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Matched Legal Cases: ['§ 5', '§ 214', '§ 5', '§ 5', '§ 306', '§ 13', '§ 5', '§ 5', '§ 11', '§ 21', '§ 5', '§ 5']

Mclean Trucking Co Vs United States - Citation 97705 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Mclean Trucking Co. Vs. United States - Court Judgment	LegalCrystal Citationlegalcrystal.com/97705CourtUS Supreme CourtDecided OnJan-17-1944Case Number321 U.S. 67AppellantMclean Trucking Co.RespondentUnited StatesExcerpt:
mclean trucking co. v. united states - 321 u.s. 67 (1944)
1. orders of the interstate commerce commission authorizing, under § 5 of the interstate commerce act as amended, the consolidation of certain motor carriers, and, under § 214 of the motor carrier act of 1935, the issuance of securities by the consolidated corporation,
as within the authority of the commission and supported by the findings and the evidence. p.
321 U. S. 88
2. The Commission having modified its orders by excluding one of the carriers from the consolidation, and the court below having determined the case in that posture, the only questions here considered are those presented by the modified orders. P.
321 U. S. 70
3. In authorizing the consolidation, the Commission did not apply improper standards and did not fail to give due consideration to antitrust laws and policies. P.
321 U. S. 77
4. The authority of the Commission to approve consolidations of motor carriers, which but for the exemption granted by § 5(11) might violate the antitrust laws, is not restricted to consolidations which are necessary in order to provide adequate service to the public. P.
321 U. S. 78
5. In determining the propriety of motor carrier consolidations, the preservation of competition among carriers, although still a factor, is significant chiefly to the extent that it aids in achieving the objectives of the national transportation policy. P.
321 U. S. 85
6. The Commission's conclusion that the proposed consolidation was "consistent with the public interest" did not go beyond the standards prescribed by Congress. P.
321 U. S. 89
7. Although the Commission should have acceded to the Anti-Trust Division's request for certain information from others bearing on the question of competition, its failure so to do does not, on the record here, require that its conclusions be set aside. P.
8. The Commission's conclusion that the consolidated corporation would not be "affiliated" with a rail carrier, within the meaning of §§ 5(2) and 5(6) of the Act, was supported by the findings and the evidence. P.
321 U. S. 91
9. Only the consolidation as approved is relieved from the operation of the antitrust laws, and any change in the
may be considered when such change occurs. P.
This is an appeal from a decree of a statutory three judge court, [
] 48 F.Supp. 933, refusing to set aside certain orders of the Interstate Commerce Commission which had authorized consolidation of seven large motor carriers.
Before the Commission, approval of the applications was opposed by the Secretary of Agriculture, the Anti-Trust Division of the Department of Justice, the National Grange, four fruit growers associations, and Super Service Motor Freight Company, a motor carrier. [
] An examiner held hearings at which evidence was introduced, and the Commission heard argument on objections to his report before finally authorizing the consolidation. [
] 38 M.C.C. 137. McLean Trucking Company, Inc., a motor carrier which claims to compete with some of the carriers included in the merger, brought suit in the District Court to set aside the Commission's orders. The Secretary of Agriculture and the American Farm Bureau Federation intervened as plaintiffs. The United States confessed error. The Interstate Commerce Commission and the parties to the merger defended the Commission's order.
The eight carriers originally sought to be merged [
] were Arrow Carrier Corporation, Paterson N.J.; Barnwell Brothers, Inc., Burlington, N.C.; Consolidated Motor Lines, Inc., Hartford, Conn.; Horton Motor Lines, Inc., Charlotte, N.C.; McCarthy Freight System, Inc., Taunton, Mass.; M. Moran Transportation Lines, Inc., Buffalo, N.Y.; Southeastern Motor Lines, Inc., Bristol, Va., and Transportation, Inc., Atlanta, Ga. The merger embraces some of the principal operators along the Atlantic seaboard from Massachusetts to Florida. Certain of them
serve communities as far west as Cleveland, Ohio, Nashville, Tennessee, and New Orleans, Louisiana. But the most important effect will be to create an end-to-end consolidation from points in the far South to New England, with obviously large possibilities for through service. According to evidence before the Commission, the total assets of the companies involved, as of April 30, 1941, exceed $8,000,000, and their gross operating revenues for 1940 exceeded $19,000,000. The carriers operate principally as motor vehicle common carriers of general commodities over regular routes totalling 37,884 miles. Over 13,546 miles between important service points, one or more competes with others in the group. [
] This competitive mileage will be eliminated by the merger, leaving a single carrier with routes extending over 24,338 miles.
