I. C. C. v. J-T TRANSPORT CO.

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Argument of B. Franklin Taylor, Jr.

Chief Justice Earl Warren: Number 17, Interstate Commerce Commission, Appellant, versus J-T Transport Company Incorporated et al., and number 18, U. S. A. C. Transport Incorporated et al., Appellants, versus J-T Transport Company Incorporated et al.

Mr. Taylor.

Mr. B. Franklin Taylor, Jr.: May it please the Court.

I shall argue for the Interstate Commerce Commission, and Mr. Roland Rice will argue for the other appellants; the Common Carriers Conference, the Regular Route Carriers, the Regular Common Carriers Conference and U. S. A. C. Transport Company.

This case is a direct appeal from a final judgment of a three-judge court, setting aside an order of the Interstate Commerce Commission.

The Commission's order denied an application by J-T Transport Company for contract carrier, extension of service permit.

This case together with the Reddish case to be argued following the argument of this case, presents important questions respecting the interpretation of the 1957 Amendments, Sections 203 (a) (15) and 209 (b) of the Interstate Commerce Act.

Section 203 (a) (15) defines the term “contract carrier by motor vehicles”.

Section 209 (b) prescribes the standard to be applied by the Commission in passing upon applications for contract carrier permits.

It sets forth five criteria which the Commission shall consider in applying the governing standard.

These statutory provisions are reproduced in the appendix to the Commission's brief at pages 65 and 66.

They provide, in important part, as follows: Section 203 (a) (15) as amended, defines a contract carrier by motor vehicle as any person which engages in transportation by motor vehicle of passengers or property in Interstate or Foreign Commerce for compensation other than transportation as a common carrier.

Such transportation to be under continuing contracts with one person or a limited number of persons either (a), for the furnishing of transportation services to the assignment of motor vehicles for a continuing period of time, the exclusive use of each person served or (b), for the furnishing of transportation services designed to meet the distinct need of each individual customer.

Section 209 (b) as amended provides that a permit shall be issued to any qualified applicant who is fit, willing, and able properly to perform the service of a contract carrier and to conform to requirements of the act and Commission regulations, where the proposed operation will be consistent with the public interest in the national transportation policy declared in the Act, otherwise, such application shall be denied.

Section 209 (b) goes on to state that in determining whether issuance of a permit will be consistent with the public interest in the national transportation policy, the Commission shall consider: (1) The number of shippers to be served by the applicant, (2) The nature of the service proposed, (3) The effect which granting the permit would have upon the services of the protesting carriers, and (4) The effect which denying the permit would have upon the applicant and/or its shipper and (5) The changing character of that shipper's requirements. In this case, the Commission found that the applicant, J-T Transport's proposed operations met the definition of contract carriage.

It found J-T qualified in terms of the number of shippers to be served and the nature of the service proposed.

It also found that the character of the shipper's transportation requirements is not such as to preclude their performance by a common carrier.

The Commission found that the principal common carrier protestant --

Justice Felix Frankfurter: Now that -- that last thing, it is specifically in turn dealt with, namely the bearing of granting it on the fate of the common carriers, I'm not saying it isn't included in some of these things.

Mr. B. Franklin Taylor, Jr.: You mean whether the transportation requirements could also be met by a common carrier?

Justice Felix Frankfurter: Like you've just said, what you said namely, they found that --

Mr. B. Franklin Taylor, Jr.: That the character of the shipper's --

Justice Felix Frankfurter: No, what you said about the common carrier.

Mr. B. Franklin Taylor, Jr.: Character of the shipper's transportation requirements is not such as to preclude their performance by a common carrier.

Justice Felix Frankfurter: Now, that is not the specifically dealt within the statute, is it?

Mr. B. Franklin Taylor, Jr.: No Your Honor.

Justice Felix Frankfurter: Why?

That's what I wanted to know (Voice Overlap)

Mr. B. Franklin Taylor, Jr.: The Commission was merely saying there that this sort of service may be rendered by contract carriers and it also may be rendered by common carriers.

Justice William J. Brennan: What you're saying there were no -- no common carriers among the protesting carriers, is that it?

Mr. B. Franklin Taylor, Jr.: The protesting carriers in this case were common carriers.

Justice William J. Brennan: Well, why don't they (Inaudible)?

Mr. B. Franklin Taylor, Jr.: I beg your pardon?

Justice William J. Brennan: Why isn't that within the (3) then, the effect which granting them permit would have a common services to the protesting carriers?

Mr. B. Franklin Taylor, Jr.: Well, it is involved.

I'm --

Justice Felix Frankfurter: My question was a much more precise in prospect, namely, the statute does not say specifically that the granting or denial doesn't use specifically the bearing upon common carrier's ability to get the service, does it?

Mr. B. Franklin Taylor, Jr.: No, it's existing carriers --

Justice Felix Frankfurter: Protesting.

Mr. B. Franklin Taylor, Jr.: -- specifically the effect which granting the permit would have upon the services of the protesting carriers.

Justice Felix Frankfurter: What I'm saying is that you know much better than I, there is a history behind all these --

Mr. B. Franklin Taylor, Jr.: Yes, Your Honor.

Justice Felix Frankfurter: All right, I just wanted to nail that down.

Mr. B. Franklin Taylor, Jr.: So having found that J-T qualified and that the transportation could also based -- performed by a common carrier, the Commission found that the principal common carrier protestant is fully able to meet the transportation requirements of the shipper.

Consequently, denial of the permit would have no material adverse effect on that shipper, then concluding that the preservation of sound economic conditions and transportation required that existing carriers should be afforded the opportunity to transport available traffic which they can handle adequately before a new competitive service is authorized.

The Commission found that granting the permit would adversely affect the protesting carrier in this instance and that the potential loss of traffic to that carrier outweighs any detriment to the applicant flowing from a denial of the application.

As a consequence of these findings, the Commission made the ultimate finding that to authorize the proposed operations will not be consistent with the public interest and the National Transpiration Policy.

On the basis of its analysis of the legislative history of the 1957 Amendments and the language of the five criteria in Section 209 (b), the District Court held that in considering the ability and willingness of existing common carriers to provide service which would meet the shipper's transportation requirements, the Commission had erred by injecting a sixth test specifically rejected by Congress.

The Court also held that the Commission's findings respecting the effect of a denial upon the supporting shipper were in error.

It held that this Commission had improperly imposed upon the applicant and its shipper, the burden of showing the inadequacy of the existing common carrier service.

That the Commission had ignored evidence of specific needs which the Court found could not in fact be met by the protesting common carrier, and that the Commission had failed to make adequate findings in terms of the shipper's distinct needs.

Finally, the Court held that the Commission's finding of an adverse effect on the protesting carrier was based on an improper presumption and is without record support since the protestant is not presently handling the traffic, and consequently the grant of an application to the contract carrier would not divert present traffic away from the protesting common carrier.

In our view, this case then presents three questions.

First, whether the Commission may consider an affirmative showing by a protesting common carrier that it is able and willing to provide a transportation service adequate to meet the transportation requirements of the shipper supporting the application for a contract carrier permit.

Second, whether in finding that denying the application will not adversely affect the supporting shipper.

The Commission erred by, (1) Placing upon the applicant and its shipper, the burden of showing the inadequacy of existing service, (2) By ignoring evidence of specific needs which could not be met by the protesting carrier and (3) By failing to make findings as to those specific needs.

The third question is whether the Commission was entitled to conclude that where existing common carrier service is adequate to meet the shipper's needs, granting the permit would be inimical to the preservation of sound economic conditions in transportation.

Justice Felix Frankfurter: May I call you to restate your third proposition?

Mr. B. Franklin Taylor, Jr.: Third, is whether the Commission was entitled to conclude as a matter of judgment and discretion on the record before it that where the existing common carrier service is adequate to meet the shipper's needs, granting the permits would be inconsistent with the preservation of sound economic conditions in transportation and would adversely affect the services of the protesting common carrier.

Justice Felix Frankfurter: Is that as a general proposition or with reference to what was developed in the record in this case?

Mr. B. Franklin Taylor, Jr.: The Commission stated this -- in this case as a proposition generally applicable.

The quarrel that we have with the United States is almost entirely on this third question and the United States feeling that the Commission reached its conclusion here on the basis of a presumption which did not reflect particular facts in this particular case and we are of course disagreeing and I would develop that point fully when I reach it.

The facts in this case are essentially undisputed.

The appellee, J-T Transport Company has operated for a number of years as a regular route carrier by motor vehicle, carrying uncrated aircraft parts between various points in Midwestern and Western states.

It has been issued some 16 permits between July 1953 and January 1957 for that purpose.

By an application filed in March of 1957, J-T sought a permit to operate as a contract carrier of aircraft landing gear bulkheads, uncrated, requiring special handling and equipment over irregular routes from Indianapolis, Indiana to Wichita, Kansas.

At the hearing on the application, the Wichita Division, a Boeing Airplane Company which is the consignee of the bulkheads supported the grant of the permit.

Several motor common carriers appeared as protestants.

Now, a landing gear bulkhead weighs about 1380 pounds.

It's worth about $24,000.

Four bulkheads constitute a load on a trailer hauled by a truck tractor.

They are manufactured for Boeing at Indianapolis by a subcontractor and delivered to Boeing at Wichita for installation in B-52 airplanes.

At the time of the hearing which took place in May 1957, J-T had been transporting the bulkheads for about four months under temporary authority issued by the Commission.

It was averaging slightly less than four loads per month and that is that it carried 14 loads in the slightly less than four months.

The transportation has been accomplished under the temporary authority and has proposed to be accomplished under the permit sought in this case by the use of specially designed closed top trailers, equipped with shipping fixtures, designed by J-T, the applicant, with the aid of Boeing.

The equipment is assigned to the exclusive use of the shipper.

J-T has a terminal at Wichita, but none at Indianapolis, the origin point of the shippers.

Thus, J-T must deadhead its equipment 700 miles to Indianapolis in order to pick up each shipment.

However, the record showed that Boeing knows sufficiently far in advance of a particular movement to give J-T ample notice in order that it may move its equipment to 700 miles to Indianapolis, transport the bulkheads back to Wichita, and still meet Boeing's production schedules.

Prior to the inauguration of J-T's service under its temporary authority, railroads were used, but the record reflects dissatisfaction on the part of Boeing with the rail service principally because there was a necessity of constructing special containers in which to put the bulkheads when they were transported and that that was a costly operation.

The principal protesting carrier in this case, U. S. A. C. Transport Company is a motor common carrier.

Since January 1950, it has held a certificate of public convenience and necessity to transport over irregular routes, aircraft parts crated or uncrated, restricted to parts requiring special equipment or handling by reason of size, weight or fragile nature.

The geographical scope of U. S. A. C.'s certificate embraces the instant transportation between Indianapolis and Wichita.

The record shows and the Commission's findings in accordance with this following statement of facts with respect U. S. A. C.'s capabilities and past performance.

U. S. A. C. specialized in serving the aircraft industry for several years.

It is accustomed to modifying its equipment to meet specific transportation requirements of particular aircraft manufacturers and it has done so many times in the past.

It operates more than 170 tractors and over 225 trailers including trailers which would be readily adaptable for the transportation of the traffic involved in this case.

If tended the traffic, it would modify and make available whatever equipment is necessary to meet the shipper's transportation requirements.

It has numerous terminals throughout the country.

While it has no terminal at Wichita, it does have a terminal at Indianapolis where the shipments originate.

Consequently, it would not have to deadhead its equipments 700 miles to pickup the shipments.

It is willing to station at Indianapolis, a suitable closed type van modified and with fixtures installed to move the traffic.

It has idle equipment in Indianapolis and must deadhead other movements, considerable equipment out of there.

Its drivers are required to have security clearance and that's true of J-T's drivers and apparently, it's a requirement in order to handle this type of traffic and enter the Boeing plant.

Although Boeing knew of the services of U. S. A. C., it didn't try them for the Indianapolis to Wichita movement.

Generally, it gave three reasons.

There was a testimony about an allegedly unsatisfactory experience in using U. S. A. C. at another place in connection with other traffic in 1953, four years before the hearing.

The witness was unable to say whether the damage incurred at that time was a fault of the carrier or the shipper, what recovery was made or any of the details, really and the examiner shut off a cross-examination on the grounds that this was too remote in time to have any bearing on the present application.

The second reason given was that U. S. A. C.'s tariff contains a provision which says that it may exercise control over the type of equipment to be used.

Now, U. S. A. C. witness explained the purpose of that provision as being merely to ensure that its equipment would not be overloaded such that there might be damage to traffic or unsatisfactory safety conditions to give it a minimal control over its equipment since it is doing the hauling and the Commission specifically found that this sort of tariff provision was no impediment in view of U. S. A. C.'s express willingness to specifically modify and make available the necessary special equipment to handle movements in this case.

The third objection offered by the shipper for not having tried the services of U. S. A. C. was that U. S. A. C. had no terminal in Wichita where Boeing is located.

But as I have pointed out, it did have a terminal in Indianapolis where the shipments originate and it has a terminal in Topeka Kansas which is about a 170 miles in Wichita, and of course, telephonic communication is always available to talk with the U. S. A. C. people so that the --

Justice Felix Frankfurter: Cost difference (Inaudible)

Mr. B. Franklin Taylor, Jr.: I beg your pardon.

Justice Felix Frankfurter: Cost difference -- is there a difference within the cost?

Mr. B. Franklin Taylor, Jr.: Mr. Justice Frankfurter, in this case, there's no cost involved or rates.

Rates and cost --

Justice Felix Frankfurter: No, no, no.

Mr. B. Franklin Taylor, Jr.: -- are not a problem.

Justice Felix Frankfurter: I mean in Boeing's choice of J-T instead of U. S. A. C., finance, money play no part?

Mr. B. Franklin Taylor, Jr.: No, Your Honor.

There's nothing in this record about the rates being available to Boeing -- made available to Boeing by the various carriers as having anything to do with this, no.

Now in the Reddish case there is that problem, but consequently the --

Justice Felix Frankfurter: These are the -- the Boeing was free of course, Boeing in -- was free to use U. S. A. C. It chose not to, is that right?

Mr. B. Franklin Taylor, Jr.: Yes.

Justice Felix Frankfurter: For the reason that you gave?

Mr. B. Franklin Taylor, Jr.: Those were the reasons that Boeing gave for not having tried the services of U. S. A. C.

Justice Charles E. Whittaker: (Inaudible)

Mr. B. Franklin Taylor, Jr.: Yes Mr. Justice Whittaker.

It's a -- it's a common carrier which specializes in serving the aircraft industry.

It serves a number of aircraft manufacturers, Lockheed among others.

And as I've noted in the -- the record shows that it -- it's accustomed to modifying its equipment to handle special types of traffic.

It's authorized to do so.

And in the record, there are some photographs of some of the equipment that U. S. A. C. has showing the highly specialized nature and the varying nature of their equipment.

Justice Felix Frankfurter: Now, the upshot of -- of the Commission's denial of this certificate to J-T or equipment to J-T that Boeing would have to use U. S. A. C.?

Mr. B. Franklin Taylor, Jr.: That Boeing would have to use U. S. A. C. or the railroads which it had been using before for 20 months before this temporary authority operation of J-T or there was some other testimony in the record with respecting two other common carriers who could offer a joint line service, which they testified would be able to meet the requirements of Boeing.

Justice Felix Frankfurter: I'm not -- I'm not implying the -- the legal consequences or --

Mr. B. Franklin Taylor, Jr.: No.

Justice Felix Frankfurter: -- significance.

I just want to know what it means.

It means that -- that the carrier of choice would be restricted to what Boeing is concerned, is that right?

Mr. B. Franklin Taylor, Jr.: It means that the Boeing would be restricted to those carriers who are presently in the field, authorized to provide the service, and as the Commission found fully capable of providing.

Justice Felix Frankfurter: And -- and the Commission's --

Mr. B. Franklin Taylor, Jr.: Or going --

Justice Felix Frankfurter: At large -- at large, the Commission's position is taking into account the relative encouragement or help or regard to the had for the railroad to grant transportation systems in their entirety, it has the right to make such -- such determinations which would restrict the shippers' freedom, is that right?

Mr. B. Franklin Taylor, Jr.: As the Commission develops at considerable length and -- and probably redundantly in its report, that generally speaking, absent peculiar facts in this specific case the -- the transportation industry will be best served.

If the presently permitted and existing carriers are given the opportunity to haul traffic which they can adequately haul before a new competitive service is authorized, and I suppose that goes back to the original problems which gave rise to the enactment of the motor carrier right as this Court pointed out in the ATA case in 344 U.S. Over competition and an unsettled rate picture were factors which moved the Congress to put the motor carrier industry under regulation.

Justice Felix Frankfurter: But it goes back to what we've had to deal in settled cases namely with this -- the National Transportation Policy, doesn't it?

Mr. B. Franklin Taylor, Jr.: Precisely, and the Commission made -- related it specifically to that policy which is specifically mentioned in the governing standard of the five criteria we have in 209 (b) are to be considered in determining whether the application would meet the standard of consistency with the public interest in the National Transportation Policy.

That is the standard, the criteria are implementing factors.

Well, the threshold issue in this case is whether the Commission is precluded by these 1957 amendments from giving any consideration to a showing by a protesting common carrier that it's able and willing to provide service adequate to meet the needs of the shipper, supporting the contract carrier application.

Justice Felix Frankfurter: An amendment which --

Justice William O. Douglas: The (Inaudible) is not presently furnishing the service.

Mr. B. Franklin Taylor, Jr.: It's not presently --

Justice William O. Douglas: Of course not presently --

Mr. B. Franklin Taylor, Jr.: Yes, Your Honor.

Justice Felix Frankfurter: You say that under the 1957 Amendment, it wasn't able to do this under the prior -- well, 1957 enlarged the power of the Commission instead of narrowing them widely speaking, doesn't it?

Mr. B. Franklin Taylor, Jr.: We say that it certainly did not take away the right of the Commission to consider the adequacy of existing service in the field, something which it had always considered up until that time.

The District Court appears to have held and -- and I must confess that it's not perfectly clear whether they have gone so far as to say that the Commission may not give any consideration to this factor or I say it appears to upheld the Commission may not consider the adequacy of existing services.

Justice Felix Frankfurter: What makes you say that the decision isn't -- may not give any consideration because if it may give some consideration, then the weight to be given, (Inaudible) questions of judicial review.

Mr. B. Franklin Taylor, Jr.: I've read the report of the District Court many, many times and I'm still not clear in my own mind whether the District Court is saying flatly that the Commission may not give any consideration, or whether it is saying that the manner in which it gave consideration here was error.

It is certainly saying the latter, but some of the language in the report that for example considering the ability and willingness of existing carriers to provide the service.

The court below says, “Involves the application of a sixth test specifically rejected by Congress.”

So the best I can say is that may have held that the Commission may not give any consideration.

I think that's the position of the United States too, as I read their brief.

