Case Name: DUQUESNE WAREHOUSE CO. v. RAILROAD RETIREMENT BOARD (BROTHERHOOD OF RAILWAY AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES et al., Interveners)
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1945-03-12
Citations: 148 F.2d 473
Docket Number: No. 138
Parties: DUQUESNE WAREHOUSE CO. v. RAILROAD RETIREMENT BOARD (BROTHERHOOD OF RAILWAY AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES et al., Interveners).
Judges: Before CHASE, HUTCHESON, and FRANK, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 148
Pages: 473–490

Head Matter:
DUQUESNE WAREHOUSE CO. v. RAILROAD RETIREMENT BOARD (BROTHERHOOD OF RAILWAY AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES et al., Interveners).
No. 138.
Circuit Court of Appeals, Second Circuit.
March 12, 1945.
Writ of Certiorari Granted June 11, 1945.
See 65 S.Ct. 1558.
Joseph H. Freehill, of Chicago, 111., and Myles F. Gibbons, Gen. Counsel, Railroad Retirement Board, of Washington, D. C., David B. Schreiber, Asst. Gen. Counsel, of Chicago, 111. (Jacob Abramson and Louis Turner, both of Chicago, 111., of counsel), for appellant.
Burlingham, Veedor, dark & Plupper, of New York City (George R. Allen, of Philadelphia, Pa., and Ray Rood Allen and Herbert Mayhew Lord, both of New York City, of counsel), for appellee.
Mulholland, Robie & McEwen, of Toledo, Ohio (Willard H. McEwen, of Toledo, Ohio, and Samuel J. Cohen, of New York City, and Frank L. Mulholland and Clarence M. Mulholland, both of Toledo, Ohio, of counsel), for intervening appellants.
Before CHASE, HUTCHESON, and FRANK, Circuit Judges.
45 U.S.C.A. § 228k. “Court jurisdiction. An employee or other person aggrieved may apply to the district court of any district wherein the Board may have established an office or to the District Court of the United States for the District of Columbia to compel the Board (1) to set aside an action or decision of the Board claimed to be in violation of a legal right of the applicant or (2) to take action or to make a decision necessary for the enforcement of a legal right of the applicant. Such court shall have jurisdiction to entertain such application and to grant appropriate relief. The decision of the Board with respect to an annuity, pension, or death benefit shall not be subject to review by any court unless suit is commenced within one year after the decision shall have been entered upon the records of the Board and communicated to the person claiming the annuity, pension, or death benefit.”

Opinion:
HUTCHESON, Circuit Judge.
Brought under Section 11 of the Railroad Retirement Act of 1937, the suit was to set aside an order of the Railroad Retirement Board that plaintiff within the definition of the Act was an employer. The claim was that the undisputed facts establish as matter of law that plaintiff is not an employer as that term is defined by .statute and that the Board's decision and order, that it is, is not in accordance with law. On the Board's motion tor summary judgment made on the complaint, the answer and the record made before it, there was a judgment for plaintiff ordering the action and decision of the board set aside and annulled. The Board has appealed.
