that there were many cases where railroads could use motor vehicles to great advantage in their operations, in substitution for rail service, as many of them are now doing. Many railroad men, for example, feel that the operation of way trains has become obsolete; that the motor vehicle can handle such traffic between small stations much more economically and conveniently than can be done by a way train, and the motor vehicles are being used in that way by many railroads. The same is true of many terminal operations. The motor vehicle is a much more flexible unit than a locomotive switching cars, and it can be used to great advantage and with great economy in many railroad operations."
"For that reason, something of a compromise was reached between those two opposing views, and it was provided that a railroad could acquire a motor carrier if it could make special proof that the transaction was not only consistent with the public interest, but would promote the public interest and would also promote the public interest in a special way -- namely, by enabling such carrier other than a motor carrier to use service by motor vehicle to public advantage in its operations. And a further finding was required -- that the acquisition will not unduly restrain competition."
"(c) Notwithstanding any provision of this section or of section 203, the provisions of this part . . . shall not apply --"
"(1) to transportation by motor vehicle by a carrier by railroad subject to part I, or by a water carrier subject to part III, or by a freight forwarder subject to part IV, incidental to transportation or service subject to such parts, in the performance within terminal areas of transfer, collection, or delivery services; but such transportation shall be considered to be, and shall be regulated as, transportation subject to part I when performed by such carrier by railroad, as transportation subject to part III when performed by such water carrier, and as transportation or service subject to part IV when performed by such freight forwarder."
See Conference Report, H.Rep. No.2832, 79th Cong., 3d Sess., Section 17(B), p. 74.
Pennsylvania Truck Lines, Inc. -- Control -- Barker, 1 M.C.C. 101, 113; 5 M.C.C. 9. Similar finding was made in Illinois Central R. Co., Common Carrier Application, 12 M.C.C. 485; Gulf, M. & N. R. Co. Common Carrier Application, 18 M.C.C. 721; Missouri Pac. R. Co., Extensions of Operations -- Illinois, 19 M.C.C. 605; Willett Co. of Ind. Inc., Extension -- Ill., Ind. and Ky., 21 M.C.C. 405; Pacific Motor Trucking Co. Common Carrier Application, 34 M.C.C. 249, 322, par. 4.
The Commission's brief, Appendix B, lists 94 opinions dealing with truck movement of rail freight.
"Item No. 30. Territorial Boundaries. (a) Except as otherwise specifically indicated in Section 2, Pick-up or Delivery service will be confined within the corporate limits of cities or towns; at points not having corporate limits, within a radius of one mile of carrier's freight station."
See also Pick-up and Delivery in Official Territory, 218 I.C.C. 441, 445; dissent, 483, 484; Pick-up of Livestock in Illinois, Iowa and Wisconsin, 238 I.C.C. 671; 248 I.C.C. 385, 391, 397; 251 I.C.C. 549; Morgain Forwarding Co., Pick-up and Storage, 258 I.C.C. 547, 771; Empire Carpet Corp. v. Boston & M. R., 258 I.C.C. 697. Also see Section 202(c) of part II, Interstate Commerce Act, 54 Stat. 920, 56 Stat. 300.
"We are without jurisdiction to compel coordinated service between carriers by rail and carriers by motor vehicle. It could only be accomplished through the medium of through routes and joint rates, and we have no power to require their establishment. It follows that any such plan must be dependent on voluntary cooperation. While protestants say that they are willing to entertain proposals, they have not developed a plan, nor do they suggest what general form it might take."
"Upon the evidence, therefore, we are persuaded that coordinated service through the voluntary cooperation of all or some of the protesting motor carriers is not here practicable, and that the 'useful public purpose' which the proposed new operation will serve cannot 'be served as well by existing lines or carriers.' It remains to be determined whether, in accordance with the definition of 'public convenience and necessity' in the Pan-American case [1 M.C.C.190],"
"it can be served by applicant with the new operation or service proposed without endangering or impairing the operations of existing carriers contrary to the public interest."