They feel the Court may have held that, but in any event, the other appellees, J-T Transport and the contract carrier conference pretty flatly contend that the Commission may not consider the ability and willingness of existing common carriers to provide the service.

They flatly say in their brief in more than one place that such a factor is irrelevant to the five criteria.

So that -- in fact, one or the other, I think it's the J-T brief says that, “We don't think the Court went so far to say it may not give any consideration, but we go that far.”

So that is issue is here one way or another.

Justice Felix Frankfurter: Largely because of legislative history I suppose?

Mr. B. Franklin Taylor, Jr.: Largely because of legislative history, Your Honor.

Now, the United States agrees with the Commission that the Commission may consider such a showing, indeed that it must.

We think that that's patent from a reading of the plain language of the statute.

I think it's clear that a showing by the existing carriers of their ability and willingness to provide a service which would meet the needs of the supporting shipper.

It's necessary to be considered if the Commission is going to imply -- to apply the third and fourth criteria at all.

If the Commission is going to consider the effect which granting the permit will have upon the protesting carrier, it seems to me, it's got to consider whether the protesting carrier is in a position and is willing to provide the service to meet the shipper's requirements.

And it's even more clear I believe when you consider the fourth criteria as the Commission said itself in its report, “Whether the shippers would be adversely affected by a denial must depend upon a determination of whether existing service is adequate to meet their transportation requirements.”

And we submit the question of whether there is a need on the part of the supporting shipper for the proposed service, inherently embraces the complementary question of whether the existing available service in the field is adequate to meet the shippers' needs.

They are but opposite sides of the same coin.

So it seems to me that right from the language of the statute, you've got to consider such a showing.

Moreover, the 1957 amendments retain the same governing standard of consistency with the public interest and the National Transportation Policy that had applied since the National Transportation Policy was enacted in 1940 and had indeed applied since the motor carrier regulation was passed in 1935 because in -- until 1940, between 1935 and 1940, the standard was consistency with the public interest and Section 202 (a) of the Motor Carrier Act as it was then read and as this Court knows 202 (a) was the predecessor of the National Transportation Policy.

It was that statement of policy which later as expanded became a National Transportation Policy so that this governing standard has always existed and it was not changed by the 1957 Amendments and the ability of carriers in the field has always been considered as a factor of considerable importance in determining whether a new permit or certificate should be issued and we think that the retention of the standard indicate that it should still be considered.

And we don't think that it's -- of any importance that the factor of the adequacy of existing service is not specifically mentioned in the statute.

Appellees apparently would feel that that was significant, but as we point out in our brief, the Commission has considered many things which are not specifically written in the statute and the good example is this auxiliary and supplemental restriction in connection with common carrier certificates and contract carrier permits issued to motor carrier subsidiaries of railroads.

And the Commission imports this standard -- these restrictions which originate in the Section 5 (2) (b) of the Act into Sections 207 and 209 dealing with motor carrier certificate and permits and that practice has been approved and indeed required by the Court in the number of cases, most recently in the American Trucking Associations case, 364 U.S.

In fact, in that American Trucking Associations' case at pages 13 and 14, and we have sent them out -- set out the quote in our brief in speaking of the amended Section 209 (b), this Court clearly recognized that the ability and willingness of the existing carriers to render the service was of a significant factor the Commission must consider and point it out, but saying at one point, there is for example no finding that independent contract carriers are unable or unwilling to perform the same type of service as specific motor.

So we think its clear from the statute the history and from even this Court's pattern recognition that such a factor and such of showing must be considered by the Commission.

That leads us to the legislative history.

Justice John M. Harlan: Where is the United States (Inaudible)?

Mr. B. Franklin Taylor, Jr.: Mr. Justice Harlan, the United States and the Commission differ on the manner in which the Commission treated the criterion of the effect of granting the permit on the protesting -- existing protesting carriers.

The Commission found that granting the permit would adversely affect the existing carriers in the field who are able to handle the traffic.

The United States quarrels with the Commission there because in their view, the Commission made such a finding on the basis of a presumption without relating it to specific facts of harm or detriment in this record and that --

Justice John M. Harlan: But as far as your present argument has gone, you are in agreement, is that it?

Mr. B. Franklin Taylor, Jr.: So far as our view of the legislative history and what it accomplished, United States and the Commission is generally in agreement.

So far as the ability of the Commission to consider a -- an affirmative showing by a protestant that it's able and willing to meet the shipper's requirements, we're in agreement.

And so far as the manner in which the Commission treated, the affect on the supporting shipper of a denial of the contract carrier application, the United States agrees with the Commission that the Commission's treatment of it was correct and that the District Court erred in saying (1) That we had imposed an unfair burden of proof on the applicant and its shipper, (2) That we had not considered the distinct needs and requirements of the shipper and (3) The Commission had not made adequate findings to reflect those distinct needs, all of which the Court took the Commission to task for it, but we maintain that the Commission's findings were adequate and that the United States agrees with us on that.

So our difference is quite narrow.

The appellees, JT and the Contract Carriers' Conference and the District Court would find in the legislative history of the 1957 amendments, a clear indication on the -- or intention on the part of Congress to prohibit the Commission from considering a showing by common carriers that they can and will provide adequate service.

And of course, it's -- I've discussed in an answer to a question by Mr. Justice Frankfurter, these amendments did not -- are not to be viewed in the vacuum.

There has been a history of the motor carrier regulation as this Court has pointed out.

It was passed for distinct purpose to stabilize the industry to take care of unsatisfactory economic conditions caused by overcrowding, over competition and unstable great picture.

We also point out in some detail in our brief that one of the purposes and the fundamental objective of motor carrier regulation was to foster, promote and protect adequate common carrier service and that was one of the reasons why contract carriers were placed under the regulation, that that was a purpose of the Motor Carrier Act and continues to be a purpose.

I think it's supported by Congress in the same session at which passed the 1957 Amendments in dealing with amendments to -- another part of the Act.

The same House and Senate Committees that dealt with the 1957 Amendments we're concerned with here, said at one point in its report, this very thing that a purpose, a fundamental purpose of motor carrier regulation is to promote and protect common carrier service.

So, we think these two threats must be considered when we view the 1957 Amendments themselves.

The precise impetus for the 1957 Amendments was this Court's decision in the United States, the Contract Steel Carriers, 350 U.S. at page 409, which decision apparent to make possible the proliferation of contract carrier services in competition with common carriers.

In that case, the Court held that the contract carriers were free to aggressively search for a new business and enter into new and more contracts within the scope of their permit.

The result was that the line between common and contract carrier which is essentially in terms of holding out, the common carrier holds out to provide its services to the general public or anybody that can use it.

The contract carrier has no such holding out but only provides a service to the shipper with whom it executes a contract.

And by a contract carrier being able to enter into many, many contracts, it was reaching the point where it was essentially holding out its service to any and all and consequently, the line between common and contract carrier is becoming (Inaudible).

Chief Justice Earl Warren: We'll recess now.

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Argument of B. Franklin Taylor

Chief Justice Earl Warren: The Interstate Commerce Commission appellant versus J-T Transport Company Incorporated et al.

And number 18 U.S.A.C. Transport Incorporated versus J-T Transport Company Incorporated.

Mr. Taylor, you may continue your argument.

Justice Felix Frankfurter: Mr. Taylor, before you begin so I shouldn't be breaking in on you.

Mr. B. Franklin Taylor: Yes sir.

Justice Felix Frankfurter: Did I understand you to say that the practice or the orders of the Commission, or whatever the basis for your statement, that it has been said in the law prior the 1957 amendment, taking into account what the District Court here said couldn't be taken into account?

Mr. B. Franklin Taylor: I said that it has been the general practice of the Commission actually since virtually the inception of the Motor Carrier Regulation in 1935, to give due consideration to the adequacy of service that could be rendered by protesting existing carriers.

Justice Felix Frankfurter: That's what this is about, isn't it?

Mr. B. Franklin Taylor: Yes, Your Honor.

In part, it's whether they may consider that and then (Voice Overlap).

Justice Felix Frankfurter: Are you -- am I right to infer that if this decision stands, there would be a break in that practice or a denial of something that has been enforced by the Commission from 1935 to 1957?

Mr. B. Franklin Taylor: Well, we would certainly say --

Justice Felix Frankfurter: And I'm not (Voice Overlap) and I just want to know what the --

Mr. B. Franklin Taylor: Yes.

Justice Felix Frankfurter: -- what the material showed?

Mr. B. Franklin Taylor: If the extreme position of appellees here and what the court below may have found --

Justice Felix Frankfurter: Well now, certainly --

Mr. B. Franklin Taylor: -- it should be the law that the Commission may not consider this sort of showing at all.

Justice Felix Frankfurter: But now the Government doesn't stand on that, does it?

Mr. B. Franklin Taylor: United States, no.

Justice Felix Frankfurter: Alright.

Mr. B. Franklin Taylor: They agree with the (Voice Overlap).

Justice Felix Frankfurter: Well, now assume -- assume the decision below is not to be read to the extreme extent, to which some of the appellees at all had been would put it, assume that they say that on the record here while it may take into account what happens to the common carriers addressed on that almost exclusively or with insufficient basis either in facts or in finding --

Mr. B. Franklin Taylor: Well that -- that is --

Justice Felix Frankfurter: -- with that point of view.

Mr. B. Franklin Taylor: -- that is really the second phase, which would be embraced by the second and third questions whether --

Justice Felix Frankfurter: What I want to know is whether there was a -- whether -- what was decided in this case, forget the talk, what was decided in your view, the Commission's view is the departure from what had been the Commission's practice under to the Motor Carrier Act for 20 years?

Mr. B. Franklin Taylor: We are afraid that that is -- that is the case and it might be a rather abrupt and extreme departure.

For example, the appellees have argued in their brief, as I understand their ultimate position, that if a contract carrier meets the definition of contract carriage in terms of the number of shippers and the nature of the service proposed, that it virtually follows that the certificate or that the permit should issue.

As I read their briefs, there are a number of statements, which it seems to me, definitely lead to that conclusion.

Justice Felix Frankfurter: Well, we are here not reviewing their brief, but the decision below.

Mr. B. Franklin Taylor: Well, they -- frankly, we would hope at the very least to secure from this Court an opinion, which would be much more clear to both the industry and to the Commission itself with respect to what the Commission may or may not do under these amendments --

Justice Felix Frankfurter: Well now, I suppose --

Mr. B. Franklin Taylor: -- and we find the opinion below.

Justice Felix Frankfurter: Suppose -- suppose I have read the opinion as wholly, not that the Commission is precluded, but that in this case on the record, the evidence before the Commission and the requisite findings to be made thereon.

One, there was an insufficient, that there was a want of evidence, or two, or and two, that there weren't findings such as a court is entitled to have from the Commission in order to know what it is that it is reviewing, suppose I -- we'll get the -- the opinion below that way and therefore, the decision to carry out that kind of an opinion, what do you say then about the decision below?

Mr. B. Franklin Taylor: We say that decision below is still in error and as I will argue to Your Honors, the Commission's findings are adequate and what it did is supported by the record and is within the ambit of its discretion and judgment as the expert agency in this field.

The United States will agree -- will agree with me I think on one of the points, that is, what the Commission did with respect to the record and its findings concerning the adequacy of the existing service, the effect on the supporting shipper.

Justice Felix Frankfurter: Alright, right, right.

Mr. B. Franklin Taylor: The United States will disagree with us on what -- and a ship -- the Commission's treatment of the criterion of the effect of a grant on the protesting existing common carriers.

Justice John M. Harlan: As I -- as I read your brief, I understood your ultimate point would be that however you'll read the District Court's opinion, that what the District Court did here exceeded its proper function as the reviewing court of the administrative agency.

Mr. B. Franklin Taylor: We think it clearly --

Justice John M. Harlan: And that the findings that it -- so far as findings were concerned, you say the findings are adequate.

Mr. B. Franklin Taylor: That (Voice Overlap) Justice Harlan --

Justice John M. Harlan: Isn't that the (Voice Overlap)?

Mr. B. Franklin Taylor: -- and I think -- especially apparent, at least it is to us, in the District Court's criticism of what the Commission did with respect to this effect on the supporting shipper.

Justice Felix Frankfurter: May I suggest, instead of worrying about what the United States argued and what the appellees, the other appellees argued, and bothering about my questions, you address yourself to what is involved in Justice Harlan's question what you had said before you intervene, namely that taking not the extreme interpretation that may be placed upon the District Court, but taking the view that it does not disallow the Commission from taking into account the effect or consequence to the uncommon carriers, (a) there is basis in the record for the fact -- for the conclusion that it did not unduly give weight to that factor, and (b), that there are findings carrying out that sufficiency of evidence.

I think then, one will be a little clearer rather than having to consider all of these cross kinds of differences.

Mr. B. Franklin Taylor: Yes.

Well, that would bring me actually to my argument at first on what the District Court said about the Commission's findings and conclusions with respect to the effect on the supporting shipper of the denial and what the Commission in fact did.

The District Court said, as we read this opinion, that the Commission had ignored the affirmative evidence of the supporting shipper, Boeing, specific needs that no consideration were given to special services, which the District Court said in fact could not be supplied by the common carriers here.

And that the Commission had not made adequate findings respecting the distinct transportation needs of the shipper.

I think from the rather full statement of facts I gave yesterday and others facts from the record and which the Commission has found and we set them out rather fully in our brief, that it's just not true that the Commission did not consider the evidence of the shipper, Boeing's needs, and that it did not consider the ability of the protesting common carrier to meet those special needs.

It summarized the needs in great detail and it found specifically that the protesting common carrier could provide exactly the same sort of service as was proposed by J-T, the appellant, and it recited in detail the things that the protesting common carrier was accustomed to do and would do in this case.

And as a result, the Commission concluded that the protesting common carrier was fully able to meet the needs of Boeing.

So, I think it's just patent from the Commission's report, in any fair reading of it, that it is just not the case that the Commission ignored affirmative evidence of Boeing's needs and that it made findings that didn't reflect or touch those needs, that -- that the report is the full answer to that.

The court also --

Justice John M. Harlan: Can you --

Mr. B. Franklin Taylor: -- suggests --

Justice John M. Harlan: Can you pinpoint the particular passages in the report?

If you can do it quickly.

Mr. B. Franklin Taylor: Yes sir.

In the Commission's brief, pages 46 to 52, we address ourselves to this point, to recite initially what the court said about the Commission's treatment of this and then we point out what the Commission itself said.

Justice John M. Harlan: 47?

Mr. B. Franklin Taylor: On page 50, for example, we set out from the Commission report what it said about the needs of Boeing and what the applicant is proposing to do for Boeing, what it's been doing under its temporary authority.

It goes on to set out what U.S.A.C. can do and is offering to do here and then at -- to go back to page 47, it again summarizes in some detail what U.S.A.C. is in a position to do and is offering to do.

And I think it's apparent from this sort of treatment in the report that it has fully considered what the shippers has testified what its needs are and has fully considered what U.S.A.C. has affirmatively shown that it could and would do, and has concluded that -- and I'm quoting, “U.S.A.C. is fully able to meet the shippers' needs.”

And that, “In view of the adequacy of existing common carrier service, the supporting shipper would not be materially affected by denial of the applications.”

I think that's all the Commission needs to find on this, especially after this rather full discussion.

So, we're satisfied to rely on these few pages in our brief and the -- and the court's reading of the Commission report to --

Chief Justice Earl Warren: Might there not be a difference between the Commission saying that U.S.A.C. can supply all of the needs of the shipper from saying that it can do all of the things for the shipper that the private or the contract carrier could do?

Mr. B. Franklin Taylor: Well --

Chief Justice Earl Warren: Isn't there a difference?

Are they not there deciding what they think the shipper needs rather than to say that they can do just as much for him as the contract carrier?

Mr. B. Franklin Taylor: I think the answer to your question Mr. Chief Justice is no.

The Commission has not said here.

The shipper says it needs this, but we really don't think it needs that that the common carrier can do something else, which is close enough.

They're not substituting their judgment for the shipper here with respect to its needs.

Although, I don't want to be understood as conceding that the Commission has got to accept uncritically, everything a shipper says about its needs.

But in this case, on this record, that the Commission recites the testimony of Boeing as to what it needs and what has been done for it on the temporary authority by J-T.

And then the Commission points out that the U.S.A.C. can do the same things.

It's a specialized carrier.

It's a common carrier but specializes, and that's what 85% of his business in serving the aircraft industry.

It's accustomed to modifying equipment, dedicating special equipment, meeting production schedules, all these things, Boeing says it needs.

It has --

Chief Justice Earl Warren: Was there --

Mr. B. Franklin Taylor: -- the terminal right at the origin point of the shipment so it can pick them up on a phone call.

Justice Charles E. Whittaker: But do they have one at the point of destination?

Mr. B. Franklin Taylor: No sir.

Justice Charles E. Whittaker: That the other on is (Inaudible)

Mr. B. Franklin Taylor: The J-T has the terminal in Wichita, which is where Boeing is.

It does not have a terminal in Indianapolis.

The reverse is true of U.S.A.C.

Justice Charles E. Whittaker: Do you contend that the service rendered -- supposedly rendered by J-T would be precisely that which has been rendered by the other company?

Mr. B. Franklin Taylor: Mr. Justice Whittaker, I think it's fair to say from this record that the protesting common carrier U.S.A.C has indicated, has shown, that it can provide service, which would be as close to being precisely what J-T is now rendering as you could get it.

Justice Felix Frankfurter: But, if it's merely a question of whether it is -- where it would be rendering the same service from the point of view of the shipper, considerations of convenience, time, cost, everything -- you say cost is out of this case.

Mr. B. Franklin Taylor: That's right.

Justice Felix Frankfurter: Where all of the other considerations had make a difference to the shipper, it says a contest on the ingredient of factors that add up to satisfy or meeting the shippers' need, if there's a difference of opinion and there's a basis for taking one view rather than another, it's not a business of a court to say, “We think we disagree with the Commission.”

Mr. B. Franklin Taylor: Well, the Commissioners -- the Commission is the finding of the fact.

I don't have to tell this Court that.

Justice Felix Frankfurter: Well, I know.

But that's a loose phrase “a finding of fact” and I'm trying to penetrate in finding out what -- what is the finding of fact in the sense that if there is a conflict, the Commission's resolution of the conflict is determinative, rather than what are the standards by which the so-called fact to judge.

Those are two very different things.

Mr. B. Franklin Taylor: Well --

Justice Felix Frankfurter: Then, we better agree on what are the standards that may be taken into account once you assume the common carriers' interest as viewed from the shipper's need is a relevant factor for the ultimate determination.

Mr. B. Franklin Taylor: I would say that the Commission's report reflects that it fully set forth and considered the shippers' needs, that it fully set forth and considered the service that is proposed to be provided and could be provided by the protesting common carrier, and that it made completely adequate findings that the service proposed is fully able to meet the shippers' needs.