While we agree with the Board that the case presents no genuine issue as to any material fact, we cannot agree that these facts demanded a judgment in .its favor. Indeed, we think it plain that they demanded a judgment for plaintiff. The facts on which Board and Court based their exactly opposite conclusions of law were furnished entirely by plaintiff in response (a) to the Board's questionnaire which formed the basis of the opinion originally issued by the Board's general counsel, and later adhered to by two members of the Board, that plaintiff is an employer; (b) plaintiff's additional memorandum filed with the Board September IS, 1939, and (c) its statement of facts filed February 14, 1940. These, without contradiction or inconsistency of any kind, establish that Duquesne is not a carrier but a commercial warehouseman, that it does not perform any transportation service of any kind, that the services it performs are not services which Pennsylvania, as a carrier, ís obligated or has contracted to perform, and that, though Pennsylvania owns all of its stock, it is operated not as a department of Penn., but as a distinct corporate entity entirely and completely independent of Pennsylvania. It is conceded that but for the fact that. Penn, owns its stock, there would not, there could not, be any claim made that the service Duquesne performs brings it within the statutory definition of "employer." The dispute between it and the Board turns on whether it operates its two warehouses "in connection with the transportation of property by railroad or in receiving, delivery, storage, or handling of property transported by railroad." It is not disputed that, though it does a general commercial warehouse business, without restriction to goods which have -moved or will move on the Pennsylvania lines, the major part of the goods handled by Duquesne have been, or are to be, transported on those lines, and that its operations are convenient and beneficial to the railroad and its patrons. Neither is it disputed that what Duquesne does is in discharge of its own obligations and not at all of any obligation imposed upon or assumed by the carrier. It thus appears that the point of difference between Duquesne and the "Board is that the Board insists that though Duquesne, the warehouseman, operates entirely independently and not as a department of Penn., the statute is satisfied by proof, that its operations are availed of by Penn.'s customers, that they are concerned largely with goods which have been, or will be, transported, and that it is an advantage to Penn, to have a warehouse conveniently located with reference to its lines, while Duquesne insists that the statute is satisfied only when the storage, etc., is done by or for the carrier in discharge of the carrier's obligations. Coming more pointedly to it, Duquesne insists that the words of the statute, "in connection with the transportation of property by railroad or the receipt, delivery, etc. of property transported by railroad" require that the acts, which the statute sets out as definitive, be done by, or for, the carrier in discharge of the carrier's obligations imposed upon it, by law or by contract, in connection with its transportation of the property, that is, while the carrier's obligations are in course of being performed, while the Board reads the statute as though it covered acts done by or for the owner of the property before the carrier's obligation has attached or after it has been satisfied. If the Board is right, then mere ownership by a carrier of the controlling stock interest in a warehouse company which stores freight which has been or is to be transported by rail will convert that company into a carrier employer with the result that of two warehouse companies operating side by side performing the same service, storing freight which has been or is to be transported by rail, for the same customers, one will be an "employer," the other will not, according to whether its stock is, or is not, owned by a railroad company. We think it quite plain that the words of the statute considered in themselves and especially in the light both of its purpose and of the legislative history made in the course of its enactment, completely negative this view. They make it plain that the critical words "in connection with the transportation of property and of property transported by railroad" are used to denote transit and cover acts clone only by or for the carrier while its obligations persist. We, therefore, agree with Duquesne that the judgment was right and that it should be affirmed. The same definition appears in the Carrier's Taxing Act and in the Railroad Unemployment Insurance Act. The Railway Labor Act, as amended, carries substantially the same definition. Yet no one has claimed that Duquesne is subject to its terms.
Further, in litigation over the meaning of the definition when used in the Carriers' Taxing Act, the courts have uniformly repudiated the construction now placed by the Board in favor of the one we take. But, says the Board in effect, the question is not wliat the courts think the act under construction here means, it is what the Board thinks it means, and the Board has spoken. Thus by virtue of being constituted the Board to administer the act, the Board has been endowed with a prescience, invested with a prepotence, in respect of statutory construction to which the courts must bow, though the facts are undisputed and the question is entirely one of law. Thus by the simple expedient of having a lawyer, under the dignified name of General Counsel for the Board issue an opinion and then adhering by a bare majority to that opinion, the Board is enabled to read the statute as it will. When the same general course was pursued by the administrator, and the same heresy was advanced in Fleming v. Belo, the Courts had no difficulty in rejecting the claim. We find no difficulty in rejecting it here. None of the authorities the Board cites sustain its position. National Labor Relations Board v. Hearst Publications one of the cited cases, 322 U.S. 111 at page 130, 64 S.Ct. 860, 88 L.Ed. 1170, correctly states the rule:
"Undoubtedly questions of statutory interpretation, especially when arising in the first instance in judicial proceedings, are for the courts to resolve, giving appropriate weight to the judgment of those whose special duty it is to administer the questioned statute. Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 53 S.Ct. 350, 77. L.Ed. 796; United States v. American Trucking Ass'n., 310 U.S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345; [Niagara Falls Power Co. v. Federal Power Commission, 2 Cir., 137 F.2d 787]."
In Fleming v. Belo, the Fifth Circuit Court of Appeals pointed out the great fallacy in the doctrine pressed in that case and generally by administrative absolutists that recent administrative construction of a statute, consisting of the legal opinion of the administration's general counsel, is entitled to great weight. This court, in Niagara Falls Power Co. v. Federal Power Commission, 137 F.2d at page 792, spoke to the same effect:
"The conventional reason for the deference exacted from courts for such rulings has always been the advantage possessed by such tribunals in the background of specialized experience and understanding, gathered from a long acquaintance of the members with the subject matter, either while they are in office or before. The continuity of this experience is assumed to build up an acquaintance inaccessible to others — -courts included. If so, a single ruling, made shortly after the tribunal has been set up, should have far less weight than a series of repeated rulings over a course of years."
