Source: http://www.chanrobles.com/usa/us_supremecourt/316/74/case.php
Timestamp: 2019-11-12 08:25:44
Document Index: 572690636

Matched Legal Cases: ['§ 206', '§ 306', '§ 206', '§ 2', '§ 11', '§ 206', '§ 212', '§ 212', '§ 206', '§ 206', '§ 206', '§ 306', '§ 211', '§ 311', '§ 174']

This appeal is from a judgment of a statutory three-judge court denying appellants' petition to set aside an order of the Interstate Commerce Commission refusing the Gregg Cartage & Storage Company a certificate of public convenience and necessity under the so-called grandfather clause of § 206(a) of the Motor Carrier Act, 1935, 49 U.S.C. § 306(a). chanroblesvirtualawlibrary
Meanwhile, the Gregg Company had failed and ceased to operate. It had arranged the filing on October 4, 1937, of a creditor's bill in a state court of Ohio, which, on the following day, appointed the company's counsel to be its receiver with authority to continue the business. On the day of this receiver's appointment, other creditors filed a petition in bankruptcy in the United States District Court for the Northern District of Ohio, Eastern Division, which, on October 27, adjudicated the company a bankrupt, and, on October 30, appointed a receiver to preserve the assets of the estate pending the election and qualification of a trustee. [Footnote 1] In operating the business, the state court receiver confined himself to the completion of shipments en route, and did not solicit or accept new business. On October 14, he filed with the Commission a petition for permission to suspend operations without prejudice to rights under the grandfather clause. The chanroblesvirtualawlibrary
A further hearing before another examiner, confined to the circumstances of the interruption of Gregg's service, resulted in another recommendation of the issuance of a certificate under the grandfather clause. The Commission, however, denied the application December 12, 1939, after a rehearing following the report of Division 5, a majority of which had held similarly on November 14, 1938. 10 M.C.C. 255, 21 M.C.C. 17. The Commission ruled that an interruption of service within the control of the applicant had occurred, that the purchase by Northeastern had conferred no operating rights, and that therefore neither corporation was entitled to a certificate under the grandfather clause. Five commissioners dissented. Gregg and its trustee in bankruptcy then filed a complaint in the United States District Court for the Northern District of Ohio, Eastern Division, praying that the order of the Commission denying Gregg's application be annulled and set aside and that the Commission be directed chanroblesvirtualawlibrary
to issue a certificate of public convenience and necessity to Gregg. A statutory court of three judges was convened, Northeastern was allowed to intervene, and judgment went against the complainants, who appealed to this Court, which noted probable jurisdiction. [Footnote 2] 42 F.Supp. 266.
Appellants contend that the Commission and the court below erroneously construed § 206(a) [Footnote 3] of the Motor Carrier Act in holding that, excepting the specified interruptions of service, the statute required continuous operation from June 1, 1935, until the hearing by the Commission on the application. We have, however, held to the contrary. United States v. Maher, 307 U. S. 148, petition for limited hearing denied, 307 U.S. 649; Hoey v. United States, 308 U.S. 510; Lubetich v. United States, 315 U. S. 57.
From October 15, 1935 to December 31, 1936, Gregg was insured against public liability and property damage by an insurance company which, in 1936, failed either to disprove or settle certain claims against Gregg, and was rumored to be insolvent. For these reasons, Gregg cancelled its contract with this company and obtained similar insurance with another company, paying the premiums in advance. The failing insurance company was adjudged a bankrupt in January of 1937, and ceased to pay any chanroblesvirtualawlibrary
How far one, by an exercise of free, will may determine his general destiny or his course in a particular matter, and how far he is the toy of circumstance, has been debated through the ages by theologians, philosophers, and scientists. Whatever doubts they have entertained as to the chanroblesvirtualawlibrary
matter, the practical business of government and administration of the law is obliged to proceed on more or less rough and ready judgments based on the assumption that mature and rational persons are in control of their own conduct. Certainly that assumption must be made in reference to a corporation such as the applicant. Society, in creating a corporation, vesting its management in a board of directors, granting it large powers and not inconsiderable immunities, can hardly allow that its business affairs are at any time out of the control of those whose duty it is to conduct them. The Bankruptcy Act states that even an involuntary adjudication results only from some "act of bankruptcy," defined upon the clear assumption that it is within the bankrupt's control. [Footnote 4] Whether or not this assumption squares with philosophical doctrine, or even with reality, [Footnote 5] is not for our determination. The Commission, and the courts too, must get on with the application of the federal statutes without waiting to settle the verity of the philosophical assumptions on which they rest.