In connection with Arrow's participation, the Commission found that The Transport Company, whose stock was wholly owned by Kuhn, Loeb, and Company, had an option to purchase Arrow's common stock, and would receive Associated's stock therefor when the merger was effected. The stock thus received, together with 9,000 shares of Associated's common stock already held, would give The transport Company, and, through it, Kuhn, Loeb, and Company, 6,877 shares of Associated's preferred and 67,167 of Associated's common, a total of 13 percent and 9.53 percent, respectively, of the preferred and common stocks expected to be outstanding at the conclusion of the transactions. [
] Kuhn, Loeb, and Company is represented on the boards of directors of several railroads
The pertinent provisions of the Interstate Commerce Act, which is controlling, are set forth in the margin. [
Section 5(11). The other provides the standards to be applied in cases of affiliation of a motor carrier with a railroad. Where a railroad or "any person which is controlled by such a carrier, or affiliated therewith" [
] is an applicant in a consolidation proceeding, the Commission cannot approve the merger
But, in executing those policies, the Commission may be faced with overlapping and at times inconsistent policies embodied in other legislation enacted at different times and with different problems in view. When this is true, it cannot, without more, ignore the latter. The precise adjustments which it must make, however, will vary from instance to instance depending on the extent to which Congress indicates a desire to have those policies leavened or implemented in the enforcement of the various specific provisions of the legislation with which the Commission is primarily and directly concerned.
Cf. National Broadcasting Co., Inc. v. United States,
The national transportation policy is the product of a long history of trial and error by Congress in attempting to regulate the nation's transportation facilities beginning with the Interstate Commerce Act of 1887. [
] For present purposes, it is not necessary to trace the history of those attempts in detail other than to note that the Transportation Act of 1920 marked a sharp change in the policies and objectives embodied in those efforts. [
] "Theretofore, the effect of Congress had been directed mainly to the prevention of abuses; particularly those arising from excessive
or discriminatory rates," [
] and emphasis on the preservation of free competition among carriers was part of that effort. [
] The Act of 1920 added "a new and important object to previous interstate commerce legislation." It sought "affirmatively to build up a system of railways prepared to handle promptly all the interstate traffic of the country."
Texas & P. R. Co. v. Gulf C. & S.F. R. Co.,
. And, in administering it, the Commission was to be guided primarily by consideration for
287 U. S. 25
Since that initial effort at reshaping regulation of railroads to "insure . . . adequate transportation service," [
] Congress has extended federal regulation in connection with other forms of transportation, [
] and has elaborated
"a system of coordinated transportation for the Nation which will supply the most efficient means of transport and furnish service as cheaply as is consistent with fair treatment of labor and with earnings which will support adequate credit and the ability to expand as need develops and to take advantage of all improvements in the art. [
The policy which was to guide the Commission in administering that Act was fully stated, [
] and has since been absorbed into the equally full statement of the National Transportation Policy. That policy, which is the Commission's guide to "the public interest,"
cf. New York Central Securities Corp. v. United States,
, demands that all modes of transportation subject to the provisions of the Interstate Commerce Act be so regulated as to
The history of the development of the special national transportation policy suggests, quite apart from the explicit provision of Section 5(11), that the policies of the antitrust laws determine "the public interest" in railroad regulation only in a qualified way. And the altered emphasis in railroad legislation on achieving an adequate, efficient, and economical system of transportation through close supervision of business operations and practices, rather than through heavy reliance on the enforcement of free competition in various phases of the business,
, has its counterpart in motor carrier policy. The premises of motor carrier regulation posit some curtailment of free and unrestrained competition. [
] The origins [
] and legislative
] of the Motor Carrier Act adequately disclose that, in it, Congress recognized there may be occasions when
Cf. Texas & P. R. Co. v. Gulf C. & S.F. R. Co.,
Whatever may be the case with respect either to other kinds of transactions by or among carriers [
] or to consolidations of different types of carriers, [
] there can be little doubt
that the Commission is not to measure proposals for all-rail or all-motor consolidations by the standards of the antitrust laws. Congress authorized such consolidations because it recognized that, in some circumstances, they were appropriate for effectuation of the national transportation policy. It was informed that this policy would be furthered by "encouraging the organization of stronger units" in the motor carrier industry. [
] And, in authorizing those consolidations, it did not import the general policies of the antitrust laws as a measure of their permissibility. [
] It in terms relieved participants in appropriate mergers from the requirements of those laws. Section 5(11). In doing so, it presumably took into account the fact that the business affected is subject to strict regulation and supervision, particularly with respect to rates charged the public an effective safeguard against the evils attending monopoly at which the Sherman Act is directed. Against this background, no other inference is possible but that, as a factor in determining the propriety of motor carrier consolidations, the preservation of competition among carriers, although still a value, [