The very structure of our institutions, the very sources from which they derive the judicial section of the Constitution itself all concur to make it crystal clear why Congress has never given, why it could not constitutionally give to the construction of a statute by the General Counsel of an administrative body or by the body itself, controlling weight, and that the "appropriate weight" which the courts give to such construction is that which is not inconsistent with settled Constitutional doctrine. The heresy eagerly advanced by some devotees of the administrative, as opposed to the judicial, process, and sometimes tolerated, sometimes toyed with judicially, that giving "due weight" means the surrender of the judicial office of interpreter of statutes, has never had official sanction. Perhaps it has never been better negated, the true rule better stated, than by this court:
"In spite of the plentitude of discussion in recent years as to how far courts must defer to the rulings of an administrative tribunal, it is doubtful whether in the end one can say more than that there comes a point at which the courts must form their own conclusions. Before doing so they will, of course, — like the administrative tribunals themselves — look for light from every quarter, and after all crannies have been searched, will yield to the administrative interpretation in all doubtful cases; but they can never abdicate. Even Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301,—a case which perhaps went as far as any other, — left no doubt as to this. Mitchell v. United States, 313 U.S. 80, 97, 61 S.Ct. 873, 85 L.Ed. 1201." Niagara Falls Power Co. v. Federal Power Commission, 2 Cir., 137 F.2d 787 at page 792.
And this is bound to be so for the very foundation stone of our liberties is the fact that judges without interest in the result are to determine and apply the law, as old Hooker put it, "with all indifferency." When then a person, claiming to be a third person, that is, neither a carrier nor ail employee, aggrieved by a decision of a majority of the Board, applies to the courts to have that decision set aside, "as in violation of a legal right," the contention that the Board, constituted as this one was, with two of its three members appointed on a partisan basis, is endowed with any peculiar prescience in divining the meaning of a term so precisely defined by statute, must be supported by something more than the mere claim. A search of the statute and particularly of 228k, the section relating to court jurisdiction, reveals nothing in support. More it discloses that the statute does not prescribe finality for even the Board's conclusions of fact, and that for such finality as they have, the Board must rely entirely on the principle supporting administrative fact findings. When we turn from the statute to the courts, we find no case which at all supports the claim made here that where a statute has defined a term, courts must, though they do not agree with it, follow the administrator's opinion as to its meaning. The opinion in National Labor Relations Board v. Hearst Publications the case mainly relied on here, makes clear the difference between that case and this. Pointing out that Congress, without defining it, had used a broad term "employees" broadly, leaving to the Labor Board to determine its application in particular situations, the Court said,
"But where the question is one of specific application of a broad, statutory term in a proceeding in which the agency administering the statute must determine it initially, the reviewing court's function is limited."
Citing decisions of similar purport, it then concludes: "The Board's determination is to be accepted if it has 'warrant in the record' and a reasonable basis in law."
Here Congress did not use the term "employer" broadly. On the contrary, it gave it a precise, a definite meaning. In this situation, the preceding sentence in the Hearst opinion, "Undoubtedly questions of statutory interpretation, especially when arising in the first instance in judicial proceedings, are for the courts to resolve, giving appropriate weight to the judgment of those whose special duty is to administer the questioned statute," furnishes the guiding rule. The application of that rule requires an affirmance of the judgment. It is accordingly affirmed.
45 U.S.O.A. § 228a et seq.
45 U.S.C.A. § 22Sj.
45 U.S.O.A. § 228a Definitions:
"For the purposes of sections 228a-228r of this title — (a) The term 'employer' means any carrier (as defined in subsection (m) of this section), and any company which is directly or indirectly owned or controlled by one or more such carriers or under common control therewith, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad, ".
So far as material, these are the facts:
(1) Though most of its principal officers are also officers of Pennsylvania, and its stock is, and lias been, entirely owned by Pennsylvania, Duquesne is in no sense a department of Pennsylvania, but it is, and always has been, conducted as a separate corporate entity, and entirely separate from and independent of Pennsylvania.