I'll go further to say that those findings are overwhelmingly supported by this record and that certainly, when this Court gets into the record, it could not conclude that such findings, which I submit are adequate, are arbitrary and without support in the record.

I think that they're more than substantially supported.

I think it's fair to say that they're rather overwhelmingly supported in this record.

I don't see that this phase of the Commission decision is a problem frankly.

I -- again, maybe I'm deferring too much to our friends in the United States, but the point at which they are in disagreement with the Commission's decision is the most troublesome point.

And if it meets the pleasure of the Court, since my time is rapidly running out, I'd like to --

Chief Justice Earl Warren: Right.

Mr. B. Franklin Taylor: -- address myself to that final point.

Chief Justice Earl Warren: Go ahead.

Mr. B. Franklin Taylor: Now, as we read the District Court's opinion, it's its view that the Commission based this determination of the effect of granting the permit on the services of the protesting carriers, on the basis of: one, an improper presumption; and two, its conclusion with respect to this affect was without record support.

That is the District Court seemed to feel that, for example, if the protesting common carrier were presently enjoying the track, such that a grant of the permit would result in the traffic being withdrawn from the protesting common carrier, that then it might be the sort of a diversion of traffic which could constitute a sufficient adverse effect that the Commission could consider.

But that something short of that, it just wouldn't satisfy the criterion and that the Commission on something short of that would probably not be justified in finding an adverse effect.

Well, the protesting common carrier is not enjoying that track so we do not have a case where the grant of the permit is going to withdraw on the protesting common carrier, traffic, which is now transported.

I think the United States generally agrees with the District Court.

It too feels that the Commission has based its finding in this area on an unsupported presumption.

Now, the basis --

Justice Hugo L. Black: Would you mind stating again the sentence -- what the presumption is?

Mr. B. Franklin Taylor: Yes sir.

Justice Hugo L. Black: As you understand it.

Mr. B. Franklin Taylor: Yes.

Justice Hugo L. Black: On an unsupported presumption, you say.

Mr. B. Franklin Taylor: I will read you the language in the Commission's report in which what is presumption lang -- at this presumption word is used.

Justice Hugo L. Black: What page?

Mr. B. Franklin Taylor: In our brief, it's a language quoted from the Commission's report at pages 57 to 58 of our brief.

In the record, it's page 42.

The Commission has been discussing generally the background and what it has done in the past and towards the bottom of this quotation on page 57 of our brief, we find the language, “However, we believe that our past holdings that existing carriers are entitled to transport all the traffic which they can economically and efficiently handle before additional authority is granted are equally valid today as they were prior to the 1957 amendments to the Act.

There is, in effect, a presumption that the services of existing carriers will be adversely affected by a loss of 'potential' traffic, even if they may not have handled it before.”

Now, that is a sole place in the Commission's report where it uses this presumption language and the court will note, they said, “There is, in effect, a presumption,” in effect in setting -- to set off the commerce.

Now, what the Commission is saying, and I think when this report is carefully read at two or three -- it becomes almost redundant on this point.

At a couple of places, they've discussed the National Transportation Policy and relate this sort of thinking to it.

And what the Commission is saying, it seems to me, is that generally speaking, authorizing a service for which there is no need, that is that the existing carriers can meet, but authorize a new unneeded competitive service.

Generally speaking, it is viewed as adversely effecting the existing carriers because it takes out of circulation, potential traffic, which might become available to them and that this sort of thing if it were to occur as a regular matter authorizing an unneeded competitive service would be inconsistent with preserving sound economic conditions in the motor transportation industry.

And I think that sort of thinking is entirely consistent with -- if we go back to 1935, when motor carriers are put on to regulation, with the -- the reasons that they were put under regulations as set forth so succinctly by this Court in the A.T.A. case at 345 U.S., where they pointed out it was the over competition, the instability in the industry which it caused to be put on the regulation.

Justice Hugo L. Black: May I ask you --

Mr. B. Franklin Taylor: So the Commission in general is of the belief, that it is -- will not advance the preservation of sound economic conditions in the motor carrier industry to authorize a new service to compete with carriers already in the field where the new service is not meeting a need that the existing carriers cannot adequately take care of.

Justice Hugo L. Black: May I ask you to go (Inaudible), I've had a rather -- it's rather (Inaudible) for me to get precisely the issue.

Does that meet the court's reference to meeting the distinct or specific need of the deporting supporting shipper or is that statement, based on the ideas, it meets the needs of shippers in general (Inaudible)

Mr. B. Franklin Taylor: As I try to indicate a few moments ago, in this case, the Commission has found, I think completely ample evidence that the existing common carriers here, who were protesting this application can meet the distinct needs of these shippers.

Justice Hugo L. Black: For services to Boeing?

Mr. B. Franklin Taylor: Well, the existence of a terminal in Wichita has nothing to do with whether you can deliver to Boeing's plant.

Frankly, and I may be challenged (Voice Overlap).

Justice Hugo L. Black: I asked that because -- I asked that because of Justice Whittaker.

Mr. B. Franklin Taylor: Yes.

I think this terminal at Wichita thing, in a transportation sense, is kind of a phony, because the delivery is to the plant of Boeing, it's not to a carrier's terminal in Wichita -- it's still a plant of Boeing.

The only convenience to a shipper and the carrier having a terminal in the same town where his industry is would be that he could walk over there and talk things over, but you've got a telephone for that.

Justice Hugo L. Black: But your argument is based on the assumption, and as I understand it what I'm trying to say on my mind, that the service would be adequate, must be the kind of service that the Commission can find on evidence, meets the distinct needs of this particular shipper who has supported the application of the other route.

Mr. B. Franklin Taylor: I'd say in this case that there is no issue as there may be in Reddish, on whether the Commission has found that it's the reasonable needs that are met, but not the distinct needs, because here the Commission has said, as I read a few moments ago, the protesting carrier is fully able to meet the needs and it has recited the needs and recited what the carrier can do.

I don't think there's any question on this record that the distinct precise special needs can't be met the protesting carrier.

Justice Hugo L. Black: (Voice Overlap) something that is hard back to the railroad days, trailer and trucking business where the trucking business began to meet the special needs of the carriers of the goods right to the warehouse.

Now, that would be -- now, that would be something I would think of as in the nature of a distinctive service that that shipper needed.

In your statement, you are arguing on the assumption that this case has fully met, the commission has fully met its burden, or not its burden but a duty to decide this on the basis of the actual services rendered by each one and that it shown as decided on evidence, that the distinctive needs of this shipper can be met.

Mr. B. Franklin Taylor: Mr. Justice Black, yes, that's our position and we're entirely content to leave the Commission's report to speak for itself in the record.

We think that the findings are there on the records supported.

Chief Justice Earl Warren: Does this Act contemplate competition between public carriers and private carriers in this field?

Mr. B. Franklin Taylor: Well, private carriers --

Chief Justice Earl Warren: Well I'm -- I'm speaking with contractors, or is it just between rail and water and trucks or does it break it down farther and does it contemplate the competition in this field between public truckers and contractors?

Mr. B. Franklin Taylor: Well, I think, Mr. Chief Justice, at first, the Act contemplates limited competition in the first place, because we are dealing with a regulated industry and regulated rates.

I would like to think it more in terms of service.

I think the function of a contract carrier is to provide some specialized and tailored service to a shipper, which is akin to what it might provide for itself, where that service is not otherwise available.

It's an alternative to going into private carriage.

And today, other contract carriers might be under the scene, providing the same service, and that might be a barrier to a new one being authorized or specialized common carriers may be fully able to provide it.

I'd like to save a few minutes for rebuttal, and on the other hand, I would like to say something, and I'm afraid I've cut my friend Mr. Rice out completely here.

Justice Felix Frankfurter: But before you go beyond the immediate discussion, let me rather conclude, forgive me.

209 (b) sets forth five factors in determining whether he can affirm and be consistent to the public interest et cetera, the Commission shall consider the five factors, which you enumerated just -- I want to know this.

I want to know the Commission's specific attitude on this question.

Must the Commission take all five factors into account?

Mr. B. Franklin Taylor: Mr. Justice Frankfurter, I would say that they must take all of the factors into account that are relevant and pertinent to a particular set of facts.

For example, the fifth factor, the changing character of the shippers' requirements.

The Commission pointed out was not pertinent here.

Justice Felix Frankfurter: Was it then --

Mr. B. Franklin Taylor: It took it into account.

He --

Justice Felix Frankfurter: Well, I knew you must --

Mr. B. Franklin Taylor: -- was aware of it.

Justice Felix Frankfurter: -- must in determining whether a delicate issue canvassed those five considerations.

I'm not now asking whether the considerations have any relevance in a particular case, and therefore, they do take them into account, namely zero.

I'm not asking the weight to be attached, I'm asking, must they in their conclusion give evidence that they have considered the five ingredients which determines the ultimate conclusion of rejection or grant?

Mr. B. Franklin Taylor: Oh, the statute says, “In determining whether a grant would be consistent with the public interest and national transportation policy, the Commission shall consider.”

Now, I would say that that's pretty mandatory upon the Commission --

Justice Felix Frankfurter: Alright.

Mr. B. Franklin Taylor: -- to consider those things.

Now, what weight they attach --

Justice Felix Frankfurter: They are not --

Mr. B. Franklin Taylor: -- to these is not spelled out.

Justice Felix Frankfurter: That would be my question.

I answer those -- I put a very specific question with very specific purposes in mind, with very specific decisions of this Court in mind.

Namely, when any administrative agency, whether the Commission or the Secretary of Agriculture in the Sugar case we had, is told to act on the basis of the following consideration, he cannot delete from the statutorily enumerated consideration anyone and say, “Well, I don't -- I'm not going to pay attention to this.”

He may find that there's no part in the equation.

It has no weight.

It has no value.

It has the irrelevance.

But there must be some evidence that the Commission wasn't unmindful of the limitation of its mandate.

Do you agree with that?

Mr. B. Franklin Taylor: I would have to agree with that --

Justice Felix Frankfurter: Now.

Mr. B. Franklin Taylor: -- Mr. Frankfurter, yes.

Justice Felix Frankfurter: Then you can you -- can this -- the report of the Commission, from the point of view of the Commission arguing before this Court, that the report of the Commission indicate explicitly that it did something about each one of those five?

Mr. B. Franklin Taylor: It certainly does.

I would like to save whatever time we have left for rebuttal.

Chief Justice Earl Warren: You may Mr. Taylor.

Argument of Roland Rice

Mr. Roland Rice: May it please the court.

Chief Justice Earl Warren: (Inaudible)

Mr. Roland Rice: Let me say that it is the view of the specialty common carrier, which I represent in the two groups of common carriers holding general commodities, which I represent that the Commission is required to consider all of the elements enumerated by Congress in Section 209 (b).

Let me also emphasize that this specialty common carrier which I represent hauled a limited group of commodities, namely U.S.A.C. Transport Company.

These are commodities, airplane parts, engines and so on, and we are obligated to offer our services to all people who ship and who wished to receive those commodities.

Now, with respect to the general commodity carriers which I represent, the two groups, the two conferences of American Trucking Associations, we hold out our services to all the public insofar as we are capable of doing so and in many, many cases, we are actually serving thousands and thousands of shippers and we haul many thousands of individual commodities.

Now, at the same time, there are common carriers that transport a very few commodities and U.S.A.C. Transport is one of those.

J-T Transport, a contract carrier also hauls a very few commodities, certainly as compared with the general commodity carriers.

And as a matter of fact, those two are competitive because J-T is now seeking and has been granted temporary authority by this Commission to do something, which very clearly, U.S.A.C. Transport has the right to do and the Commission found that U.S.A.C. Transport could perform this service.

Not only that, there are automobile carriers who handled nothing but automobiles and who are common carriers and who served whatever portion of the public is available to them and there aren't many automobile manufacturers in this country.

At the same time, there are contract carriers of automobiles holding permits granted by this Commission, which perform service which is almost identical, if not physically identical, with that served by the common carriers.

In addition, there are many other types of common carriers of -- specialty commodities.

For example, you have the household goods carriers who haul for anybody but they don't haul general commodities.

They haul that group of commodities falling in the area of the household goods service.

You should find the same thing with tank truck carriers.

You have common carriers by tank truck and you have contract carriers by tank trunk and they will be both be hauling the same or a limited number of commodities, and these carriers therefore, in a very real sense are competitive the one with the other.

The question was asked here a bit earlier, whether or not if what the lower court does should become law, there will have been established a sharp departure from practice in the past with respect to what this Commission has done in considering cases when a new application is before it.

It's my view and very emphatically so that this would amount to a sharp departure in practice, going all the way back to the beginning of regulation in 1935 and continuing to cases that are being decided week after week and month after month by this Commission in which it shows that it does consider the adequacy of service of existing carriers.

That is something which in my opinion is specifically brought out by the amendments of -- in 209 (b) in 1957, and furthermore, that language, the word “adequate” itself appears in the National Transportation Policy, the concluding sentence of which imposes upon the Commission the obligation to administer all the sections of Act with due regard to the total policy expressed by Congress there, which includes adequacy and which includes sound economic conditions.

We think the Commission was fully within its rights and bound by law as a matter of fact to give consideration to every element that it did and to come to the conclusion that it reached in this case.

And furthermore, if anyone wants to know what adverse effect there might be upon U.S.A.C. Transport, the common carrier of limited commodities, which I here represent along with the others, let me say, just look at the 219 empty vehicles which we moved in a two and half month period, and this in the record from Indianapolis out and on which we had no break and with which by modification which we offer to do have record, we could have used, for transporting the commodities, that are here before the Commission and before this Court.

Justice Felix Frankfurter: Well, the Commission doesn't have to take your -- the Commission doesn't have to determine the demand for a permit, either by your willingness to do, that it isn't foreclosed to say, despite that fact, we think some of these other factors outweigh any more than it has to give the shipper a free choice, neither the shippers' wish nor the common carriers' readiness and determinative as I read the statute and as I read its history.

Mr. Roland Rice: I agree with you, Your Honor.

And I think that this Court said so in 364 U.S.1, the Pacific Motor Trucking case.

Thank you.

Chief Justice Earl Warren: Mr. Solomon.

Argument of Richard A. Solomon

Mr. Richard A. Solomon: Mr. Chief Justice, members of the Court.

In a very brief period that I have in this argument, I don't think I'll have time to do more than outline our position.

But the issues presented in this case are also presented in the Reddish case is to follow and I may be able to elaborate there.

Now, with due respect to my friends on the appellee side, I'm not going to take any time here to argue the question of whether the Commission can't consider adequacy of service or consider the service that the common carriers and other protesters here provide.

I think the lower court's decision in both this case and the Reddish case are very ambiguous on this point.

And I agree strongly with the Commission that they should be clarified in this Court's opinion.

But I don't really think that there's any serious problem.

If the court was saying, if they can't consider, it was clearly wrong, they have to consider the existing services.

You can't make a determination that makes any sense without knowing what you're starting.

The problem we have is not whether you consider existing services, but how you consider existing services in evaluating the two primary questions which normally are going to be decisive in this type of case.

Now, as Justice Frankfurter said, there are five factors which the Commission is required to consider and there are additional factors because I agree with the Commission that these are not exclusive factors.

There may be other factors, which the record will require them to consider.

But in most cases, in most cases, the problem really comes down to whether the interest of the shipper in securing new service are more important to the National Transportation Policy or less important to the National Transportation Policy than the interest of the existing carriers in protecting their services, the choice is between the effect, in other words, if I may cite, use statutory language between the effect of a denial of the application upon the shippers for whom it is being put forward because contract carrier applications are always put forward by a proposed contract shipper, a transporter for specific shippers.

The shipper's interest as contrasted with the interest of the existing carriers.

Now, as we see it, and as the court below saw it too, in passing upon these two basic factors, there are three problems which have risen over the years and which are exemplified in both the J-T and the Reddish cases, which are very important.

The first of which, to which I'll only advert very briefly here is burden of proof.

The Commission has used very loose language in the past.

It uses very loose language here with respect to whether the shipper or the applicant must show that the protesting carriers are unwilling and unable to do what they intend to do.

And to the extent that the Commission puts the burden upon the shipper and the applicant to show what somebody else can do, not only is that illogical but it's clearly contrary to the legislative history of 1957 amendments because the Commission at that time tried to put through an amendment which would've put the burden on the applicants and that was expressly rejected.

Justice Felix Frankfurter: But that isn't quite -- unless you have a different legislative history in mind than I have, what the Commission tried to originally propose is that that such -- such a permit can be granted only if the existing common carriers are unwilling or unable to provide.

Mr. Richard A. Solomon: Showing that they're unwilling or unable to provide.

Justice Felix Frankfurter: But it has nothing to do with burden of proof.

Mr. Richard A. Solomon: I think it does, sir.

Justice Felix Frankfurter: Well, Mr. Solomon, please tell me why the Commission -- why the Commission, having been authorized to take into account five factors cannot say as a result of a great deal of experience over more than two decades, our experience lead us to conclude that in evaluating these five factors, it seems to us desirable from a point of view or proof to start off in saying that in most instances, the factors have been shown to be such that we can now formulate a general rule that on the hold, this one (Inaudible) the burden of proof.

So long as they don't make it conclusive, please tell me why that may not be drawn from their experience.

Mr. Richard A. Solomon: Well, I think a lot of things can be drawn from their experience and I think even they can -- from their experience say, generally speaking we are going to look with great disfavor upon contract carrier applications unless there is a real unmeetable need, because we know generally speaking that this will effect the existing common carriers.

But the problems as Your Honor pointed out, the 1957 Act, in part because that contract carriers' complaint that they were doing this too generally and not looking at the specific facts, it requires them to look at the specific facts and apply their general test to the specific facts of the case.

Now, as putting --

Justice Felix Frankfurter: And on putting that completely, that means that they cannot make their generalization or conclusion.

Mr. Richard A. Solomon: Right.

Justice Felix Frankfurter: But it doesn't mean that they can draw on a generalization as one of the elements in reaching a conclusion?

Mr. Richard A. Solomon: I think that's right.

I think that's right.

I think the real problem here is whether they do make their generalizations conclusive.

Justice Felix Frankfurter: Alright.

Mr. Richard A. Solomon: And the generalizations are perfectly well tools to help you in reaching in a decision but they are not a substitute for a decision.

Justice Felix Frankfurter: I agree with you, but a great deal of leeway will be given as to the different weight they attach and I'm rather surprised that -- surprised to look at the brief, neither side have cited a case in which we dealt with this problem rather extensively, namely Secretary of Agriculture against Central Roig Company in 338 U.S.

Mr. Richard A. Solomon: Well, from my point, I must confess completed wherein -- that's why we didn't decide that.

Justice Felix Frankfurter: Because that case dealt with a similar problem relating to the functions of Secretary of Agriculture and gave him the broadest leeway as to how you weigh the different factors.