] is significant chiefly as it aids in the
Therefore, the Commission is not bound, as appellants urge, to accede to the policies of the antitrust laws so completely that only where "inadequate" transportation facilities are sought to be made "adequate" by consolidation can their dictates be overborne by "the public interest." That view, in effect, would require the Commission to permit only those consolidations which would not offend the antitrust laws. As has been said, this would render meaningless the exemption relieving the participants in a properly approved merger of the requirements of those laws, and would ignore the fact that the Motor Carrier Act is to be administered with an eye to affirmatively improving transportation facilities, not merely to preserving existing arrangements or competitive practices. [
Congress, however, neither has made the antitrust laws wholly inapplicable to the transportation industry nor has authorized the Commission, in passing on a proposed merger, to ignore their policy. Congress recognized that the process of consolidating motor carriers would result in some diminution of competition, and might result in the creation of monopolies. To prevent the latter effect and to make certain that the former was permitted only where appropriate to further the national transportation policy, it placed in the Commission power to control such developments. [
] The national transportation policy requires
"consistent with the public interest."
Cf. Interstate Commerce Commission v. Illinois Central R. Co.,
. If the Commission did not exceed the statutory limits within which Congress confined its discretion and its findings are adequate and supported by evidence, it is not our function to upset its order.
The Commission found, as has been noted, that the proposed consolidation would result in improved transportation service, greater efficiency of operation, and substantial operating economics. The higher load factor on trucks, reduction in the number of trucks used, and the mileage traversed would lead to more efficient use of equipment and save motor fuel. Terminal facilities would be consolidated and used more effectively, through movement of freight would reduce costs, and, in a multitude of other ways, the stability and safety of the service rendered would be enhanced. [
] The Commission also considered the extent to which competition among the merging carriers would be diminished, the effects of the consolidation on competing carriers, and the consequences for transportation service and motor carrier operations in general in the areas affected. It found that in each of the areas served by the present components of the merger there are from 44 to more than 100 Class I carriers, many
of Associated's common stock, has one representative among the nine directors of Associated, has investment banking connections with competing rail carriers, and is represented on the boards of directors of other railroads. For present purposes, we may assume that, by virtue of those connections, the rail carriers' interests will be the banking house's interests in directing the affairs of Associated. But, aside from the proportionately small (9,000 out of 1,000,000 common shares) stock ownership and the place on the board of directors, the Commission found no connection -- either in the origins of the present proposal or in personnel, financing, or otherwise -- between Kuhn, Loeb, and Company and the rail carriers, on the one hand, and Associated, on the other. This contrasts sharply with the circumstances in
36 M.C.C. 61, where a much larger merger of eastern motor carrier operators, sought to be consummated with at least the assistance of Kuhn, Loeb, and Company, was denied approval by the Commission. And, in the present merger, others, not associated, so far as this record shows, with Kuhn, Loeb, and Company or rail carriers, would have substantial blocks of stock. [
] We cannot find anything arbitrary or unreasonable in the conclusion that the consolidation, as finally authorized, will not result in Associated's being affiliated with a carrier by rail. It may be added that, under the Commission's order in this case, the relatively close holdings which will emerge from the consolidation cannot be altered without the Commission's approval. And it is the consolidation as approved which is exempted from the operation of the antitrust laws and the prohibition against rail affiliation without approval. Any future
"Sec. 5. (1) Except upon specific approval by order of the Commission as in this section provided, and except as provided in paragraph (16) of section 1 of this part, it shall be unlawful for any common carrier subject to this part, part II, or part III to enter into any contract, agreement, or combination with any other such common carrier or carriers for the pooling or division of traffic, or of service, or of gross or net earnings, or of any portion thereof, and, in any case of an unlawful agreement for the pooling or division of traffic, service, or earnings as aforesaid, each day of its continuance shall be a separate offense:
That, whenever the Commission is of opinion, after hearing upon application of any such carrier or carriers or upon its own initiative, that the pooling or division, to the extent indicated by the Commission, of their traffic, service, or gross or net earnings, or of any portion thereof, will be in the interest of better service to the public or of economy in operation, and will not unduly restrain competition, the Commission shall by order approve and authorize, if assented to by all the carriers involved, such pooling or division, under such rules and regulations, and for such consideration as between such carriers and upon such terms and conditions, as shall be found by the Commission to be just and reasonable in the premises: . . ."