(2) A public warehouse chartered to conduct a general storage and warehouse business, services which Penn, is not obligated to, and does not perform, it is engaged solely in the commercial warehouse business at Pittsburgh and East liberty, Pa., and though a large part of its business consists in the warehousing, the loading, unloading, and other handling incident thereto, of goods which have been, or are to be, transported over tho Pennsylvania lines, it is not a carrier, nor is it engaged at all in railroading. (3) Its business is conducted under tho direction of its superintendent who has full and unrestricted authority to conduct a commercial warehouse business under its charter, and its facilities are available to, and are employed by, the public generally without restrictions to goods shipped over Penn, lines. (4) Its employees are employed by it, carried on its payroll, paid solely out of its funds, and discharged by it alone. Penn, lias no authority over them and nothing whatever to do with them. They are not, they have not regarded themselves, and have never been regarded by the railroad company as, its employees. They are Duquesne's employees only. (5) The two warehouses operated by Duquesne at East Liberty and Pittsburgh, are owned by Penn., being operated by Duquesne under lease from Penn. A portion of the ground floor of each warehouse is retained by Penn, and used and officially designated by it as its "freight agency." Duquesne's warehouses, as well as Pennsylvania's "freight agencies," are served by Pennsylvania's railroad tracks and are equipped with platforms or sidings and other facilities for the receipt, delivery, and other handling of inbound and outbound freight.
(0) At the East liberty warehouse, Duquesne handles and stores only one commodity, carload sugar, which comes in apd goes out over Pennsylvania's rails. Tho sugar is handled by Duquesne under storage-in-transit privileges permitted and covered by railroad tariffs filed by Pennsylvania with the Interstate Commerce Commission. Part of the sugar which passes through Duquesne's warehouse is refined in California and part in New York. That refined in California is moved by ship to one of tho eastern ports, such as Philadelphia or Baltimore, and thence by rail to Pittsburgh; and that refined in New York is shipped by rail directly from New York to Pittsburgh. At Duquesne's warehouse, which is used as a distribution center, the packages of sugar are assembled in the proper numbers and sizes and then shipped out over Pennsylvania's lines for distribution. Incoming shipments are consigned to the owner care of Duquesne, the route being designated as "Penn R R — For Stge in Transit"; and outgoing shipments are consigned to the owner, the bill of lading having a transit record number and being marked "accorded transit privilege at East Liberty, Pa." Both the unloading of the sugar from, and its reloading into, Pennsylvania cars are performed by Duquesne at the latter's siding for the account of the shipper in accordance with the governing rail tariff (Consolidated Freight Classification No. 13) requiring owners to load and unload freight carried at earloading rates. In the case of incoming sugar, delivery is made by Penn, and receipt is taken by Duquesne when Penn, places the cars on Duquesno's siding, and Duquesne then unloads. In the ease of outgoing shipments, tho empty cars are placed by Pennsylvania on Duquesno's siding and loaded by Duquesne, which then receives Pennsylvania's bill of lading. The handling and storage charges are billed by Duquesno directly against the owners of the property and are paid by such owners.
(7) At its Pittsburgh warehouse, Duquesne is primarily, principally and predominantly engaged in tho handling of freight which has come in, or is destined for movement, over Pennsylvania's rails, or which has both come in and is going out over Pennsylvania's rails. Approximately 95 percent of the commodities handled at that place, which commodities are diverse in character and are hauled in both carload and less-thanearload form, come in by rail, the remainder coming in by truck. The respective rail and truck percentages of the outgoing commodities are 60 and 40. The services performed by Duquesne at the Pittsburgh warehouse are similar to those at East Liberty insofar as carload freight is concerned, except that no sugar is handled. As to the less-than-earload freight, Duquesne, in addition to storing it, performs the handling involved in delivering it to and receiving it from Pennsylvania's platform. The loading and unloading of less-than-earload freight is performed by Penn, at its platform. In the case of incoming less-than-earload shipments, the freight is unloaded by Penn, from the cars to its platform and is delivered to and received by Duquesne on such platform. In the case of outgoing less-than-earload shipments, Duquesne delivers the freight unto Pennsylvania's platform; Penn, then issues its bill of lading, loads the freight into the cars, and moves them out. Of the total space used by Duquesne at its warehouses .at East Liberty and Pittsburgh, approximately 30 percent was devoted to the handling of freight accorded storage-in-transit privileges in 1936; approximately 12.5 percent in 1937; and approximately 12.5 percent in 1938.