The Commission was warranted in holding as matter of law that the interruption because of bankruptcy was not one over which the applicant had no control within the meaning of the Motor Carrier Act. The complexity of the chain of causation shown in this case makes it an apt illustration of the impracticability of any other rule. chanroblesvirtualawlibrary
It is true that Gregg would not have had to bear the burden of most, if not all, of the claims, had it not been for chanroblesvirtualawlibrary
Furthermore, the interruption of service was the deliberate act of those who, for the time being, stood in the position of applicant and owned its rights. During the interval between receivership and sale of these rights to Northeastern, we take it that the beneficial interest therein vested in the creditors, and the legal title in the receiver or trustee. The federal receiver or trustee could have been authorized to conduct the business of the bankrupt for a limited period, if in the best interests of the estate. § 2 of the Act of July 1, 1898, as amended, 11 U.S.C. § 11. The creditors and their representatives, however, failed to seek such authority, evidently regarding the rights, which later sold for $850, not worth the expense and risk of continuing business. It is the purchaser Northeastern, organized to acquire the "grandfather" rights, and to an undetermined extent identified with the management of the bankrupt, [Footnote 6] which, having bought these rights in this chanroblesvirtualawlibrary
The applicant for a certificate under the grandfather clause seeks to exempt his further operations from scrutiny as to public convenience and necessity. If he is able to meet those tests, he may be authorized to operate even if he never had grandfather rights, or if those he once had have been lost. As the Motor Carrier Act is remedial, and the grandfather clause confers a special privilege, the proviso defining exemptions is to be held to extend only to carriers plainly within its terms. McDonald v. Thompson, 305 U. S. 263, 305 U. S. 266.
Finally, appellants claim to be entitled to relief from prejudice said to have resulted from delay of the Commission in acting on Gregg's application made under § 206(a) chanroblesvirtualawlibrary
on February 12, 1936. They point out that, had the Commission acted at once, a certificate would have issued, thus conferring the benefits of § 212(a). [Footnote 7] But, by its terms, § 212(a) is applicable only where a certificate has already issued, and, being a section of general applicability. at least for present purposes, it has no analogical bearing upon the construction of the specific provision relating to interruptions of service made in § 206(a). The delay in passing upon the application was considerable and regrettable, as the Commission acknowledged, but it does not seem to have been arbitrary, or the result of any deliberate discrimination, nor, in view of the magnitude of the Commission's task, unreasonable. The Commission had nearly 90,000 applications to pass upon under § 206(a), and, of course, could not have been expected to pass upon them simultaneously. It is not within our province to remedy inequalities necessarily incident to the administration of the statute.
I cannot believe that experts of the subject -- say, referees charged with the duties of administering the bankruptcy law -- would conclude that every bankruptcy arose without exception from conditions which were within chanroblesvirtualawlibrary
the "control" of the bankrupt in any accepted meaning of the word. Nor do I think that that view would be taken in case of receiverships. Yet that is the irrebuttable presumption which the Commission has created in this type of case. Congress did not create it. Congress merely provided that this class of carrier had a right to the statutory grant on a showing, inter alia, that it was in "bona fide operation as a common carrier by motor vehicle on June 1, 1935" and "has so operated since that time" except as to "interruptions of service over which the applicant or its predecessor in interest had no control." Motor Carrier Act of 1935, § 206(a), 49 U.S.C. § 306(a). I would have supposed that the question of "control" was "an issue of fact to be determined by the special circumstances of each case." Rochester Telephone Corp. v. United States, 307 U. S. 125, 307 U. S. 145. That would mean that, "[s]o long as there is warrant in the record for the judgment of the expert body, it must stand." Id., pp. 307 U. S. 145-146. But that is quite different from giving the word "control" a construction which prevents a person from showing under any circumstances that the events which led to his business disaster were not subject to his "control." On the one hand, the Commission rules that interruptions of service owing to floods, [Footnote 2/1] snow, [Footnote 2/2] unsafe [Footnote 2/3] or impassable [Footnote 2/4] roads, highway construction, [Footnote 2/5] droughts which destroy a carrier's chief source of business, [Footnote 2/6] ill health, [Footnote 2/7] strikes, [Footnote 2/8] or the illegal action of governmental chanroblesvirtualawlibrary
authorities [Footnote 2/9] constitute grounds for holding that an interruption of service is beyond an applicant's "control." But similar misfortunes of a purely accidental character which affect financial stability and end in bankruptcy or receivership are held as a matter of law to be subject to the carrier's "control."