Mr. Richard A. Solomon: Mr. Justice Frankfurter, the United States, despite what it may seem like because we sometimes do come up here opposing the Commission does not like to and --

Justice Felix Frankfurter: Do we have a separate statutory standing or duty --

Mr. Richard A. Solomon: We --

Justice Felix Frankfurter: -- as an independent position?

Mr. Richard A. Solomon: -- recognizing exactly what you were saying, we have, although we think there is some basis for the lower court's opinion here, we have leaned over backwards to say that in our opinion, on the basis of the record of the J-T case, we don't have to say this in Reddish, we're in the basis of the J-T case, we do think that the Commission can be said to have found that J-T can fully and completely meet the distinct needs of the shipper here.

Now, this is debatable, but we think that, as we look at the record here that this is a conclusion that they not only could've drawn, but that the language would seem to say they drew it outweighs the language, which seems to indicate they didn't.

This isn't a clear problem even in the J-T case Your Honor, because not only does the Commission in its general discussion at pages 38 of the record, talk in terms of shipper needs being merely met by reasonably adequate service of the common carriers, exactly the type of showing, which this Court and the Schaffer found was no -- not sufficient.

But on page 49 of the record, it again talks in terms of, whereas here it appears that a motor common carrier is able to furnish a service substantially similar to that proposed by a motor carrier -- by a motor common carrier applicant.

So there is this problem in the J-T case as well as the Reddish case.

But we agree with Mr. Taylor that when you look at this decision on the whole here, there is enough in here to find that the Commission filed that the existing carrier could fully meet the needs of the shipper and that they're sufficient on the record so that in the very broad leeway that the Commission must necessarily have, this is supportive.

Justice Hugo L. Black: Do you mean by needs -- distinctive needs again?

Mr. Richard A. Solomon: I mean by distinctive needs, sir --

Justice Potter Stewart: Using the --

Mr. Richard A. Solomon: The Commission seems to think it means that too because the Commission does use the words “distinctive needs” in the J-T case.

Justice Felix Frankfurter: Distinctive needs within the statute, is it?

Mr. Richard A. Solomon: Yes sir, the 203 (a) (15), in defining common carrier uses --

Justice Potter Stewart: What?

Mr. Richard A. Solomon: I mean contract carrier, uses the term distinct needs of the shipper and it is that -- for that reason, that the lower courts picked up this term.

Justice Felix Frankfurter: I mean on 209, is there any difference between needs and distinctive need?

I don't --

Mr. Richard A. Solomon: I think there's a -- all the difference in the word.

Justice Felix Frankfurter: There is.

Mr. Richard A. Solomon: Yes.

Justice Felix Frankfurter: Could you tell me?

Mr. Richard A. Solomon: The problem in all too many cases, the problem in the Reddish case is that in evaluating the needs of the shipper, one of the statutory things that they must evaluate all too often, the Commission says --

Justice Felix Frankfurter: Why is it they must evaluate?

Mr. Richard A. Solomon: The needs of the shippers --

Justice Felix Frankfurter: In 209, there is no “distinctive needs.”

Mr. Richard A. Solomon: No.

But what 209 says is, “You must evaluate the effect of a denial upon the shipper.”

Justice Felix Frankfurter: Yes.

Mr. Richard A. Solomon: Which means, I believe and I think must necessarily mean, that what will a shipper lose in the way of transportation if this application is denied, which necessarily means what does he need, because what if -- you'll now determine what he loses.

Justice Felix Frankfurter: Yes.

Mr. Richard A. Solomon: Well now, all too often --

Justice Felix Frankfurter: An automobile shipper had different needs than a banana shipper.

Mr. Richard A. Solomon: Yes, sure.

But it's not only that, it's a question of what are the specific needs, because all too frequently Justice Frankfurter, what the Commission does is it looks at the common carriers and says, “They can perform the general type of service that is asked for here.”

If it's -- well, they say here, these are both specialized carriers.

They can both perform the same general type of service.

Now, if they stop there, as we think they did in Reddish, we think that would be clearly wrong.

It would be exactly what the Commission did in the Schaffer Transportation case, at 355, where they said the railroads can get these granite blocks from Vermont to the Midwest, they can provide a reasonably adequate service and they didn't look to see that -- a reasonably adequate service may not meet the full needs of the shippers.

Justice Felix Frankfurter: Therefore, from my --

Mr. Richard A. Solomon: This is a very real problem --

Justice Felix Frankfurter: Therefore, from my point of view, it isn't reasonably adequate.

Mr. Richard A. Solomon: Well --

Justice Felix Frankfurter: This is “words.”

Mr. Richard A. Solomon: This is “words.”

Justice Felix Frankfurter: "Words, words, words,” then, aren't they?

Mr. Richard A. Solomon: This is “words” --

Justice Hugo L. Black: Would you say this is --

Mr. Richard A. Solomon: -- but it's more than that.

Justice Hugo L. Black: I gather, you are saying, I'm trying to get the distinction, reasonably adequate for this shipper.

Mr. Richard A. Solomon: Yes, that's what -- that's what --

Justice Hugo L. Black: That's what you would say, reasonably adequate or distinct to meet his -- you say, distinctive needs, isn't it?

Mr. Justice Frankfurter was simply, as I gather, say, for the shipper?

Justice Felix Frankfurter: That's what I do mean with -- because the statute talks not about an abstract platonic shipper, it means a fellow is engaged in business as some goods to ship from A to B and his needs must be satisfied.

Mr. Richard A. Solomon: I don't disagree.

What I am saying is that all too frequently, the Commission has used this phrase “reasonably adequate,” as this Court found in the Schaffer case, has used this convenient term “reasonably adequate” to say that the protesting carriers are doing something equivalent generally to what the shipper needs and that's good enough, and we won't consider the shipper needs anymore.

Justice Felix Frankfurter: Many of the carriers who ships bulk goods, that isn't good enough that the particular bulk requires a particular treatment, a particular acceptance and a particular delivery.

Mr. Richard A. Solomon: Well, I'll give you a more specific case because it's the case I'm going to argue next.

In the Reddish case, both the protestants and the applicant can provide multiple pickup and delivery service of small orders and that's true.

And to that extent, they are -- the protestants can provide reasonably adequate service, but that's not the issue.

The issue in Reddish is whether the protestants can provide this type of service as fast and as efficiently, and that the Commission doesn't pay any attention to.

Justice Felix Frankfurter: Once you spell it out, I don't disagree with you at all, but I don't get any (Inaudible) significance between specific needs and needs.

Needs --

Mr. Richard A. Solomon: Well --

Justice Felix Frankfurter: -- that don't satisfy the particular shipper on satisfaction of his needs.

It's as simple as that to me.

Mr. Richard A. Solomon: Well, I think on the same wavelength.

What I am saying is that the problem here and in all these Commission cases is that in all too many of them, they have used a formula rather than looking at the facts to see distinct needs.

Justice Felix Frankfurter: You know, they have loosened their language unlike what courts there were engaging.

Mr. Richard A. Solomon: No, they have used lose language to avoid doing their job.

Justice Felix Frankfurter: Alright.

If you can penetrate that in their result, they have left out irrelevant factors and I understand you thoroughly, if you'd go and looked at their words through a microscope, then I don't think why -- I don't see any reason why they should be judged more harshly than you would judge me, I hope.

Mr. Richard A. Solomon: I agree sir that we have to look at what is behind the words and not merely at the work.

And that -- let me turn in connection with to this problem.

Unknown Speaker: The Commission said that there is no evidence of distinct needs.Can you tell us (Inaudible)

Mr. Richard A. Solomon: I have no doubt that the burden of showing the distinct needs of the shipper are upon the shipper or the applicant who wishes to serve it.

The burden of showing whether they can be met by the protestant carriers is on the protesting carriers.

Now, I would like to get, if I have any time at all, to the question of presumption, which is the place which in the specific facts of the J-T case, we part company with the Commission.

Now, as I say in most cases and in the J-T case, the problem is evaluating shipper needs against the needs of the -- against the interest of the existing carriers.

And the statute, the 1957 amendment next express what we think was implied previously and that is that the Commission must consider the effect of a grant upon the services -- upon the services of the existing protesting carriers.

Our problem with the Commission is that it doesn't make any effort in any case or at least in these two cases, maybe it makes some effort in some cases Mr. Todd may mention.

But in these two cases, it makes no effort to look and see what the real effect of this grant is going to be upon the protesting shippers.

It doesn't look to the problems that Mr. Rice mentioned about the empty trucks of U.S.A.C.

It doesn't look to what U.S.A.C.'s financial position is.

It doesn't look to whether this grant would really affect U.S.A.C.'s ability to continue its services for its public just as efficiently as if it didn't make the grant.

All it does is apply this presumption.

Now, Mr. Taylor read you the general language that the Commission had in its decision with respect to this presumption.

I'm not going to reread it.

But what I would like to read from the Commission's decision is what it said in this case when reach the factor that it has to reach under 209 with respect to the impact upon the protesting carriers.

And I am reading from the bottom of page 45 of the record and what it says is, “The requirement of Section 209 (b) that we consider the effect which are grant of authority would have upon the services of protesting carriers has we believe been adequately discussed,” where on page 42 the language that Mr. Taylor read you.

It is sufficient at this point to say that in view of our finding herein, that U.S.A.C. is in a position to provide any service that is needed.

We conclude that a grant of authority to the applicant would have an adverse affect upon the protestant.

In other words, without any attempt to analyze what the real impact will be, they say, “It is sufficient that they can provide the service, therefore, if they don't get it, it will have an adverse effect upon it.”

Justice Felix Frankfurter: Was there any evidence -- what -- your proceedings are before the Commission --

Mr. Richard A. Solomon: Yes sir.

Justice Felix Frankfurter: Was there oral testimony or --

Mr. Richard A. Solomon: Yes.

Justice Felix Frankfurter: Extensive?

Mr. Richard A. Solomon: Not very extensive, this is the entire record.

Justice Felix Frankfurter: You mean, all the witnesses?

Mr. Richard A. Solomon: All the witnesses.

Justice Felix Frankfurter: Well, is there nothing in the oral testimony bearing on this subject?

Mr. Richard A. Solomon: Mr. Rice suggests that there was something bearing on the subject that wasn't evaluated?

Justice Felix Frankfurter: But if this is the record -- if this is the record, then you know the record, was there anything?

Why do you have to refer to him?

Mr. Richard A. Solomon: I think there was very little if anything which you can make an appropriate analysis on.

But if the Commission were to disagree with me and say that we think that this and this in the record is sufficient, I might have more difficulty in arguing that the --

Justice Felix Frankfurter: Must they repeat in their order, in their report, the evidence that's in the record.

Mr. Richard A. Solomon: They must consider the problem in the light of the evidence and not consider in the light of a pure generalization.

Justice Felix Frankfurter: Well, I don't understand this.

Mr. Richard A. Solomon: Let me --

Justice Felix Frankfurter: Must be -- I don't follow.

If in fact, the issue was canvassed.

I can understand if you say the issue wasn't canvassed, but if the issue was canvassed testimonially before the Commission, must they summarize the evidence?

Again and again, courts don't do that.

Mr. Richard A. Solomon: Well, but Your Honor, it's not a question of whether the issue was canvassed, it's a question of what such evidence as there is in the record means and they must evaluate.

Justice Felix Frankfurter: But they evaluate it by (Voice Overlap).

Mr. Richard A. Solomon: No sir.

They did not evaluate.

They simply said, “We don't have to discuss this matter because we've already said that we are applying a general presumption.”

Justice Felix Frankfurter: But they go on to the next sentence.

Maybe they were -- they were repeating however than indeed (Inaudible) could go on.

Mr. Richard A. Solomon: There is one statement -- no, that's just general again.

Justice Felix Frankfurter: Well, I know generally, but that's why I asked you whether there's an underlying basis for it in the testimony.

If you say, “No,” that would be an end of the matter.

But you don't say, “No,” you said there was some.

Mr. Richard A. Solomon: I say that --

Justice Felix Frankfurter: Can I ask you?

Must they repeat it in the body of their report?

Mr. Richard A. Solomon: I would think the answer to your question would be no.

But if the Commission were to disagree with me and pick on some bit of evidence and say, “This is sufficient,” I am not in a position now to say that I would say that that was unreasonable, so unreasonable that it would have to be removed

Justice Felix Frankfurter: And I think you must be in that position, if you say they didn't adequately, take into account a requirement of the statute.

Mr. Richard A. Solomon: I don't think so, Your Honor.

I think that it's up to the Commission to come to this Court having evaluated the evidence and not to say to this Court, “We didn't evaluate the evidence.

We just played on a general presumption but you look at the record and see whether there's sufficient evidence to support this generalization.”

I think that's a fairly shocking point of view, not a one that this Court would normally want to hear to.

I think it's up to the Commission as the body here that's got the statutory responsibility to evaluate the evidence.

And your job is to review whether that's a reasonable evaluation.

Justice Hugo L. Black: May I ask you if there's any concrete challenge in the record to the sufficiency of evidence to show that the needs would not be met in a concrete way with reference to this particular company.

Mr. Richard A. Solomon: Yes, sir.

It's a challenge.

This is a debatable question --

Justice Hugo L. Black: Why?

What is concretely -- what is the distinction?

What is the argument that there is some reason why the services here --

Mr. Richard A. Solomon: Are inadequate?

Justice Hugo L. Black: -- are inadequate to meet the needs of this particular shipper?

Mr. Richard A. Solomon: The argument is one, they had previous experience with the protesting carrier and it was found to be unsatisfactory.

Two --

Justice Hugo L. Black: You mean, protesting common carrier?

Mr. Richard A. Solomon: Yes.

Justice Hugo L. Black: Unsatisfactory in what way and for what reason?

Mr. Richard A. Solomon: The record is very weak on this because when they started to testify on this unsatisfactory past history, the examiner cut them off and said that's 1952.

That's too --

Justice Hugo L. Black: Was that --

Mr. Richard A. Solomon: -- long ago.

Justice Hugo L. Black: Is that -- where is that in the record?

Did they cut them off from showing that they had tried them before and the service is unsatisfactory for particular reasons?

Mr. Richard A. Solomon: It's -- I can't give you the exact page.

It's in the testimony of a namesake of mine, but no relative by the name of Ernest Solomon which appears in the record roughly between pages 83 and 109, but I am sure his counsel will know better than I do.

Justice Hugo L. Black: What other challenges, concrete challenges?

Mr. Richard A. Solomon: It was argued --

Justice Hugo L. Black: -- (Voice Overlap) the adequacy of the service --

Mr. Richard A. Solomon: It was --

Justice Hugo L. Black: -- of that particular carrier?

Mr. Richard A. Solomon: It was argued that the common carrier protested, had a provision in his tariff which gave him permission to keep control at all times of the vehicles and that this would make it more difficult for him to dedicate vehicles to the particular shipper.

Justice Potter Stewart: This was another argument?

Mr. Richard A. Solomon: These were all discussed by the Commission and reject --

Justice Hugo L. Black: Was there any evidence on that?

Mr. Richard A. Solomon: Yes, there are some evidence on that.

Chief Justice Earl Warren: To support either way or both ways?

Mr. Richard A. Solomon: There is very little evidence in this record to support anything but there is some evidence on this.

It's mostly opinion evidence.

Justice Felix Frankfurter: But there was -- if you can look at the examination, direct and cross-examination, wasn't it, on these points?

Mr. Richard A. Solomon: There is not very much evide --

Justice Felix Frankfurter: Well, I didn't ask you whether very much.

There were some.

Mr. Richard A. Solomon: Some.

Justice Felix Frankfurter: Alright.

Mr. Richard A. Solomon: Yes.

Justice Felix Frankfurter: You don't say it's barring your testimony, do you?

Mr. Richard A. Solomon: We are supporting the Commission on this point, Your Honor.

I am just answering Justice Black's question, sir.

We think that these --

Justice Hugo L. Black: In both cases?

Mr. Richard A. Solomon: No, sir.

Justice Hugo L. Black: (Voice Overlap)

Mr. Richard A. Solomon: I'm talking about the J-T case.

I will talk about the Reddish case later, it's at -- no.

But in the --

Justice Hugo L. Black: Well, if the -- if the record shows in the case, while you're supporting the Commission, there were concrete challenges.

Mr. Richard A. Solomon: Which the Commission considered and evaluated.

Justice Hugo L. Black: Considered, evaluated and resolved.

Mr. Richard A. Solomon: We think so.

Justice Hugo L. Black: Why wouldn't that settle it without regard to what language they used as to that general rule in connection with that consideration --

Mr. Richard A. Solomon: Well --

Justice Hugo L. Black: -- in that particular case?

Mr. Richard A. Solomon: Yes, I --

Justice Hugo L. Black: Why would you not then be in support of the Commission?

Maybe my question --

Mr. Richard A. Solomon: No, no, your question is the heart --

Justice Hugo L. Black: I just don't quite understand you.

Mr. Richard A. Solomon: No, no, no, your question is the heart of the problem.

What Your Honor is asking me is if the protesting carriers can arguendo, provide fully and completely for the shippers, why do you have to go beyond that?

Why doesn't that end the case?

Justice Hugo L. Black: This particular shipper and the Commission have decided on the evidence that both sides present it --

Mr. Richard A. Solomon: Why doesn't that end the case?

Justice Hugo L. Black: -- which is satisfactory, why wouldn't it end there, in that case?

Mr. Richard A. Solomon: Yes.

This so, I think, gets into the basic problem of the relationship between common carriers and contract carriers and the basic difference in standards for passing upon the two.

Unfortunately, our brief does not contain the standards for common carrier applications but I've handed it up to you, 207 of the Act provides that common carriers are to be passed, common carrier applications are to be passed upon in the normal way that a utility application is to be passed upon, i.e. a common carrier must show that the service he wishes to provide is or will be required by present or future public interest and necessity, and that is the standard language for applicant for common carrier facilities and railroads, telephones, telegraph, public utilities.

Contract carriages are different animal.

The standard of Section 209 does not require him to show that there is a public need for the service.

Instead, the provisions of Section 209 are that the Commission shall grant a contract carrier application if it is consistent with the public interest and the national transportation policy.

Now, this distinction which the lower courts mentioned reflects I think a real distinction that Congress was making.

We agree completely with the Commission that the basic reason for regulating contract carriage was to ensure that contract carriers didn't skim the cream off the market and hurt the common carriers upon which the small people in the country necessarily depend.

But the Commission felt, I mean the Congress felt that that was the primary reason for regulating contract carriers and unless there was a demonstrable effect upon the common carriers, there wasn't any need to prevent the small man from buying a truck and going into business providing for the special services of a shipper.

And therefore, they had this distinction in the standards.

Now, prior to 1957 --

Justice Felix Frankfurter: In the standards for issuing contract carriers as against common carriers certificate?

Mr. Richard A. Solomon: Yes sir.

Justice Felix Frankfurter: But 209 isn't that, 209 --

Mr. Richard A. Solomon: I'm getting to 209.