Sec. 207(a) of the Interstate Commerce Act authorizes the issuance of a certificate to a common carrier by motor vehicle if the proposed service "is or will be required by the present or future public convenience and necessity." But the present decision allows the Commission to construe the statute as if "railroad convenience and necessity," rather than "public convenience and necessity," were the standard.
I can find in the Act no indication whatsoever that railroad applicants for a motor vehicle certificate are to be considered any more favorably than any other type of applicant. Yet it is plain that this decision permits just that. For, if any applicant other than a railroad affiliate were before the Commission with an application for a certificate to serve this precise territory, it would have to show that existing transportation facilities were inadequate to serve the needs of the public efficiently. * No such showing has been made here. None has been attempted.
That necessity is sought to be avoided by holding that the motor carrier service to be rendered is "auxiliary to or supplemental of rail service." If, as the Commission at first required (Kansas City Southern Transp. Co., 10 M.C.C. 221), this motor carrier service was restricted to goods which had a prior or subsequent rail haul, the service might properly be designated as an auxiliary or supplemental one. But the Commission changed its position, and withdrew that condition. Kansas City Southern Transp. Co., 28 M.C.C. 5. The key-point condition was substituted. Between those points, the railroad will operate like any motor carrier. The service which it seeks to render is not a combined rail and truck service. As the Commission states in its report in the present case, "[t]he railroad, through its subsidiary, merely seeks the substitution of a more efficient for a less efficient means of service." This "substituted" service differs from the adequate independent motor carrier service already existing only in its being under railroad control. In that respect, and in that respect alone, is the service of a new and different character.
The Commission justifies that "substitution" of service on the grounds of the operating convenience of the railroad and a reduction in its costs. That is a standard of "railroad," not "public," convenience. Would it be thought for a moment that motor carriers could obtain authority to build a new competing railroad by any such standard of "motor carrier" convenience?
Whether it is wise policy for the railroads to enter and dominate this field is neither for us nor the Commission to decide. If the railroads are to be given this preferred treatment when they seek to substitute motor carrier service for rail service, the authority should come from Congress, not this Court. Meanwhile, we should be alert to see to it that administrative discretion does not become the vehicle for reshaping the laws which Congress writes.
"might use the control as a means to strangle, curtail, or hinder progress in highway transportation for the benefit of the other competing transportation."
The same standard should be applied whether the railroads enter the motor carrier field by acquisition of existing facilities or by establishment of their own motor carrier affiliates. The potentialities for abuse may be as great in one case as in the other. Railroads, like other business enterprises, are subject to the antitrust laws except as Congress has created exemptions for them. Georgia v. Pennsylvania R. Co., 324 U. S. 439. And the antitrust policy is one of the components of the public interest which the Commission is supposed to protect in the transportation field. McLean Trucking Co. v. United States, supra.
that there can be no competition, because the railroad now has the business. But the railroad is not restricted to business which it now has. Between the key-points, it is entitled to any and all business which it can get. Every future movement of freight will be the subject of competition. If, as assumed, the present railroad service is poor as compared with the proposed new motor carrier service, a new and important competitive element will certainly be introduced. The railroad wants this broad certificate so it can better compete with existing motor carriers. If the railroad really wants a purely auxiliary service, let the service be limited to commodities which have a prior or subsequent rail haul. But it is not so conditioned. The railroad is entering the motor carrier field, and rendering a pure motor carrier service. If the policy of Congress is to be honored, there must be a finding supported by evidence that competition will not be unduly restrained. On this record, no such finding has been or can be made.
MR. JUSTICE BLACK and MR. JUSTICE RUTLEDGE join in this dissent.
* Norton Common Carrier Application, 1 M.C.C. 114; C & D Oil Company Contract Carrier Application, 1 M.C.C. 329; Carr Contract Carrier Application, 2 M.C.C. 263, 269; Irven G. Saar Common Carrier Application, 2 M.C.C. 729; Merrill & Hamel, Inc., Common Carrier Application, 8 M.C.C. 115, 117; Boyles & Luten Common Carrier Application, 8 M.C.C. 593; White Circle Line Common Carrier Application, 16 M.C.C. 516.

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