(8) Duquesne handles, reconditions and sells for Penn, over freight, damaged refused freight, and damaged unclaimed freight under a contract entered into between the two companies on Feb. 1, 1922. Pursuant to this contract Penn, transports to Pittsburgh any freight it desires to be disposed of by Duquesne and Duquesne removes such freight to its warehouse after the payment to Penn, of all freight and other charges that may have accrued thereon. Out of the gross proceeds realized by it from each sale, Duquesne deducts a commission of ton percent and any amounts paid by it for reconditioning, drayage, freight and other charges and turns the balance over to Pennsylvania. If the owner of any unclaimed freight is ascertained prior to the sale- of such freight, Duquesne delivers such freight, upon instructions from Pennsylvania, to the owner and receives from the owner such charges as Duquesne has paid to Pennsylvania. In the event that the gross proceeds of the sale of freight do not equal the expenses incurred by Duquesne, plus the ten percent commission, Duquesne is credited with the difference. If any lot of freight becomes so worthless as to be unsaleable, Duquesne disposes of it in such manner as Penn, directs. When any freight is returned by Duquesne to Penn, upon the latter's order, Duquesne is reimbursed only for the actual expenses incurred by it.
50 Statutes, 435, 45 U.S.O.A. § 261 et seq.
52 Statutes, 1094, 45 U.S.C.A. § 351 et seq.
48 Statutes, 1185, 45 U.S.O.A. § 151 et seq.
Ocean Steamship Co. of Savanah v. Allen, 5 Cir., 123 F.2d 469; Magruder v. Baltimore Steam Packet Co., 4 Cir., 144 F.2d 130.
5 Cir., 121 F.2d 213; Affirmed 316 U.S. 624, 62 S.Ct. 1223, 86 L.Ed. 1716.
National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 130-131, 64 S.Ct. 851, 88 L.Ed. 1170; Endicott Johnson Corporation v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed. 424; Swift & Co. v. United States, 316 U.S. 216, 62 S.Ct. 948, 86 L.Ed. 1391; Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301; South Chicago Co. v. Bassett, 309 U.S. 251, 60 S.Ct. 544, 84 L.Ed. 732; Rochester Telephone Corporation v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147; Ellers v. Railroad Retirement Board, 2 Cir., 1943, 132 F.2d 636; South v. Railroad Retirement Board, 5 Cir., 1942, 131 F.2d 748, certiorari denied 317 U.S. 701, 63 S.Ct. 525, 87 L.Ed. 561.
Judging as Administration, Administration as Judging, Texas Law Review, November, 1942.
Said Justice Brandéis, concurring in St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 84, 56 S.Ct. 720, 740, 80 L.Ed. 1033. "The supremacy of law demands that there shall be opportunity to have some court decide whether an erroneous rule of law was applied;" Cf. National Labor Relations Board v. Hearst Publications, supra; Niagara Falls Power Co. v. Federal Power Commission, supra.
"We cannot be ignorant how much our obedience unto law dependeth upon this point. And só it is that 'notwithstanding even they which brook it worst that men should tell them of their duties, when they are told the same by law, think well and reasonably of it.' For why? They presume that the law doth speak with all indifferency, that the law is, as it were, an orade proceeding from wisdom and understanding."
Buchanan, in 1579, said: "The maker of the law is the people, acting through a council of representatives, chosen from all classes, and the interpreter of the law should be not the king, but a body of independent judges."
While Locke declared that law is a definite, certain, known or knowable rule of action, in existence before, not after, the event, justly and impartially applied by known and indiiferent judges, with authority to determine all differences according to established law.
"is Qne member shall be appointed from recommendations made by representatives of the employees am! one member shall be appointed from recommendations made by representatives of carriers, in both cases as the President shall direct, so as to provide representation on the Board satisfactory to the largest number, respectively, of employees and carriers concerned. One member, who shall be the chairman of the Board, shall be appointed initially for a term of two years without recommendation by either carriers or employees and shall not be in the employment of or be pecuniarily or otherwise interested in any employer or organisation of employees. " 45 U.S.C.A. § 228j.
South v. Railroad Retirement Board, 5 Cir., 131 F.2d 748.