Justice Felix Frankfurter: -- gets the relationship.

Mr. Richard A. Solomon: I'm getting to 209, sir, because 209 gets to the relationship as a result of the 1957 amendments.

Now, prior to 1957, despite the statutory scheme, the Commission had a very real problem and that was -- I am really taking much too much time, but let me try at least answer it.

The problem they have was that prior to 1957, when they were passing upon an application for a contract carrier applicant, they didn't know what they were passing on and the reason for that was that prior to 1957, a contract carrier application was a hunting license.

Justice Hugo L. Black: Was a what?

Mr. Richard A. Solomon: A hunting license.

It was a -- maybe a limited hunting license but it didn't limit the person when he got his permit to serving the particular shippers whose needs he had applied to serve.

He could go out and get additional shippers and in this Court's decision in the Contract Steel case, which Mr. Taylor mentioned yesterday, the Court made that perfectly clear.

It said, “As long as he keeps within the general specialization field that he had been licensed for, he is perfectly able and willing to go out and get as many new contracts as he wants.”

Now, that meant -- that meant that despite this difference in standard, the Commission had a real problem because it never could really tell when it made a grant for a contract carrier what its impact was going to be.

It could not say, “This fellow is going to serve shipper A and B and we can tell what the impact of his serving shipper A and B is because as soon as it got the permit, he could turn around and serve shippers D, E, F and G as well.

And therefore, the Commission over the years did evolve a policy of changing the Act and turning around completely.

And applying to contract carrier applications the same public interest, convenience, and necessity showing standard that the Act provided for common carriers and it thought that was necessary because of this problem I mentioned.

But this problem has been resolved.

The 1957 amendments do for the first time give the Commission the authority when J-T comes here and says, I want to serve Boeing.

They say, “Okay.

We will give you a grant to serve Boeing and if you want to serve some other air companies, you come in and amend your certificate before you do it.

There are certain minor exceptions to this.

This isn't may be quite as definite as I might be implying.

There are certain substitution rights but barring that, the Commission now has control, it can determine.

It can go back to where it should have been in the first place.

I'm very belated in coming to answer your question Justice Black.

It can now allow a man to go into the contract carrier field even though there isn't any showing of unmeetable need if that man can go in without demonstrable harm to the existing carrier.

Justice Felix Frankfurter: You're not suggesting --

Mr. Richard A. Solomon: And let me -- let me backtrack on demonstrable.

Justice Felix Frankfurter: You're not suggesting that the 1957 Act was an enlargement of opportunities to what you call a little carrier, that contract carrier.

It was a contraction.

Mr. Richard A. Solomon: I am suggesting that the 1957 amendments were both an enlargement and a contraction, yes, sir.

Justice Felix Frankfurter: So the origin of the statute was precisely to cut down the freedom that theretofore existed.

Mr. Richard A. Solomon: That is correct.

The origin of the statute was a proposal by the Interstate Commerce Commission to cut down on contract carriers.

But like many other things, what starts out as one thing ends up as another, and the contract carrier people, the legislative history makes perfectly clear, got their quid pro quo in this compromised legislation.

As the Congress made perfectly clear in its report, everybody was happy with this at the end.

Justice John M. Harlan: Was the statute eventually enacted -- enacted over the protest to the Commission?

Mr. Richard A. Solomon: The statute as it eventually enacted was enacted with the hosannas of everybody.

It was a compromised legislation and everybody was satisfied.

The Commission was satisfied.

The contract carrier people were satisfied.

The common carrier people were satisfied.

Everybody was satisfied as the reports make clear this was compromised legislation.

The main thing the common carriers and the main thing the Commission were worried about as the legislative history makes clear and as the common carrier people said when they withdrew their objections to certain other changes, the main thing they were afraid of was this Court's decision in the contract dealings, the hunting license problem to which I referred previously.

To get that plug, they were willing to add these five factors to Section 209.

Justice Felix Frankfurter: Well, they were in, in the original proposal.

Mr. Richard A. Solomon: They were not in, in the original pro --

Justice Felix Frankfurter: They were --

Mr. Richard A. Solomon: No, sir.

Justice Felix Frankfurter: There were some an -- another one in there, which would have been more restrictive.

But the Commission was -- didn't ask for a free charter to deny a grant without more, were they?

Mr. Richard A. Solomon: The original Commission proposal to Section 209 (b) did not contain any of this language of evaluating these five factors.

That was suggested originally by my friend Mr. Todd representing the contract carrier group.

The Commission's original suggestion for 209 (b), on the contrary, would have put the burden upon the contract carriers to show that the common carriers were unwilling and unable to provide --

Justice Felix Frankfurter: Not only --

Mr. Richard A. Solomon: -- adequacy.

Justice Felix Frankfurter: -- burden, it would have been an absolute prohibitory provision.

Mr. Richard A. Solomon: In effect, yes.

Justice Charles E. Whittaker: Now, is not that the very basis upon which the Commission had acted prior to those amendments?

What is the basis that they had to these showing of unwillingness or inability on the part of the common carriers upon the service, before a contract carrier (Inaudible)

Mr. Richard A. Solomon: I think in a lot of cases, that was the basis upon which the Commission was acting that had never been approved by the courts and I suggest, to Your Honor, that that's why they originally attempted in 1957 to get language into the Act to nail down the policy which they had been applying.

But they weren't successful.

Justice Charles E. Whittaker: Well, they could not get it done, but they finally withdrew it, didn't they?

Mr. Richard A. Solomon: They withdrew it.

Justice Charles E. Whittaker: Yes.

Mr. Richard A. Solomon: No.

Chief Justice Earl Warren: Or was it -- excuse me --

Justice Charles E. Whittaker: One more thing.

Isn't that the same policy which Judge Smith found, they view in this case, despite that change in amendments?

I'll refer you to page 176 of the record, where it says, “We conclude that if these decisions turning solely on the adequacy, willingness, and ability to pass, it cannot be justified and were clearly erroneous.

Mr. Richard A. Solomon: I think you're -- I think so, yes, sir.

Justice Charles E. Whittaker: Now, he said, now here comes the crux of the matter, there can be no doubt that this case was decided by the Commission on that basis.

That's the fact of -- crux of his holding, isn't it?

Mr. Richard A. Solomon: I think the answer to your question is yes, because I read this language to be really getting at this problem of saying that you have to show a need or you don't get your grant irrespective of what the real impact is on common carriers.

Justice Felix Frankfurter: But Mr. Solomon, if -- your answer to Justice Whittaker's question in the position of the Government, the case is a very simple one, namely, that Congress has laid down five requirements to be considered by the Commission and as I understand the question to which you responded, your answer means the Commission disregarded four out of the five and paid attention only to one.

Is that the position of the Government?

Mr. Richard A. Solomon: No, sir.

That is not the position of the Government.

Justice Felix Frankfurter: Alright, if that is what -- that is what Justice Whittaker read from the judge below.

Mr. Richard A. Solomon: I don't -- with all due respect to both myself and Justice Whittaker, I do not think we quite meant that.

Justice Felix Frankfurter: But I -- but the portion of what he just read from Judge Smith's opinion says that that, the Commission paid exclusive attention, getting the exact words, to one factor, not in fact so that we do not have to have pre-arguments.

Mr. Richard A. Solomon: That's why I -- that's why I hedged my answer to Judge --

Justice Felix Frankfurter: Well, I know, but hedging means that it isn't so, or hedging means nothing.

What do you mean you hedged?

You mean you didn't agree with it.

Mr. Richard A. Solomon: Well, I think I've made my position clear.

If I misstated in my answer to Justice Whittaker, I really think that it is better that I let my colleagues make their position clear than trying to resolve.

If I misstated myself Justice Frankfurter, I am sorry.

Justice Felix Frankfurter: Well, I am trying to understand this case and if Judge Smith is right, it is a very simple matter, namely, the Commission is on the duty to consider five factors in reaching the conclusion.

It considered only one and therefore, there is no need of long arguments or long opinions or long anything.

It disregarded an Act of Congress.

Mr. Richard A. Solomon: I wouldn't have put it the way Judge Smith did it because he implies that they were considering only a six-factor?

Now, I don't think that is what he meant.

Justice Felix Frankfurter: How do I know what he meant unless by what he said?

Mr. Richard A. Solomon: Well, Your Honor, and I suggest that the decision can be -- go on not on what Judge Smith said, but what the law is.

Chief Justice Earl Warren: Mr. Wrape.

Argument of James W. Wrape

Mr. James W. Wrape: Chief Justice, and the Court pleases.

There's is one preliminary matter that I'd like to take up with the Court.

On October the 9th, the Interstate Commerce Commission, in docket MC 108, 453 Sub 22, the application of G & A Truck Lines served an order, this was only a week or so ago and after the briefs were printed.

In that order, we believe that the Court correctly stated the law and applied the principles of Section 209 as we believe they should be applied.

We furnished copies of that report to all parties.

We furnished copies to the clerk and we asked leave to have it distributed to the Court as this report is one of the many that are not printed in the permanent found reports of the Commission and we believe that it will be very helpful to you in the disposition of this case.

Justice Hugo L. Black: Your report, did you say?

Late report, did you say?

Mr. James W. Wrape: Yes, just -- October the 9th.

Justice Hugo L. Black: On the same point.

Mr. James W. Wrape: On the same point and it applies the five criteria in Section 209 as we believe and say they should have been applied in this case.

If the Court pleases, I represent J-T Transport Company and have represented them throughout this proceeding along with Mr. Todd who represents the Contract Carrier Conference, we'll attempt to divide our time and we have attempted to divide our argument.

I intend to address myself to the record as made in the case, the reports of the Commission, the decision of the fine court in Kansas City.

Mr. Todd will be happy to discuss and to answer any questions with respect to the legislative history out of which the 1957 amendments evolved.

In the first place, I should state and I want to state it as shortly as I can.

We can't quite figure the position of the attorney general in this case.

He was our foremost antagonist in the lower court below.

He did not appeal.

He comes here and I believe he now confesses error on the part of the Commission and to some extent, he supports us.

Into some extent, he supports the Commission.

But in the end, he asked that the matter be remanded and the case decided by the Commission in the light of his brief.

Justice Felix Frankfurter: You're generously --

Mr. James W. Wrape: As I say, I believe he is an appellee only because he is not an appellant.

Justice Felix Frankfurter: He's generously suggesting you'll clear up all the difficulties.

Mr. James W. Wrape: I'll be very happy to, sir.

Now, with respect to the argument and the briefs advanced and filed by the Commission, I have a more quarrel -- more of a quarrel with Mr. Taylor in what he didn't say than in what he did say.

This -- the J-T Transport Company is a contract carrier who has devoted its 20 years of existence to the transportation exclusively of aircraft components.

We don't talk about aircraft parts.

These are great, big components or assemblies that are subcontracted and manufactured at a place apart from the place of final assembly.

And then, they have to be transported to the production line and they are put into the big air freight.

The particular aircraft assemblies, or components as we sometime call them, that are here involved are parts of the B-52 which is the -- it is a big jet transport fighter plane.

It's one of the type that met with the disastrous accident this past weekend.

It has been manufactured since 1952 and is it -- it is still a part of the Air Force's production of fighter planes.

The particular commodity here is called the landing gear bulkhead.

That is a great, big 12-foot by 16-foot component that fits up into the airframe from which the wheels, the landing gears are suspended.

It is made of magnesium, titanium, and aluminum.

Yet, the core, the aft bulkhead is 122 x 181 x 24 inches.

That is 11 x 15 x 2 feet wide.

The other one is slightly smaller.

They weigh practically nothing considering their bulk, their weight in each instance is under 1400 pounds.

They are very expensive.

Each one way cost about $25,000.

Now, in order to transport a component of this size over the highway, in a vehicle within the legal limits, is a problem and it is not like the Commission would have you think that it is something you throw on the back end of a flatbed truck and take across the country because you can.

It --

Unknown Speaker: (Inaudible)

Mr. James W. Wrape: Sir?

Justice William J. Brennan: That's the picture of it?

Mr. James W. Wrape: Yes sir.

There are some fine pictures of the components in the record, pages 144 to 140 -- or pages 141 to 144 in (Inaudible).

The picture at page 144 is the component in a shipping fixture.

The shipping fixture goes into the trailer and the component is shipped within those big frames.

Now, the -- as I say, the job of moving this over the highway is a tremendous one, the J-T Transport Company in their long experience designed a trailer which was a highly specialized trailer.

It had to be because one of these components which was 11 feet high had to be carried upright because of strain or stress.

So we had to get a component that is 11 feet high into a trailer that is only 12.5 feet at its highest point from the roadway.

So they developed what they called an underslung trailer.

That means one part of the trailer drops down to about eight inches off the highway and the floor, the rest of the trailer is higher.

In order to load the components in the shipping fixture, into the trailer, they push them in on tracks.

When they would get this component over the underslung portion which the floor which had been raised, they had an electric elevator that they installed in each one of these trailers.

And that elevator would move the roof and the -- and the floor up at the same time so that the sunken floor was leveled with the rest of the floor so that the component could be pushed in.

Once it got there, the elevator lowers the top and the floor down to the point where this big component could ride safely over the highway.

Now, in addition to the trailer that they have, they also designed and they owned and they furnished these shipping fixtures, copies of which you can see in the record beginning at pages 141 and 144.

These fixtures were designed so that the components were attached to them in a way to simulate the attachment of these same components when they go into the airframe, so that you avoid strains and stresses in transit.

These components are highly susceptible to damage because of strain or stress.

If they are jarred, or if they are dropped or if anything lose them, so as to cause the strain.

Justice Hugo L. Black: What material?

Mr. James W. Wrape: Sir?

Justice Hugo L. Black: Of what material are they composed?

Mr. James W. Wrape: These were composed of a light -- a very light metal.

Now, my time is short.

I could tell you some more about the highly specialized nature of the tractor -- I mean, of the trailer and of the shipping fixtures, but I believe that along with the pictures will demonstrate what I mean.

This was no simple kind of an operation.

It was a highly complex operation.

Now, according to the record here, the shipment moved from the empty trailer or the trailer with the shipping fixtures in it, moved from Wichita to Indianapolis overnight, from Indianapolis after it was loaded back to Wichita overnight as against a rail movement of some three or seven -- up to seven days transit time.

Now, the trailer after it was designed and built, the fixtures after they were designed were submitted to the engineering department of Boeing, who under our contract had the absolute right to reject either the trailer or of the shipping fixtures if they believe that any damage would accrue or if they didn't believe that they were entirely proper.

In other words, we simply acted as the agent and we did for Boeing what Boeing would have done by -- for itself if it had engaged in private carriage.

Now --

Chief Justice Earl Warren: Did the testing carrier have comparable equipment?

Mr. James W. Wrape: No, sir.

This equipment had to be built.

Chief Justice Earl Warren: Yes.

Mr. James W. Wrape: The existing carrier offered to build one.

Now --

Justice Hugo L. Black: It offered to build one, was one had been enough?

Mr. James W. Wrape: Yes, sir.

There are four ships a month in each direction and with overnight service it would just about to make it.

Now sir, the pictures which began in the record at page 141 show the trailer empty with the electric elevator in the front of the trailer.

You'll notice a hole, or a well up in the front, that is the underslung portion, the floor which is raised by the elevator.

Now, on page 142, you see the fixtures loaded with the components and in the trailer.

That is the way that it moved from Indianapolis to Wichita.

Now, at page 143, you see one component loaded in a fixture and one empty fixture.

And of course anyone -- anyone can see that the return trip with the empty fixtures is not what we ordinarily call deadhead.

That is the movement of an empty unit over the highway.

And for the Commission to insinuate or to suggest that U.S.A.C. could have eliminated deadhead miles, in this operation, it is impossible because it requires the absolute use of the trailer in each direction one with the empty fixtures, one with the loaded fixtures in the other direction.

It is a two-way movement, although the components are only handled in one way, in one direction.

Justice Hugo L. Black: Why?

Mr. James W. Wrape: Sir?

Justice Hugo L. Black: Why?

Mr. James W. Wrape: Well, if you'll look at page 143 sir, you will see --

Justice Hugo L. Black: I just flipped there -- I just flipped there.

Mr. James W. Wrape: Alright, so you'll see that the fixture, the empty fixture, completely fills up one half of the trailer.

The other fixture has a component in and if you took the component out, the fixture would likewise occupy the other half.

In other words, coming back with the empty fixtures, you'll require a full trailer.

Justice Felix Frankfurter: You make those fixtures (Inaudible)

Mr. James W. Wrape: Yes sir.

That is right, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. James W. Wrape: No, sir.

That is right, sir.

These are -- these are prominent fixtures and the record shows there were two sets where there were -- there were four trailers, four fixtures owned by J-T Transport Co. and furnished for transportation and Boeing had four more units for their own use or storage in their plan.

Justice William J. Brennan: (Inaudible)

Mr. James W. Wrape: Yes sir.

It -- I will touch on that in a few minutes, Mr. Justice Brennan.

Now, in light of that point, I might bring it out here.

The record shows that each of these B-52's is an individual airplane.

It has a serial number and every component bears that particular serial number.

Each component is manufactured for a particular airframe.

So, when the production line begins to move, these components move in to Wichita on a schedule so that at the proper time when the landing gear bulkheads are to be inserted into the airframe, they must be there at that time.

If for any reason they are not there, then you have either to stop the production line and wait for them or you take that airframe completely out of the line and then put an out of sequence installation into the airplane when the component finally arrives.

You have a tremendous delay in production and you will have the tremendous expense of taking that big airframe, that big plane, a big Jet 52 out of the line and over -- and set it aside until the component gets there.

Justice Felix Frankfurter: I take it that all these details were developed before the Commission?

Mr. James W. Wrape: Yes sir.

That's -- it's all in the record sir.

The record, and a practitioner before the Commission is a very complete one.

It isn't very long.

There were two witnesses for the applicant and two or three carrier witnesses for the protesters.

Justice Felix Frankfurter: These (Inaudible) were all written?

Mr. James W. Wrape: Yes sir, it is fully developed there.

Justice John M. Harlan: Are you arguing the sufficiency of the evidence?

Mr. James W. Wrape: Yes sir, I will get to that, yes.

Justice John M. Harlan: I mean, that's where all this is directed to.

Mr. James W. Wrape: That sir and with respect to the distinct need of the shipper as we part as the statute mentions, and particularly because the Commission, in their argument, just overlooked it.

I'm going to stop right here on the account of my time, sir.

Now, with respect to the record, the traffic director for Boeing testified, Mr. Solomon.

And I think it would be quicker for me to read to you two or three excerpt from his testimony, and to even summarize it.

At Page 89 in the record, the question was asked, “Did that mean anything to you in determining to bring about the filing of the application and your support of the application?”

That is whether it's a contract carrier or not.

His answer was, “Yes, it did, because we recognized that the contact carrier can dedicate equipment to our service.

The type of equipment that we want and we feel that on this type of transportation, it is the best thing to have the equipment solely dedicated to our use.”

