Source: https://supreme.justia.com/cases/federal/us/321/19/
Timestamp: 2019-04-19 02:22:52+00:00

Document:
1. In respect of operations by motor vehicle in a coordinated rail motor freight service -- the motor vehicles being operated by contractors under arrangements described in the opinion -- only the railroad was a "common carrier by motor vehicle" entitled to "grandfather" rights under § 206(a) of Part II of the Interstate Commerce Act, since it alone held itself out to the general public to engage in such service. P. 321 U. S. 23.
2. The Commission's so-called "control and responsibility" test, so far as it leads to a different result, is disapproved. P. 321 U. S. 26.
Appeal from a decree of a District Court of three judges, dismissing the complaint in a suit to set aside an order of the Interstate Commerce Commission, 31 M.C.C. 299.
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).
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.
The railroad has consistently held itself out to the general public and to shippers as being engaged in this coordinated rail-motor freight service. It solicits all the freight transported by the trucks operating as part of this unified service, and its bills of lading and tariffs are used throughout. The shipper does not know in a specific instance whether his freight will be shipped entirely by rail or partly by motor vehicle. But he is informed by the railroad's tariffs that the railroad, at its option, may substitute motor vehicle service for rail service between stations on its lines, and that the charges in such a case are the same as would be applicable for all-rail service.
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.
The written contracts describe the operators as "independent contractors" and state that "nothing herein contained shall be construed as inconsistent with that status." The contractors are bound by these contracts to provide vehicles of a type satisfactory to the railroad for the purpose of transporting freight between certain specified freight stations in accordance with such schedules and instructions as shall be given by the railroad. The contractors agree to transport such freight as the railroad designates in a manner satisfactory to the railroad. All persons operating the motor vehicles are under the employment and direction of the contractors, and are not considered railroad employees. The operations are conducted under the contractors' own names, and the vehicles do not display the railroad's name. The contractors further agree to comply with state, federal, and municipal laws, and to indemnify the railroad against any failure or default in this respect. They also agree to indemnify the railroad against all loss or damage of any kind resulting from the operation of the motor vehicles. The railroad is authorized to maintain for its own protection public liability and property damage insurance on all the vehicles at the contractors' expense up to a specified amount. Finally, the contracts provide that, in the event that the highways between any of the stations become impassable, the contractors shall immediately notify the railroad so that it can arrange and substitute other service if it desires.
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 light of these undisputed facts, however, we hold that the Commission erred in finding that the railroad was not entitled to a certificate as a common carrier by motor vehicle. This error arises not from a lack of substantial evidence to support its conclusion or from an improper exercise of its discretion. Rather, it is due to an incorrect application to these facts of the statutory provisions and Congressional intention relating to "grandfather" rights of common carriers by motor vehicle.
In addition, as we pointed out in United States v. Rosenblum Truck Lines, Inc., 315 U. S. 50, 315 U. S. 53-54, "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 undisputed facts here disclose that only the railroad holds itself out to the general public to engage in a single complete freight transportation service to and from all points on its lines. As an integral and essential part of this service tendered by the railroad, motor vehicle transportation between certain stations is provided. It is completely synchronized with the rail service, and has none of the elements of an independent service offered on behalf of the motor vehicle operators. Their operations are the operations offered by the railroad as component parts, not as separate or distinct segments, of its single service. They may be replaced or eliminated at the sole discretion of the railroad.
U.S. 638; O'Malley v. United States, 38 F.Supp. 1; Moore v. United States, 41 F.Supp. 786, aff'd, 316 U.S. 642. 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. 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.
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.
The Commission has taken the view that only one certificate can be granted on the basis of a single transportation service, and that the "common carrier by motor vehicle" entitled to the certificate is the one who exercises direction and control of the motor vehicle operations and assumes full responsibility therefor both to shippers and the general public. This so-called "control and responsibility" test, however, is applicable in this case only insofar as it aids in determining the person offering and engaging in the single coordinated rail-motor freight service. To the extent that it leads to a result different from that reached by the application of the statutory provisions and the Congressional intent which we have indicated, it must be disapproved.
The judgment of the court below is reversed. The case is remanded to that court with directions to remand it to the Commission for such further proceedings, consistent with this opinion, as may be appropriate.
MR. JUSTICE JACKSON is of the opinion that the judgment should be affirmed.
Section 203(a)(14) of the Motor Carrier Act of 1935, 49 Stat. 543, 544.
Section 203(a)(14) as amended by the Transportation Act of 1940, 54 Stat. 898, 920. 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.
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. [Footnote 2/1] 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 Transportation Co., supra. But there has been no disagreement over the propriety of the control and responsibility test itself.
Congress intended to put applicants such as appellant in a preferred position.
Since there is concededly sufficient evidence to support the findings of the Commission on the control and responsibility test, I would affirm the judgment below.
"any person which holds itself out to the general public to engage in the transportation by motor vehicle in interstate or foreign commerce of passengers or property."
"was in bona fide operation as a common carrier by motor vehicle on June 1, 1935, over the route or routes or within the territory for which application is made and has so operated since that time."
Thus, after as well as before the 1940 amendment, the basic question in this type of case was whether the connecting carrier was in "bona fide operation" as such a carrier. If it was an independent contractor, it was engaged in such "operation;" if it was performing a transportation service as a mere agent for the carrier with whom the shipper dealt, it was not. Boston & Maine Transp. Co., supra.

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