"(b) Whenever a transaction is proposed under subparagraph (a), the carrier or carriers or person seeking authority therefor shall present an application to the Commission, and thereupon the Commission shall notify the Governor of each State in which any part of the properties of the carriers involved in the proposed transaction is situated, and also such carriers and the applicant or applicants (and, in case carriers by motor vehicle are involved, the persons specified in section 205(e)), and shall afford reasonable opportunity for interested parties to be heard. If the Commission shall consider it necessary in order to determine whether the findings specified below may properly be made, it shall set said application for public hearing, and a public hearing shall be held in all cases where carriers by railroad are involved. If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed transaction is within the scope of subparagraph (a) and will be consistent with the public interest, it shall enter an order approving and authorizing such transaction, upon the terms and conditions, and with the modifications, so found to be just and reasonable:
That if a carrier by railroad subject to this part, or any person which is controlled by such a carrier, or affiliated therewith within the meaning of paragraph (6), is an applicant in the case of any such proposed transaction involving a motor carrier, the Commission shall not enter such an order unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition."
"Affiliated therewith" is defined in Section 5(6),
Sharfman, The Interstate Commerce Commission (1935), Part I, 11-20, and authorities cited, for a concise compilation of the more important legislation implementing the Interstate Commerce Act of 1887 and a reference to some of the impulses leading to the adoption of that Act;
Healy, The Economics of Transportation (1940) ch. 18
the Interstate Commerce Act of 1887, 24 Stat. 379, and the statutes collected in Sharfman,
the Transportation Act of 1920, 41 Stat. 456 (
MacVeagh, The Transportation Act of 1920 (1923)), the Emergency Transportation Act of 1933, 48 Stat. 211, and the Transportation Act of 1940, 54 Stat. 898.
Annual Reports of the Interstate Commerce Commission for 1888, pp. 25-26; 1892, pp. 47-55; 1893, p. 9; 1894, p. 63; 1897, pp. 48-51; 1898, pp. 18-22; 1900, p. 13; 1918, pp. 4-9; 1919, pp. 1-6.
Johnson, Government Regulation of Transportation (1938); Nelson, The Role of Regulation Reexamined, Transportation and National Policy, National Resources Planning Board (May, 1942) 197.
The Interstate Commerce Act of 1887, 24 Stat. 379, was in a sense a shadow cast by the coming Sherman Act, 26 Stat. 209.
Snyder, The Interstate Commerce Act and Federal Anti-Trust Laws (1904) 121-122.
Air Commerce Act of 1926, 44 Stat. 568, as amended by 48 Stat. 1113; Air Mail Act of 1934, 48 Stat. 933; Air Mail Act of 1935, 49 Stat. 614; Civil Aeronautics Act of 1938, 52 Stat. 973; Motor Carrier Act of 1935, 49 Stat. 543,
Title II of the Transportation Act of 1940, 54 Stat. 898, 929.
No motor carrier can operate in interstate commerce without a certificate of public convenience and necessity, 49 U.S.C. § 306, 49 Stat. 551, 52 Stat. 1238, 54 Stat. 923.
Monograph No. 21, Temporary National Economic Committee, 76th Cong., 3rd Sess., 268.
the Reports of the Coordinator of Transportation, cited
Even after the major shift in policy reflected in the Transportation Act of 1920, Congress left it abundantly clear that the preservation of competition and the elimination of monopolistic practices in many phases of the transportation industry was a desideratum.
15 U.S.C. §§ 13, 14, 18-21; 38 Stat. 730
48 Stat. 1102, 49 Stat. 1526-1528;
In re New York, N.H. & H. R. Co.,
31 I.C.C. 32, 61;
Five Per Cent Case,
31 I.C.C. 351, 413, 414, and Section 5(1) of the Interstate Commerce Act, 41 Stat. 480, 481, 54 Stat. 905,
and compare Chesapeake & Ohio R. Co. v. United States,
49 U.S.C. § 5(14)-(16), 37 Stat. 566, 41 Stat. 482, 54 Stat. 909. In connection with the consolidation of rail and motor carriers, Congress was explicit on the subject of competition in its mandate to the Commission. Fearful of the dangerous potentialities which such coordination might create (
79 Cong.Rec. 5654-5655, 12206, 12222-12225), Congress prescribed more rigorous requirements for that process than for simple motor carrier consolidations. For the latter, approval may be granted if the Commission finds the transaction "consistent with the public interest." For a rail carrier to consolidate with a motor carrier, Commission approval requires a finding that the transaction will
the language of Section 213(a) of the Motor Carrier Act of 1935, 49 Stat. 555, 556, 52 Stat. 1239 (
cf. 86 Cong.Rec. 11546)
that of Section 5 of the Transportation Act of 1940.