On Page 90, in response to the question, “Do you have contact with them --” that's J-T, “--daily with respect to their operations?”

“Yes.”

“Does the maintenance of a terminal by J-T at Wichita mean anything to you?”

Mr. Solomon's answer, “It means very much to us, in as much as the type of operation that they conduct in hauling these various components for us.

We find the daily cooperation that we're able to have with J-T employees at Wichita is very helpful to us and is I would say necessary to the successful operation of this type of service.”

In response to the question -- is this time of transit ability important to you?”

He said, “Normally, in manufacturing airplane parts, there are many, many engineering change that must go into each unit.

As these engineering changes are incorporated, they have to lock them out so far down the line, and if you have a longer transit time, it takes you that much longer to get to these changes in the picture.

In other words, these changes mean an improvement in the airplane and if we have a longer transit time, it takes us that much longer to get these changes into our aircraft that we are rolling off the production line.”

And in response to the question, “How do you regard the J-T Transport Company in your scheme of operations?”

His answer, “Well, we feel they are just merely a part of our production line in that we can schedule the parts right from our manufacturer and the shipments are moved right into our receiving area and through the inspection and right on into our production.

So they are actually just an extension of our production line.”

And in response to the question, “Will you tell the examiner whether or not Boeing believes that it needs the surface here proposed in order to successfully complete its contract?”

His answer, “We feel we definitely need this type of service to furnish or build the best type of aircraft that we can for the United States Air Force.

Justice John M. Harlan: Could I ask you a question, but, I don't want to interrupt you too much.Did the Commission exclude the evidence that you thought was relevant to the issues in this case?

Mr. James W. Wrape: No sir.

I think it was sufficiently stated, it's only with respect to their past unsatisfactory service and I believe that Mr. Solomon stated his position, he would intend to go into other remedy.

Justice John M. Harlan: You have got before the Commission everything that you thought was germane.

Mr. James W. Wrape: Oh, certainly sir.

As I stated, I believe we have a full and complete record here from a practitioner standpoint.

Now --

Chief Justice Earl Warren: Is there any evidence to counteract what you have just read to us?

Mr. James W. Wrape: Oh, no sir.

No, there couldn't be sir.

Chief Justice Earl Warren: It stands uncontradicted?

Mr. James W. Wrape: That is uncontradicted.

The only thing that the protestants put in, they were carrier witnesses, was their availability and their willingness and their declarations of adequate -- adequacy in their service.

That's the only -- that's the only other side of the case.

Justice Hugo L. Black: Their willingness to do what?

Mr. James W. Wrape: The only thing that the protestants put into the record was their willingness, their ability, and the establishment of their service.

Justice Hugo L. Black: You mean their willingness to establish a kind of service that you were giving and to spend the money necessary to do it, is that what you mean?

Mr. James W. Wrape: Well, their willingness to handle the traffic.

I was going to get to that Mr. Justice, and it might be a good place here.

Justice Hugo L. Black: But I -- I didn't mean to interrupt, but I didn't understand the “willingness” that (Voice Overlap).

Mr. James W. Wrape: Well, they are willing -- able and the willingness, ability and willingness of course was the old test that was --

Justice Hugo L. Black: Service, in general --

Mr. James W. Wrape: Yes.

Justice Hugo L. Black: -- but I'm talking about this special (Inaudible)

Mr. James W. Wrape: They are talking about service, in general, yes sir.

Justice William J. Brennan: They could -- they -- it was on the evidence that they could dedicate equipment to this --

Mr. James W. Wrape: I have challenged the Commission in each step of this proceeding to point out one fact of record upon which they based their conclusion that U.S.A.C. said they would dedicate equipment to the use of Boeing.

Justice William J. Brennan: Well, could they -- that the common carrier --

Mr. James W. Wrape: The Commission says yes.

If they will dedicate equipment to every other shipper in the United States who also asks for it, they could do it.

I have no quarrel with that.

I do not think it is important to a settlement of this case.

But as I say, I challenge that statement of the Commission and there is no basis in the record, there is no testimony except Mr. Decker's on behalf of U.S.A.C and the only thing he says in response to -- he has an affirmative answer in response to a question of counsel, “Would you station a modified trailer in Indianapolis?”

And he said, “Yes.”

He does not say, “I will dedicate this to the exclusion of some six or seven other shippers” he bragged about having in Indianapolis and saying he was serving in order to prove his ability to perform this kind of service.

He never does say in this record that, “I will dedicate a piece of equipment to the use of Boeing,” in the same way that J-T says, “Here it is.

You use it.

You dispatch it.

You operate it.

You just tell us what to do and we'll do it for you as the same as you do it yourself.

And that is what it amounts to.

Now --

Justice Felix Frankfurter: (Voice Overlap)

Mr. James W. Wrape: -- counsel for the Commission -- sir?

Justice Felix Frankfurter: Refresh my recollection, did the District Court sustain you in saying that there was --

Mr. James W. Wrape: Yes, sir.

Justice Felix Frankfurter: That there was no evidence that the protestants could perform this very service --

Mr. James W. Wrape: Yes, sir.

Justice Felix Frankfurter: That was bringing to be facilities to give the service --

Mr. James W. Wrape: That's the only interest that you can take from -- I don't think they setup networks.

They set the data and didn't agree to dedicate.

They caught it the same as we did because we argued it before the court.

Justice Felix Frankfurter: In other words, the word “dedicate” is any kind of final label that gets (Inaudible).

The District Court say, there was no theory that the protestant common carriers could furnish, willing, and able to furnish the very service which the shippers needed.

Mr. James W. Wrape: When you say service, I heartily agree with you, sir.

Justice Felix Frankfurter: Pardon me?

Mr. James W. Wrape: When you say service, I heartily agree with you.

Justice Felix Frankfurter: Just because that they couldn't furnish the service.

Mr. James W. Wrape: The service, yes sir.

Justice Felix Frankfurter: And that there is no evidence in the record that they could put themselves in the situation to give the service that Boeing needed.

Mr. James W. Wrape: They said that -- the court said that the record didn't support a statement that U.S.A.C could meet the distinct needs of Boeing or the needs of Boeing or as disclosed by the record.

I think you'll find that sir at page 177 in the record which contains the court's decision.

It is right -- about the first five lines, sir.

Let me get back sir to my argument.

I do not have very much time.

The -- there's only one protestant here and that's U.S.A.C.

I'm figuring we have the railroads and we had three or four heavy haulers who wanted to give a multiple line service.

After the recommended report which recommended the granting of the application, these so-called heavy haulers were satisfied with it, realized they couldn't meet the needs and filed no exemptions.

The railroad objected to the recommended report because they said the commodity description was too great, it was for airplane parts, and they wanted -- restricted the landing gear bulkheads to which we agreed, and from that point on, we only have one protestant and that is U.S.A.C. Transport Company.

Now, the U.S.A.C. Transport Company were fortunate enough to secure an early certificate from the Commission.

They can transport aircraft parts, untraded and traded, between all points in the United States east to the Mississippi River, and between all points in that vast area on the one hand, and all points west of the river on the other.

So if their mere existence is to be taken as a basis for a denial of a contract carrier application, you can see it is impossible that there ever would be any extension of any contract carrier aircraft service.

Now, I think I have touched and I think I hope I have demonstrated that we have no question here about deadheading of equipment.

That is, if U.S.A.C. was able to get this business, they could utilize some empty miles because they can't.

You have to have the same number of miles in the use of the unit in each direction because one way, you haul a complete trailer load of fixtures and the other, you'll haul the fixtures with the components in it.

Now, Mr. Solomon in his testimony said that there were two reasons why he didn't go to U.S.A.C. One was this general dissatisfaction with prior service and he specifically gauged specific instances.

And the second was a tariff provision.

That tariff provision reads and I quote, “The determination of the equipment to be used to transport any shipment efficiently and safely shall rest exclusively with the carrier.”

In a most unusual statement, the Commission says, “That does not mean anything.”

The representative at the hearing says, “We will provide a piece of equipment and dedicate them.

Well, of course, the record does not show that he said they dedicate it.

And anyway, no matter what he says at the hearing, as this Court has always held and as the Commission has maintained, it's the rules in the tariff that count, that's the contract of the common carrier with his customer, and he can't bury that by anytime of an oral agreement under oath in a hearing or otherwise.

Now --

Justice Potter Stewart: Wasn't there a third reason advanced by the shipper for not wanting to utilize as they see and that -- that was the lack of a terminal --

Mr. James W. Wrape: Location for the terminal, yes, sir.

Justice Potter Stewart: And those were the three regions (Voice Overlap).

Mr. James W. Wrape: Yes sir.

Now as I stated, the examiner, immediately after the hearing, served his recommended report, recommending the granting of the application.

Before the report, before that report came out, in fact, before the hearing, the Commission had granted to the applicant a temporary authority to engage in the very operation that's here involved.

That authority was granted under Section 210 (a) which required a proof of an urgent and immediate need and a showing that there was no carrier service capable of meeting that need.

The Commission granted that temporary authority over the violent objection of U.S.A.C.

It's still effective by reason of the Administrative Procedure Act.

Now, here is something that you haven't heard and something that I believe is most important in this case.

In the first Commission report which was served on January 31, 1958, the Commission, the record shows that the Commission took six printed pages in which to adopt the recommended report of the examiner to restate the facts and then to proceed to deny the application stating and I read the one paragraph, “Here is the basis for the denial of this application in the first report.”

Justice Hugo L. Black: What page?

On page, what?

Mr. James W. Wrape: Page 26, sir.

And this is the real reason why the application was denied in the second report.

The Commission says, “The burden is upon the applicant seeking contract carrier authority as well as one seeking common carrier authority to establish among other things that there is a need for the service proposed which existing carriers cannot or will not need.

A service not needed, cannot be found consistent with the public interest, or the National Transportation Policy.”

Now, following that decision, we filed a petition for reconsideration on what the full Commission was denied.

Then we went to Court.

We filed a suit in the same District Court at Kansas City where there was a final adjudication.

That was on August of 1959.

After we got the suit filed and before the answer date, the Commission came up with a decision in the so-called Leary case that is cited at Mr. Todd's brief.

They there applied somewhat the criteria in Section 209 as we thought it should be and we thought perhaps they had finally agreed that there had been an amendment.

And incidentally in the first report, there is not one mention of the amendments of 1957, although they have been effective for three months when that order issued.

They simply ignored and decided it on the same basis that they always have.

Well, after the Leary case came out and then -- it appeared that perhaps they were going to apply these standards setup in 209, we filed a successive petition.

That is one that is not ordinarily allowed under the rules and we filed it while the case was still in Court, much to our surprise and we were very happy.

The Commission promptly issued an order setting aside and reopening the -- or issued an order reopening the proceedings for further disposition on the same record.

So, we by agreement with the Interstate Commerce Commission and the other parties, we took a nonsuit without prejudice in the District Court.

Then along came the second order which is the one that has been discussed here.

We found out of course that when we filed that successive petition, we made our first mistake, because it gave the Interstate Commerce Commission its opportunity in the second order to prepare and file its first brief in this litigation.

We say that the second order is simply -- well, first, in the second order, in the head note, which the Commission prepares, it starts out and it says, “We affirm our decision in the first order.”

In the second order, they specifically provide in the order itself that the first order is still valid.

Now, in the second order, they are trying to explain what was so clear and cogently stated on -- in the first order that the reason why the application was denied was because there was an existing carrier.

Now --

Justice Felix Frankfurter: That was the whole Commission on the reconsideration, wasn't it?

Mr. James W. Wrape: Yes, sir.

Now sir, you say the whole Commission, it wasn't --

Justice Felix Frankfurter: I agree, I remember what he said but it was before the Commission as an entirety.

Mr. James W. Wrape: Yes, sir.

Well, the first one that's done before the Commission entirely, do they denied our petition for reconsideration.

Justice Felix Frankfurter: I thought it was before Division 1.

Mr. James W. Wrape: The -- Division 1 wrote the order but the full Commission denied our petition to reconsider that order, so it was their order.

Now, the second order is only the order of four Commissioners.

The other 11 Commissioners either didn't participate or they concurred with -- separating --

Justice Felix Frankfurter: We didn't sit, Commissioner MacPherson dissented, Commissioner Webb concurred, Commissioner Freas concurred and result Commissioner (Inaudible)

Mr. James W. Wrape: (Inaudible) Freas and Commissioners --

Justice Felix Frankfurter: There were eight -- three didn't participate, so I suppose there were eight left, aren't there?

Mr. James W. Wrape: There were seven, sir.

Justice Felix Frankfurter: Seven.

Mr. James W. Wrape: And four of the seven, it is their report and not the report of the others.

Now sir, I do not think that, in view of the time, that it would do anything for me to discuss the findings of the Division.

It's there before you.

I think, as the Court said, it's apparent that they were simply giving reasons in lawyer's language, not administrative language as to why their first decision was valid.

Now, we filed a second suit and we presented it to Circuit Judges Johnson and Mathes and District Judge Smith.

And their decision is like, what is the decision that is now before you?

That decision -- I have no apologies to make for.

I believe it is a fine decision and it stands on its own feet and needs no defense from me.

Justice Felix Frankfurter: Well, there is a difference between saying the Court rule because there was a lack of evidence and saying thereby the wrong standards, isn't it?

Mr. James W. Wrape: Yes, sir.

And the --

Justice Felix Frankfurter: Now what -- what does the Court decide in your rule?

Mr. James W. Wrape: The Court says, “With respect to the Commission's findings on criteria 4 that they applied the improper standard.

Now, the gist of that Court decision, I think I can state very briefly, I've been living with it for a long time.

It does not hold that the Commission cannot or shall not consider the existing -- the existence of protesting carriers, the willingness and ability of protesting carriers or the adequacy of the service of the protesting carriers but it simply says that those factors cannot be considered in lieu or instead of the five additional standards prescribed by 209 (b).

Now, I can well understand that the Commission in beginning to consider criteria three, that is the effect of the granting of the application upon the services and that's an important word, of protesting carrier.

They first have to determine that there was a carrier.

Then that that carrier was willing and able to perform a reasonably adequate service.

All right, now having found that, they proceed to the real question.

What is the -- what rule granting of the effect?

What effect will a granting of the application have on the services in view of the fact that the first three factors were answered in the affirmative.

It does not -- if it's not adverse, we stop right there.

If it is adverse, then they weigh that along with the other four.

Justice John M. Harlan: Do you say they don't -- you say they stop and didn't consider 4 as well as 3?

Mr. James W. Wrape: No sir, no, they've got the 4.

But when, they've got to 4, they answered four by saying that the service of U.S.A.C was adequate.

But that's not -- that's not the question.

Justice John M. Harlan: Or it's just one side of the coin, isn't it?

Mr. James W. Wrape: No sir, no, it is the effect -- a denial would have on the shipper.

Now, this case that we gave you today is a perfect example of what is meant by criteria 4.

In the G & A case, the shipper had three plants.

They were all served by common carriers.

The applicant served two and he wanted to serve the third because they wanted to mix the loads and have split loads, split pickups, and split deliveries.

So, and the reason why the shipper wanted that was because of economic reasons and his distribution reasons.

So a denial of that application would have severely and adversely affected the shipper because he would not be able to practice the most economical operation are the best distribution plans.

I have taken up way more than my time.

Justice Felix Frankfurter: Mr. Wrape, if you are right that the protesting carrier couldn't have furnished, didn't make either case showing his ability to furnish the service that Boeing needs, then we don't get to the question of standards at all, do we?

Mr. James W. Wrape: Oh, but let's still get to the question of --

Justice Felix Frankfurter: Well, I --

Mr. James W. Wrape: -- standards, and let's settle it.

Justice Felix Frankfurter: I know.

Mr. James W. Wrape: I think certainly, if it's a -- it is a very simple case to --

Justice Felix Frankfurter: But if --

Mr. James W. Wrape: -- decide by the application of those standards.

Justice Felix Frankfurter: But you say there is no evidence that the -- that the protestants could do what the contract carrier did in what they needed, if that is so, it doesn't answer the case.

Mr. James W. Wrape: No, Mr. Justice.

I know that they could take one of these components and lay it in their truck and haul it from one place to another.

But that's not the dis -- that will meet the distinct need.

Justice Felix Frankfurter: Alright, therefore, if they don't meet the distinct needs, that's the end of the case.

Chief Justice Earl Warren: We'll recess now.

Print this transcript Transcript: 

Argument of Robert W. Ginnane

Chief Justice Earl Warren: Atchison, Topeka & Santa Fe Railway Company et al., Appellants, versus Elvin L. Reddish et al. and Number 53 and 54.

Is Mr. Rice or Mr. Ginnane first?

Yes sir.

Mr. Robert W. Ginnane: Mr. Chief Justice, may it please the Court.

I'm appearing on behalf of the Interstate Commerce Commission, and I am sharing my time with Mr. Rice who is the counsel for the rail and motor carriers who intervene in the proceeding before the Commission and in the court below.

This is a direct appeal from the final judgment of a three-judge court in the Western District of Arkansas.

That judgment set aside in order of the Commission, which denied the application of Mr. E. L. Reddish for a contract carrier permit.

This case, like the prior J-T case involves recurring and important questions as to the relative rules of common carriage and contract carriage in the public transportation system.

He's the coordinator of transportation as pointed out back in 1934.

These problems plagued state regulation prior to federal regulation.

They were an issue when federal regulation begun in 1935.

They were again posed in the litigation before this Court in the Contract Steel Carriers case and they were posed again, we think by the lower court's interpretation of the 1957 Amendments which followed this Court's decision in the Contract Steel Carriers case.

Like J-T but upon different facts, this case involves the question of whether in determining an application for a contract carrier permit, the Commission is precluded from considering an affirmative showing by protesting common carriers that they are able and willing to provide an adequate service to the shipper.

The case also involves two additional questions, questions which are not common to the J-T case, whether the Commission's findings as to the effect of a denial upon the supporting shipper were supported by substantial evidence and whether in determining the effect of a denial upon the shipper.

Justice Felix Frankfurter: Would you mind repeating the first question that is --

Mr. Robert W. Ginnane: Whether the Commission's findings as to the effect of a denial upon the supporting shipper are supported by substantial evidence.

Justice Felix Frankfurter: And you say that was not involved in the other case?

Mr. Robert W. Ginnane: But on different facts.

Justice Felix Frankfurter: Oh yes.

I thought you said there are two additional problems here?

Mr. Robert W. Ginnane: Yes.

But this is an evidentiary problem peculiar to this case.

That's all I meant to say.

The third question is whether in determining the effect of a denial on the shipper, the Commission must give consideration to the proposed lower rates of the applicant for a contract carrier permit.

This all began in May 1958 when Mr. Reddish applied for a contract carrier permit.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: To the lower rates or the proposed lower rates.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: Well, on this record, it must be rates because there were no costs in the record at all and not too much on rates.