The distortion which that interpretation involves is well illustrated by this case. There was evidence tending to show the following: during the year 1936, the applicant was insured against public liability and property damage by the Central mutual Insurance Co. Hearing rumors that Central Mutual was in financial difficulties and was not paying claims, applicant dropped its policy in December, 1936, and placed its insurance with another company. On January 11, 1937, Central Mutual was adjudged a bankrupt and ceased payment of all claims. In the fall of 1937, applicant was forced to pay several substantial damage claims arising from accidents during the period when its insurance policy was in effect with Central Mutual. These payments seriously impaired its working capital. Furthermore, applicant was confronted with approximately 175 additional claims for personal injury and property damage. These were estimated at about $200,000, and arose during the period when applicant was insured by Central Mutual. Applicant settled some of these claims. It was impossible, however, to satisfy the demands of all of these claimants. Receivership followed, and on its heels came bankruptcy. There is not the slightest evidence in this record of any negligence, dereliction, or mismanagement on the part of applicant. It is undisputed that its failure was due to the failure of its insurer. And there is no evidence in this record that it did not exercise due care in the selection of that insurer. It would indeed be ironical to cast a chanroblesvirtualawlibrary
presumption against the applicant on that score when the insurance policy presumably was accepted by the Commission and, under its regulations promulgated pursuant to §§ 211(c) and 215 of the Act, 49 U.S.C. §§ 311(c) and 315, had to be "approved" by it. [Footnote 2/10] Federal Register (1936) Vol. 1, p. 1163, Rule 1. And see 49 Code of Federal Regulations, Pt. 174, § 174.1.
An applicant carries the burden of establishing his right to the statutory grant which is contained in the "grandfather" clause. Alton R. Co. v. United States, 315 U. S. 15. But he should not be met at the threshold with a conclusive presumption against him unless Congress has clearly indicated that, in the circumstances of his case, he has no right even to undertake the burden of proof. If Congress had desired to eliminate all applicants whose continuous service was interrupted by bankruptcy or receivership, I believe it would have said so. As stated by Commissioner Lee in his dissenting opinion (10 M.C.C. p. 263):
Such a wholesale destruction of operating rights should not be readily or lightly inferred. Operating rights are the very life of any business. Without them, this business certainly has no more than scrap value. chanroblesvirtualawlibrary
Great deference is owed a commission's interpretation of the law which it enforces, especially where the meaning of the statutory language, generally or in specific application, gains body and flavor from the content of the highly specialized field in which the expert body works. See Shields v. Utah Idaho Central R. Co., 305 U. S. 177; Sunshine Anthracite Coal Co. v. Adkins, 310 U. S. 381; Gray v. Powell, 314 U. S. 402; Alton Railroad Co. v. United States, supra. But that is quite different from acceding to the suggestion that the nontechnical word "control" may be interpreted in a way which goes against all human experience and which does violence to its ordinary and accepted meaning. In this connection, it should be noted that, if the misfortune which ended in bankruptcy or receivership was not subject to the carrier's "control," then an interruption of service made by the trustee or receiver cannot be attributed to him. Once the court acquires jurisdiction over the estate, the affairs of the business are in its hands, not the debtor's.
Congress has provided that those who attained a position in the competitive transportation system should be allowed to retain the fruits of their struggle. Whether that policy was wise or unwise is not for us to appraise. But we should not permit those statutory grants to be whittled away on the basis of technical and legalistic grounds which find no expression in the statute however much the administrative chore may be alleviated. If the services of a carrier have been interrupted by bankruptcy or receivership, his burden of proving that that default was not subject to his "control" may be onerous. Perhaps in most cases he could not maintain it. But he should be given the opportunity to do so. It is hard for me to imagine a clearer case where he probably could succeed than this one. Yet, before we passed on that issue, as the opinion of the Court undertakes to do, we should remand the case to the Commission. For it made chanroblesvirtualawlibrary