Authorization of consolidation of rail carriers stems historically from circumstances different from those impelling the authorization of consolidation of motor carriers.
notes 17-19
This difference in origins is not entirely to be ignored simply because the same provisions of Section 5 now govern both motor carrier and rail carrier consolidations.
86 Cong.Rec. 11546. But whatever effect the difference may have, as a guide to the Commission concerning the extent to which and circumstances in which consolidation should be allowed, it cannot nullify the power given to the Commission by Section 5(11).
the provisions of the statutes cited
notes 20 and 21
infra; compare also
41 Stat. 481, 482;
Chesapeake and Ohio R. Co. v. United States,
; MacVeagh, The Transportation Act of 1920 (1923) 275-292.
Senator Wheeler, in charge of the measure in the Senate, said:
tracing shipments and settlement of claims would be facilitated, congestion at shipping platforms would be reduced, the average life of the equipment would be lengthened by scientific maintenance and safety programs on a large scale, vehicles would be shifted quickly to meet peak demands on certain routes, etc.
H. D. Horton and the members of his family will own 14,917 shares of Associated's preferred stock and 267,873 shares of its common stock. The stockholders of Consolidated also would own substantially greater blocks than the 9,000 shares which Kuhn, Loeb, and Company controls.
But I am of the opinion that the concept of the "public interest," as used in § 5, also embraces the antitrust laws. Those laws extend to carriers as well as to other enterprises. But for the approval of the Commission, the present consolidation would run afoul of the Sherman Act.
. And the Clayton Act (which makes specific references to common carriers) by § 11 expressly entrusts the Commission with the authority of enforcement of its provisions "where applicable to common carriers." 38 Stat. 734, 15 U.S.C. § 21. Those laws still stand. We thus have a longstanding policy of Congress to subject these common carriers to the antitrust laws. And we should remember that, so far as motor vehicles are concerned, we are dealing with transportation units whose rights of way -- the highways of the country -- have been furnished by the public. These considerations indicate to me that, while the power of Congress to authorize the Commission to lift the ban of the antitrust laws in favor of common carriers is clear (
-26), administrative authority to replace the competitive system with a cartel should be strictly construed. I would read § 5 of the Transportation Act so as to make for the greatest possible accommodation between the principles of competition and the national transportation policy. The occasions for the exercise of the administrative authority to grant exemptions from the antitrust laws should be closely confined to those where the transportation need is clear.
If it were the opinion of the Commission that the policy of the Transportation Act would be thwarted unless a particular type of merger or consolidation were permitted, I have no doubt that it would be authorized to lift the ban of the antitrust laws. But, unless such necessity or need were shown, I do not think the antitrust laws should be made to give way. Congress did not give the Commission
authority to substitute a cartel for a competitive system. It may so act only when that step "will be consistent with the public interest." § 5(2)(b). But, since the "public interest" includes the principles of free enterprise which have long distinguished our economy, I can hardly believe that Congress intended them to be swept aside unless they were in fact obstacles to the realization of the national transportation policy. But, so far as we know from the present record, that policy may be as readily achieved on a competitive basis as through the present type of consolidation. At least such a powerful combination of competitors as is presently projected is not shown to be necessary for that purpose. In this case, the hand of the promoter seems more apparent than a transportation need.
For these reasons, I would resolve the ambiguities of the Act in favor of the maintenance of free enterprise. If that is too niggardly an interpretation of the Act, Congress can rectify it. But if the Commission is allowed to take the other view,
a pattern of consolidation will have been approved which will allow the cartel, rather than the competitive system, to dominate this field.
* The position here taken is substantially the view which originally obtained in the Commission.
Northland-Greyhound Lines, Inc.,
5 M.C.C. 123;
Richmond-Greyhound Lines, Inc.,
35 M.C.C. 555. But that view did not long obtain.
See Northland-Greyhound Lines, Inc.,
25 M.C.C. 109;
36 M.C.C. 747.
Meck & Bogue, Federal Regulation of Motor Carrier Unification, 50 Yale L.Journ. 1376, 1393-1397.