And the way the court below put it was in terms of rates reflecting inherently lower cost but with nothing in this record on anybody's cost.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: But there was nothing in there as to what per se these were, just generalities.

And as I say that there -- I will point out shortly, there's very little in there as to what the actual rates were for that matter to say nothing of the cost.

Chief Justice Earl Warren: Did the Commission propose to hear parties on that issue?

Mr. Robert W. Ginnane: The Commission in the hearing before the hearing examiner, there were some evidence offered on cost and it was not excluded.

Chief Justice Earl Warren: It is what?

Mr. Robert W. Ginnane: Not excluded.

I mean evidence as to rates was received.

The Commission on its report held that in this, as in other cases involving determinations for applications for either common carrier certificates or contract carrier permits, it would not go into the matter of rates.

That would restrict this determination to the issues of service.

They say Reddish applied for a contract carrier permit to transport canned food, mostly seasonal vegetables for three canning companies in Springdale, Lowell and Fort Smith Arkansas and Westville, Oklahoma to customers located at points in 33 states, and to move materials and supplies used in canning from points in 30 of those states back to the four manufacturing points.

And the geographical scope of the requested authority is pretty well-Illustrated in a map which appears in the record at pages 32 and 33.

After the usual administrative proceedings, Division 1 of the Commission issued its report denying the application, and a petition for reconsideration was denied by the entire Commission.

Thereafter, the three-judge court set aside the Commission's order, remanded the case to the Commission for proceedings consistent with that Court's opinion.

The court below held first that that 1957 Amendments to Section 209 (b) forbid consideration of the adequacy of legal service in determining whether a denial of a contract carrier application would adversely affect the supporting shippers.

Well that's in the record at page 406, and however, secondly that the denial of the application would so if found adversely affect the supporting shippers as it found, and as the Court found that they required a special service which could not be supplied by existing common carriers.

And finally, that Court held that the Court must consider the lower rates of a contract carrier service in evaluating the effect of a denial upon the shipper.

I'll try to summarize the facts fairly.

There's no real dispute over them but in places they're vague and honest man can interpret them differently.

The Steele Canning Company is the principal shipper supporting the Reddish application, and one of their officers was by far the principal witness.

Steele normally buys and distributes about 75% of the output of the other two shippers, also vegetable canners.

Steele sells its merchandise through food brokers, to wholesalers, chain stores and the larger supermarkets.

They do not sell to the corner grocery stores as suggested in the Department of Justice's brief.

They're substantial canners and they sell to substantial customers.

He testified that the majority of Steele's customers, roughly 80% of them, buying orders from 3,000 to 10,000 pounds per order.

3,000 pounds will represent 100 cases.

We hold our minimum to a 100 case shipment.

Steele's represent and testified that a number of its larger customers by 10 days supply where 10 years ago, they'd buy a truck load.

That way, they can operate on the canner's money.

I think that's a little bit of the ultimate economic background with some of these transportation situations.

The canning business is competitive with narrow profit margins.

Steele's competitors in the Arkansas Valley and nearby points use a combination of private carriage for smaller shipments plus common carriage.

Steele's customers placed their orders principally by telephone and often for delivery on specified days or even specified times a day.

Steele testified that we used common carrier and straight truckload shipments and on many shipments that have a destination and two intermediate stops.

The supporting shipper's, Steele and the others stated that they would continue to use common carrier service on truckload shipments, even if registered application were granted.

Now, there's a history to this transportation.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: The supporting shippers stated that they would continue to use motor common carriers for truckload shipments, full of truckload shipments even if the Reddish application were granted.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: They are in effect so they would not.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: That would resort to private carriage.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: Yes.

The history of this transportation is something like in the Drum case last week.

In 1948, Steele started to transfer its small shipments in consolidated lots, in its own vehicles, private carriage bona fide private carriage.

And he continued that until 1958, when he encountered labor difficulties, which resulted in a sharp reduction in his contract and his private carriage operations.

And it was at that point that on Reddish's application, the Commission authorized Reddish to perform a temporary service authorized in temporary authority to serve Steele as a contract carrier, a temporary authority which is still in effect pending the outcome of this litigation.

The shippers testified that they could not use the less than truckload services of the protesting motor common carriers for various reasons.

First, that although small shipments must be carried, as a matter of economics and consolidated truckloads, a common carrier often cannot carry consolidated loads because it doesn't serve all the destinations.

That is of the different points, it will have to breakup the consolidated loan for interline or interchange with other carriers that do serve the destinations.

Secondly, they alleged, although in somewhat general terms, that such interchange when they used more than one carrier can result in delay, increased likelihood of damage and misconsignment of shipments.

And finally, they alleged that the protesting motor common carriers will handle such LTL shipments only at rates higher than truckload rates.

In its report, the Commission purported to summarize the general position of the shippers as follows.

This is in the record at page 390.

Steele's representative expressed the opinion that it would be forced out of business, if it had to ship the numerous small orders of canned goods in less than truckload quantities at less than -- at less than truckload common carrier rates and that successful operation of its business necessitates the movement of this traffic in consolidated loads either by private carriage or in for-- hire transportation at truckload at rates.

There wasn't too much specific evidence as to rates.

Looking at the Reddish's brief and the citations which he gives, they refer the Court to pages in the record which show his rates to a few points in Ohio and it's cited as showing that he was performing to those points, pooled truck movement of small shipments at a cost to the shipper, at a rate comparable to the truckload rate of the motor common carriers.

Also the Steele representative testified year rates addressing the cross-examiner, year rates on LTL shipments are prohibited in the most points.

But later, he was asked to explain that and he said, “I mean those rates and certain occasions are two and three times as high as truckload rates,” But without further elaboration or detail.

Now, the testimony of the protesting motor carriers that is set forth in detail carrier by carrier in the examiner's report which is put in the record.

It was summarized in the Commission's report at pages 391 and 392 of the record as follows; by either direct or joint-line service, motor protestants can provide service to substantially all the points involved herein.

Each of the opposing motor carriers, except Nelson Brothers, as a common carrier and each operates a substantial amount of equipment suitable for the transportation of the commodities here involved.

Although, shippers have knowledge of the availability of service from several protestants, none of the protestants has participated in the involved traffic.

All have expressed an interest in participating in this traffic either as initial or connecting carriers on both inbound and outbound shipments.

They have handled both large and small shipments of the type of traffic here involved, and are willing to provide multiple pick up and delivery where authorized.

So in that context, more or less undisputed facts, the Commission turned to apply the criteria in Section 209 (b), the five criteria that were referred to this morning.

Looking at the number of shippers to be served by Reddish, the Commission concluded that his proposal to serve only three shippers failed within the definition of contract carrier in Section 203.

Then turning to the nature of the service proposed, the second criteria, the Commission noted that the shippers require a motor carrier service for the transportation of less than truckload shipments of canned goods providing multiple pickups and deliveries.

They had found protesting carriers are authorized to serve the origin points involved and either directly or through interchange, a numerous points in a vast 33-state destination territory in which applicant desires to operate.

The service required by the shippers, the Commission found, does not seem to be in any way different from that which motor common carriers are rendering daily to countless other shippers of the same or similar commodities.

This appears to be a situation of which the service proposed and shown that when needed could be performed by protesting common carriers as well as by the applicant.

And we submit that those applicant --

Justice Felix Frankfurter: May I interrupt Mr. Ginnane?

Mr. Robert W. Ginnane: Certainly sir.

Justice Felix Frankfurter: If you read that statement about the common -- protesting carriers perform this kind of service, would you mind reading that again?

Mr. Robert W. Ginnane: The Commission found the service required by the shippers does not seem to be in any way different from that which motor common carriers are rendering daily to countless other shippers of the same or similar commodities.

Justice Felix Frankfurter: In seeking all the irrelevant factors into account --

Mr. Robert W. Ginnane: Yes.

Justice Felix Frankfurter: The geography, the same states, et cetera?

Mr. Robert W. Ginnane: Well --

Justice Felix Frankfurter: Not that there are common carriers in New England who do this as against common carriers in the South.

I don't know if there's a difference or not, but I think those were take into account.

Mr. Robert W. Ginnane: Yes, and of course one thing that they would be taken into account would be that in sharp contrast with J-T and the highly specialized articles thereabout.

We are now dealing with one of the most common items of Commerce in the country, canned food.

It moves in Commerce in a volume which I would say can be exceeded only by a coal, grain and perhaps automobiles.

A huge volume of canned food moves in Commerce.

As an example, the railroad share in 1958, under a bureau of the census study, the railroad share was estimated to be 9 million tons.

Now, this commodity, canned food, whether it's transported by the applicant Reddish or by the protesting motor common carriers is going to be moved in ordinary garden variety trailers.

Trailers pulled by a tractor and no special equipment is -- it doesn't have to be refrigerated or anything like that.

This could be carried anything from a wheelbarrow or not.

It's been carried through the years by all types of carriers.

As of 1958, a bureau of the census study which is referred to in our brief, showed the railroad as of that time holding 42% of canned seasonable vegetables for higher carriers at 19% and private carriers at 36%.

As of 1958, private carriage had dominated the haulers up to 250 miles but the longer haulers, the railroads tended to dominate particularly to their extreme distances with the for-hire motor carrier sector.

And there's another conclusion we draw from that that by no means, all of the competitors of these supporting shippers are relying solely upon private or contract carriage, in immense number, must even be used in the relatively inflexible railroad services.

In these circumstances, the Commission considered the effect of a grant upon the protesting carriers.

At that point, it relied primarily upon its own prior decision, the J-T case concluding that authorization of a new carrier to transport this traffic which the protesting common carriers could efficiently handle would have an adverse affect upon it.

Now, whether or not the Commission properly applied Section 209, in so concluding was argued fully in J-T.

Next, the Commission considered the effect of a denial, a family applicant and the supporting shippers.

And in so doing, it rejected or certainly it heavily discounted the shippers' complaints about the inadequacy of the service available from the existing common carriers, the protesting common carriers.

The Commission concluded, and this is in the record at page 394 that aside from evidence pertaining to rates, the record is devoid of any substantial showing of dissatisfaction on the part of the shippers with existing service.

Complaints about joint-line service, slow transit time and inability to arrange multiple pickups and deliveries are of a general nature and are substantiated by reference to specific instances.

Now, although protested motor carriers, especially those operating of a regular roots maybe hindered in some instances by their authorities and the nature of their operations from achieving complete flexibility in affecting pickups and deliveries.

The supporting shippers have failed to show that they have been unable to obtain reasonably adequate service upon request.

The Court below at that point held the contrary.

It said, and this is at page 406 in the record, the record clearly shows that the shippers have not used the services of the protesting carriers because these services are inadequate.

The Court below also held and this is at page 410, that the shippers required special service which could not be supplied by a common carrier.

Now the Commission erred as a matter of law in equating the reasonable service of the existing common carriers with the special service which the court found that the shippers needed.

Now, leaving the question of rates aside, we submit that that rationale of the Court below presents a very serious problem for the entire common carrier industry, rail and motor alike, and that's because we're dealing here with a commodity which requires no special equipment or handling, which is one of the largest freight movements in the country.

We're dealing with an application to transport it for substantial shippers to points in 33 states.

We say that if the Commission must grant such a broad application or such a common commodity and on such a generalized showing, it will have to do so in similar cases because on this record, evaluating this record, it's fair to say that any shipper of canned food can make the same general criticisms of common carrier interline service on less than truck line shipments, and any such shippers could testify as Steele did that he and his customers would like fast, single line service on less than truckload shipments and at truckload rates every shipment in the country would like it.

Justice Felix Frankfurter: Well, like it because interline -- because shipping from one carrier to another involves delay uncertainty.

Mr. Robert W. Ginnane: It often does, it often does.

Justice Felix Frankfurter: (Voice Overlap)

Mr. Robert W. Ginnane: It often does.

As a generality, one line service by a single carrier from origin to the ultimate destination is faster than interline service.

Justice Felix Frankfurter: Well, what was the volume of the Commission, from what you have read, the Commission said that these were generalized.

Now, what specifically was the evidence that the Commission rejected on the part of the shippers that this really isn't meeting their needs?

I don't mean that its perfection, nothing as perfect as well I suppose.

But this isn't meeting their needs and the common can't play in which one would use that phrase.

Mr. Robert W. Ginnane: Well, a bit later in his report, the Commission concluded that the shipper's real complaint was over rates not over service and that's to service.

Justice Felix Frankfurter: But the District Court you say went on the ground that the record clearly established.

That means that there wasn't room for a contrary judgment by the Commission that straight line shipment, straight line transportation is advantageous.

Now, the question is that it's sufficiently advantageous as to make -- if you please the qualitative difference, I should think that's important, isn't it?

Mr. Robert W. Ginnane: I would reply this way, that in this generalized evidence and some of those at page 194 and 195 and again at 198, that the court below made an independent evaluation of that.

We submit that it was sufficiently general that the Commission was not compelled to accept it as a sufficient demonstration that the service of the existing common carriers was not reasonably adequate.M

Justice Felix Frankfurter: Like you said a minute ago yourself that no doubt that straight line transportation is preferable.

Now, how heavily preferable?

To what extent preferable?

Mr. Robert W. Ginnane: That would vary from case to case.

It would vary for example as to whether you had to interline with a total of three carriers or whether just two.

The motor carriers involved in the interchange --

Justice Felix Frankfurter: What exactly this issue canvassed dealt with to a testimony and for experienced over a period of month if not in a year, et cetera, et cetera?

Mr. Robert W. Ginnane: It's dealt with some generalized examples at pages 194 and 195 of the record, and began at about 198, but I think (Inaudible) will indicate that the Commission was entitled to call it unsubstantiated generalities or at least not going beyond the objections which anybody will have to a less than single line service for all of their shipments.

Chief Justice Earl Warren: Was there a testimony contrary to this that you pointed out to us here on 195, 196 and 197?

Mr. Robert W. Ginnane: My recollection is that there was not, there was not.

Justice Charles E. Whittaker: And Mr. Ginnane that the average stops and deliveries here was about six per trip on these LCL loads?

Mr. Robert W. Ginnane: Five or six, yes.

Justice Charles E. Whittaker: And that the most -- that a common carrier or through line hauler could efficiently handle would be two or three?

Mr. Robert W. Ginnane: Well, the evidence on that was from Steele's representative who testified that they had used common carriers not only for truckload shipments but also for shipments which involved deliveries at two intermediate lines in addition to that destination.

That was a precise testimony on that one.

Justice Hugo L. Black: Did the carrier show inability to do more than that?

Mr. Robert W. Ginnane: For our great many of these points, there's no question, they would have to interchange with other carriers and no one of these carriers are on protesting motor common carriers, serves more than the best, a good fraction of this 33-state area and no motor common carrier of the country does.

We're talking about three quarters of the United States now being covered by this application.

Now, for a great many points in that 33-state area; there would have to be an interchange of at least one carrier, maybe two.

It was not developed in detail but we can say that just from the size of the area involved.

Justice Hugo L. Black: The testimony for the applicant was if they could do it directly.

Mr. Robert W. Ginnane: That they could do it directly.

It wasn't too specific but obviously what they would do, they would accumulate shipments for a series of points more or less approximately in the line and they then carry them through and drop them off as they went.

And then of course, they would -- because of course they couldn't take a one time shipment by itself in Arkansas, the New Jersey City and they don't pretend to.

Now in the long run, economic forces, not the Interstate Commerce Commission and not the Congress, are going to determine whether this huge chunk of traffic is going to be carried primarily by railroads or motor carriers or private carriers or contract carriers.

But in the meantime, I don't think the Commission has to accelerate that, if that is the trend.

I don't think it has to accept a shipper's statement at face value that if he doesn't get a contract carrier service, he's going to grant for private carriage and perhaps he will and perhaps he won't.

The case was before this Court two years ago, the General Motors Corporation was stating that well they might go into private carriage, well they did.

And this Court properly reminded the Commission that it shouldn't rely too heavily on the trucks or shippers as to what they would do if they didn't have their way.

And as the Drum case last week, and as Mr. Steele's experience in this case shows, it's one thing to talk about private carriage but it isn't always a bed of roses.

And under those circumstances –-

Justice Felix Frankfurter: Well, is it if we take into account anything that promotes private carriage is to be discouraged?

Is that also National Transportation Policy?

Mr. Robert W. Ginnane: Not to be discouraged in any affirmative sense because the Interstate Commerce Act leaves every shipper free carry his own goods.

But conversely, the whole National Transportation Policy is to encourage the development of a system of public transportation which can serve all of the shippers reasonably and economically.

And in this context -- sir --

Justice Charles E. Whittaker: I would like to understand that here the Commission approved the findings of the examiner but did not follow his conclusion?

Mr. Robert W. Ginnane: They approved his findings except as they otherwise indicated in their own report which they often do.

Justice Charles E. Whittaker: And --

Mr. Robert W. Ginnane: May I give you an example of that?

Justice Charles E. Whittaker: Yes.

Mr. Robert W. Ginnane: He had the pages of detailed findings as to the statement especially testimony of the protesting common carriers.

The Commission didn't reject that.

It adopted it.

In its own report, it simply summarizes its purposes in one paragraph.

Justice Charles E. Whittaker: Did he find -- the examiner's found that there were special conditions relative to the delivery of these canned goods that these various shippers had rules where they must receive from a particular time for example?

Mr. Robert W. Ginnane: Yes, I refer to that in the statement I think that some -- Steele's representatives testified that some of his customers, he did not say how many, but presumably quite a few required deliveries on certain days and that some would require shipments at specified times a day.

I suppose do you know to tie in with the availability of the shipper's own work forces.

I think that would be rather common in the --

Justice Felix Frankfurter: Did the common carriers meet that requirement?

Mr. Robert W. Ginnane: I suppose to some extent, they have to.

Justice Felix Frankfurter: But I don't mean --

Mr. Robert W. Ginnane: I mean many shippers --

Justice Felix Frankfurter: I don't need to go in your general knowledge Mr. Ginnane.

I mean, is this canvassed in this – I thought we are reviewing a proceeding which --

Mr. Robert W. Ginnane: Not in --

Justice Felix Frankfurter: (Voice Overlap)

Mr. Robert W. Ginnane: -- not in that kind of detail Your Honor.

Justice Charles E. Whittaker: Well, didn't the Commission -- didn't the examiner find that the common carrier service couldn't meet that kind of special condition and that it could be not only by a contract carrier --

Mr. Robert W. Ginnane: That was his conclusion.

Justice Charles E. Whittaker: The Commission -- the examiner's conclusion.

Mr. Robert W. Ginnane: The examiner's conclusion.

Justice Charles E. Whittaker: Yes.

You call it conclusion, I referred to it as a finding, I don't not know which it is

Mr. Robert W. Ginnane: Certainly.

And the Commission refused to give weight to what it regards as such a generalized objection as to common carrier service.

Justice Hugo L. Black: He refused to give weight or refused -- it set aside what he had found.

It refused to give weight to the fact or it just said that that's not a fact.

Mr. Robert W. Ginnane: No, it in affect said, that these complaints are not sufficiently substantial, and in fact, it discounted them as being the sort of complaint that anybody could make against interline service.

Justice Hugo L. Black: That would be a complaint that anybody would make because it's so plainly obvious that this thing would be advantageous or disadvantageous that anybody would do it.

Did they set aside these factual findings on or did they just discount it and then say, “Well, even so, we won't -- they're not patiently waiting.”

There's quite a difference to that.

Mr. Robert W. Ginnane: Well, I don't think they set aside.

They took his findings based -- which in turn were based upon rather generalized evidence.

And the Commission --

Justice Hugo L. Black: Suppose they would, if they set them aside because they were based on turn --

Mr. Robert W. Ginnane: I would say rather the Commission was evaluating that generalized evidence itself and stated that, “We do not think these objections are enough for us to hold that the services which could be provided by the existing common carriers would not be reasonably adequate.”

Justice Hugo L. Black: Now, if it rejected those finding, where did it rejected into the Court --

Mr. Robert W. Ginnane: It did not in terms reject those findings rather it itself characterized the limited evidence.

Justice Hugo L. Black: Did it make different findings?

Mr. Robert W. Ginnane: In substance, yes.

Justice Hugo L. Black: Where was that?

Mr. Robert W. Ginnane: On Page 394 Your Honor, in the second full paragraph about this sixth line, eight line.

The Commission concludes, aside from evidence pertaining to rates, the record is devoid of any substantial showing of dissatisfaction on the part of the shippers with existing service and it goes on to characterize or rather sparse testimony on this point.

It says, “Complaints about joint-line service” slow trends of time and inability to arrange the multiple pickups and deliveries are of a general nature.

Justice Felix Frankfurter: You refer to Page 198 and I looked at it, anyhow, it's on Steele, this past month, when that merchandize of interline especially get shifted from one carrier to another.

We have one awful time getting their merchandize at large.

This past month, we -- I've had complaint, we had one customer (Inaudible) ship is ordering a full load, shipped it in our trucks so it wouldn't be necessary.

But I should think withheld in the Universal Camera case that the Commission, therefore it was your Commission, administrative agency must not disregard the examiner's finding.

It must consider it as part of the whole record but it may -- or different conclusions from what he has before him.

Mr. Robert W. Ginnane: I don't think they reverse the examiner on any finding as to what the facts were.

Mr --

Justice Felix Frankfurter: Mr. Ginnane, do you think -- can you give me any hope that I might live long enough so that the Commission would make (Inaudible) on findings so that (Inaudible) have to go through looking for the (Inaudible) I just asked you if you could give any hope along that line.

Mr. Robert W. Ginnane: Oh I think that perhaps presumptions on my part.

But I think what the Commission has done in its report.

I think it's a quite permissible technique.

It has taken, for example that -- the undisputed but general testimony of Pooles (ph) representative and it just put its own characterization on it as not being sufficiently substantial in character to preclude the Commission from finding that the existing services -- existing carriers could perform a reasonable adequate service on this commodity canned food.

Justice Hugo L. Black: You're on the -- do you consider that 203 (a) statement with reference to the contract carrier, that furnishing of transportation services designed to meet the distinct need of each individual customer must to be passed on in each one?

Mr. Robert W. Ginnane: I don't know how to answer that except by getting into almost a semantic circle.

Justice Hugo L. Black: Of what?

Mr. Robert W. Ginnane: Semantic circle.

It seems --

Justice Hugo L. Black: Oh I'm not talking about systematic itself for the furnishing of transportation services designed to meet the distinct need of each individual customer.

Now, is there any finding here of any kind by the Commission which rejects the idea that this individual customer would not be greatly benefited by this service?

Mr. Robert W. Ginnane: Oh no, no indeed there was not.

Justice Hugo L. Black: If it's conceded that he would be -- I'm not saying that's to control.

Mr. Robert W. Ginnane: I think the Commission's report assumes that the kind of service which Reddish could perform and assuming what the record does sound that he could financially do so, that the service proposed by Reddish would be beneficial to the shipper because what was offered --

Justice Hugo L. Black: Would be designed to meet his special needs.

Mr. Robert W. Ginnane: Certainly, from the shipper's point of view, it would be the perfect service.

It would be the ideal that the single line shipment, single line transportation of less than truckload shipments at truckload rates.

Every shipment the country would like it.

Justice Hugo L. Black: Suppose it's not less than truckload rates.

It would be -- is there any doubt that there would be a distinct advantage to shippers who can get it to have a contract carrier who would give them less than truckload service?

Mr. Robert W. Ginnane: Alright, I think the report assumes that the shipper would be benefited.

But the report goes on -- but if under that rationale of the court below then the result would be to transfer from the Interstate Commerce Commission to the shippers to determine whether and when contract carriage is consistent to the public interest of the National Transportation Policy, and it could mean in a situation like this with this important commodity, that you turnover to the food canners of America.

The choice as to whether the --

Justice Hugo L. Black: I'm not talking about the food canner.

Maybe -- I'm not sure about what this means.

That's the reason I'm asking you the question.

Maybe it means that Congress decided that's what I want you to say one way -- or discuss one way or the other if you will.

Congress decided that contract carriers should be given through him.

That could be shown in reference to a particular need that could be carried out which was sufficiently enumerated to justify our contract carrier and forming the service if it was a distinct need it had.

Mr. Robert W. Ginnane: My reply is that Congress did not intend that in view of overall broad objectives, the National Transportation Policy to maintain a balanced, efficient system available to all the shippers not just to those who are able to get contract carriers for themselves.

Justice Hugo L. Black: What about a distinct type would -- could you say it would refer to a type?

Mr. Robert W. Ginnane: Mr. Justice Black, would you forgive me if I say that I feel honor bound to heal the rest of the time to Mr. Rice.

Justice Hugo L. Black: You could have answered --

Mr. Robert W. Ginnane: I'm sorry --

Justice Hugo L. Black: -- what I've asked you.

I just -- I'm not sure about this.

I was asking --

Justice Felix Frankfurter: It might be contended that Congress meant almost the opposite that it didn't say that a permit must be granted to a contract carrier whenever it would be to the advantage of a shipper to use the contract carrier.

That is not the legislation, isn't it?

Mr. Robert W. Ginnane: It's hardly the result.

We would have expected to come from legislation which was clearly intended to tighten up on what Congress thought was an excessive growth of contract carriage.

Thank you.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: I hope so.

I no longer have the time to do it sir.

Unknown Speaker: (Inaudible)

Chief Justice Earl Warren: Perhaps Mr. Rice will address himself to the lower rates question.

Argument of Roland Rice

Mr. Roland Rice: I hope to have some time, Mr. Chief Justice --

Chief Justice Earl Warren: Well, we've got time now, haven't we?

Mr. Roland Rice: We're coming right to the question of lower rates and I also want to deal with the other question, which has just been discussed.

It is said by the court below Your Honors that the Commission erred in not giving consideration to rate advantages and that this ought to have been done and that as I understand it, the court below believes that this alone should have been determined in this case.

First of all, the Commission has taken the position that rates ought not to be considered in these application cases.

I think the real reason for that is not so much that rates would then involve cost -- studies of costs which are extremely lengthy and expensive and time consuming.

It isn't that alone though that would be very hurtful and delaying in these proceedings.

Furthermore, to do it at this stage, it would probably mean that all the protesting carriers would have to bring in studies of their rates and cost studies which would further delay and complicate the matter.

I am inclined to think that a better reason for refusing to consider rate levels in the application proceedings is that the sole legal question before the regulatory agency at that time is a question of the service need, is there a need for service?

Not what the service is where but whether or not a need exists and to pass upon the various considerations which go to make up that need and to arrive at an administrative determination upon those facts as to a need.

The Commission has very properly said that if there is a question concerning the level of the rates that there are other provisions in the act -- the provisions that we call the rate provisions that are available to the parties for filing complaints and sometimes they are petitions for investigations and so on, whereby the level of the rate maybe brought before the Commission in a proper proceeding calculated to consider that issue and not the issue of a need for additional service or new service or advancing or extending service.

Justice Hugo L. Black: May I ask you -- if I understand correctly to say that the question of rates can never be considered in this kind of --

Mr. Roland Rice: In an application proceeding?

No sir, I do not say that they can never be considered.

Justice Hugo L. Black: I had in mind suppose there is a particular of type of service inherently so much easier performed that your knowledge rate would be less but you're not asking for fixing of the rates, would that not be a permissible element of consideration in determining --

Mr. Roland Rice: That might be but we do not have that here, Your Honor.

And furthermore, I think in the Schaffer case, this Court had such a matter before it or so indicated and furthermore, the Commission has recognized that if the level of the rate is such as to constitute effectively and embargo, perhaps rates ought to be considered then but we don't have that before us at this time.

Justice Felix Frankfurter: Are you saying that if in an application proceeding, the shipper must submit to a denial of the application and take on the common carrier and then bring a proceeding and say the common carrier to which you have preferably -- which I must now use unless I become a private carrier, as to why unreasonable rates and they have to begin rate -- unreasonable rate proceedings?

Mr. Roland Rice: If I understand your question, you're assuming that he would two things that he would support an application for new rights and also would file a complaint.

Justice Felix Frankfurter: But he would -- that he would -- a shipper would support this application but the Commission says, “No you can't have this more favorable mode of transportation, this contract carrier.

You have to resort to a common carrier” and then he must bring a proceeding and pay the rates to which I'm subjected because I must use the common carrier if I don't want to go into the private carriage business too high and that will bring a regular rate proceeding to lower the rate, is that it?

Mr. Roland Rice: No, I'm not saying that he should go through both of those, I'm saying that --

Justice Felix Frankfurter: Perhaps if the rates are onerous.

Mr. Roland Rice: Well, he wouldn't' have to try first of those.

If the rates are onerous and he doesn't like them, he can file the complaint against the rates but it's not --

Justice Felix Frankfurter: That's what I'm talking about.

He must file -- he loses, the shipper loses in the application proceeding to get a more favorable private contract carrier as a mode of transportation.

He loses in that, and must therefore either do his own carriage or take the common carrier who has or which has onerous unreasonable rates, he must begin all over again in a rate proceeding, is that right?

Mr. Roland Rice: You said if he loses.

Justice Felix Frankfurter: Well, I'm assuming he lost --

Mr. Roland Rice: Yes, yes, that would be the procedure to be followed.

But of course, you've got this fact in this particular case, that they had not used this common carrier as a great deal and there's no evidence here at all that they had made any complaint about the rates and no evidence --

Justice Felix Frankfurter: I'm assuming it's established.

Is it established that the contract carrier rate would be cheaper?

Is that the --

Mr. Roland Rice: Not established.

Justice Felix Frankfurter: Pardon me?

Mr. Roland Rice: Not established.

Justice Felix Frankfurter: Do you accept that or do you reject that?

Mr. Roland Rice: I reject that personally.

Justice Felix Frankfurter: Then we're talking about a hypothetical case, are we?

Mr. Roland Rice: In the question you put, that's my understanding, yes.

Justice Felix Frankfurter: I mean the case before us, isn't the case where concededly the contract carrier's rate would be less than the common carrier's rate.

Mr. Roland Rice: Only in a few instances, and that's all that it says Your Honor.

Justice Hugo L. Black: Are you rejecting Mr. Ginnane's argument, which I understand the basis and part on the fact that what they were really trying to get here was cheaper rates?

Mr. Roland Rice: No, I'm accepting that fact, and the Commission so found.

The Commission after looking at all of this evidence came to the conclusion that all the -- all the facts considered, all the elements of the law that the Commission had to look at, that the one important complaint these shippers had related to the level of the rates.

Unknown Speaker: Where are you at?

Mr. Roland Rice: At 395 of the record as I recall it, Your Honor.

Justice Hugo L. Black: May I ask you one question on that because of the point -- I was trying to ask, suppose that was the only point?

Mr. Roland Rice: Suppose that was --

Justice Hugo L. Black: That was the only point they had but they wanted to say and prove that was so much cheaper to the carrier by this method that inherently they could do it a lot cheaper and they want to get the advantage of it.

Would you say they abide from doing that in this kind of proceedings and that would have no influence?

Mr. Roland Rice: I don't think that that would have any influence, but the only case that I know anything about in which that has occurred is in the Schaffer case where you had two modes of transportation, and this Court took a look at the modes of transportation and found that an inherent advantage in one mode lay in its ability to provide better service and at lower rates.

Justice Hugo L. Black: Well, they have two types here, less than -- less than truckload and truckload.

Mr. Roland Rice: That's right, and they had used --

Justice Hugo L. Black: Would you say that if it's to be admitted beyond all doubt much cheaper the carrier by less-than-truckload, they made a contract to somebody to carry by less-than-truckload then common carrier one takes them before they could make that contract, that they would be barred from making that contract because the advantage -- the cheap advantage they would get, or the only advantage they would get would be cheaper rates?

Mr. Roland Rice: No, and it just doesn't operate that way.

Let me say this, Your Honor.

You have a truckload situation in which for example 30,000 pounds of canned goods would be carried on a vehicle from A to B, from one consignor to the one consignee.

There is no complaint at all about those rates.

Insofar as these facts are concerned, we don't have any problem there.

But if you carry say, 5,000 pounds, all from the same consignor to one consignee at A and then 5,000 pounds to another consignee at B and another 5,000 or 7,000 pounds to another consignee C, this man, Reddish, had a stop-off charge which he imposed presumably but was not charging.

The common carriers were wanting to impose their charges.

They would provide that kind of service.

They had the stop-off charge for that.

And the imposition that is an application of that charge did lead to a greater cost to the shipper.

And they had never been approached to see whether or not the level of that total charge to the shipper could be changed to make it acceptable to the shipper.

In other words, the carrier is right (Voice Overlap)

Justice Hugo L. Black: Could they approach the shipper to tell him that we are in modern business and we won't get this business (Voice Overlap) cheaper?

Mr. Roland Rice: There is some evidence of solicitation of traffic.

Justice Hugo L. Black: To get it at a lower rate?

Mr. Roland Rice: I don't think there's any evidence that they had offered to decrease their rates.

Justice Hugo L. Black: Did they offer to the Commission to lower that rate or ask the Commission?

Mr. Roland Rice: No.

No, there is no evidence of that, Your Honor.

I simply would like to call attention again to the Schaffer case, and to read this one sentence.

In these circumstances, as this Court said that is, where you have motor and rail carriers involved, and not just one mode.

In these circumstances, a rate benefit attributable to differences between the two modes of transportation is an inherent advantage of the competing type of carrier and cannot be ignored by the Commission.

Let me go ahead and say that --

Justice Felix Frankfurter: What does that mean cannot be ignored by the Commission?

Mr. Roland Rice: I'm quoting that --

Justice Felix Frankfurter: I'm asking -- yes you were, but I don't quite get its pertinence to this thing.

Mr. Roland Rice: Well, the Commission, I was really talking about whether or not there are any instances in which the Commission should look at rates and I said that the Court in the Schaffer case had done it and I was reading the language there in which this Court as I understood it had said that it is proper for the Commission to look at the -- at rates where different modes of transportation are involved.

Justice Felix Frankfurter: What you are saying the essential thing is that considering the nature of the problem and the structure of the Act, rate problems was not to be dealt with in certification proceedings or other proceedings had nothing intrinsically to do with rates.

Is that what you're saying?

Mr. Roland Rice: Precisely that.

Justice Hugo L. Black: Are you are saying rates, consider the rates will not be -- ever be considered --

Mr. Roland Rice: No.

Justice Hugo L. Black: -- or that rates will never be fixed in the proceeding of this term?

Mr. Roland Rice: Never be what?

Justice Hugo L. Black: Fixed, changed, rates will not be changed.

Mr. Roland Rice: Well, they won't be --

Justice Hugo L. Black: And do I understand you to say in answer to Mr. Justice Frankfurter --

Mr. Roland Rice: No they wouldn't --

Justice Hugo L. Black: -- in a proceeding of this kind with rates, they have nothing to do with it at all, even though that might be one of the main reasons why you want different kind of service, contract service that could be done cheaper?

Mr. Roland Rice: I'm saying that rates do not properly belong in a service case when somebody needs a new service.

Let's assume a man --

Justice Hugo L. Black: I agree with its rates.

You don't fix the rates of the new service.

Mr. Roland Rice: Not only --

Justice Hugo L. Black: I have no doubt about that but are you going far enough to say that they don't have anything to do with it under the circumstances?

Mr. Roland Rice: I mentioned two instances in which I know that they may lawfully be done.

One, what this Court said in the Schaffer case, and two, where there is an in effect a rate so high as to constitute an embargo.

I recognized those two and others, I don't know about.

Justice Felix Frankfurter: Well, specifically in this case, the Commission while denying this grant has given a temporary certificate, hasn't it?

It was a temporary certificate, I understand.

Mr. Roland Rice: There is temporary requirement.

Justice Felix Frankfurter: Therefore the Commission may say, taking into account the five ingredients of 209 nevertheless, there is raise of questions of the reasonableness of the rate of these common carriers which has been disclosed in these proceedings, we will continue this temporary certificate and revert the question of the rate structure of the common carrier to a separate rate hearing.

Mr. Roland Rice: That's precisely the way it would be done.

Justice Hugo L. Black: I agree with that.

Mr. Roland Rice: There is just one more thing that I'd like to say about these rates and the reason why they should not be considered in a proceeding having to do with operating rights and that is that if the Commission were required to do this, anybody could come up to the Commission and offer a lower rate than the published rate and if the Commission is required to grant the authority sought simply because the lower rate is proper, we would invite the most predatory practices that both the Congress and this Court through the years had condemned.

Justice Hugo L. Black: Or wouldn't the opposite be the case, if the Commission would look and say, “We would not consider the cheapness of these rates at all under any circumstances in deciding this question.

Wouldn't that -- wouldn't be the predatory practice?

Mr. Roland Rice: I don't think it would in an application case (Voice Overlap)

Justice Hugo L. Black: It would be a predatory of a different one.

Mr. Roland Rice: I don't think it would at all because you still have the opportunity to examine the rates under a rate proceeding.

Chief Justice Earl Warren: But would the fact that the common carrier rates were not unreasonable prove that the private carrier or contract carrier could not reasonably do it cheaper and therefore better supply the needs of the shipper.

Mr. Roland Rice: On identical service Your Honor which is really what you would have in this instance as I see it, I have no reason to believe that a contract carrier can perform the service any cheaper than the common carrier.

Chief Justice Earl Warren: But I understood here -- but I understood from Mr. Ginnane that it wasn't identical service that these men could distribute to six, seven or eight more people on its trip but that a common carrier couldn't do more than two or at the utmost three.

Now that's quite a -- there's quite a difference.

Mr. Roland Rice: Well, that all depends on the operating authority of the respective carriers.

The common carrier can do it just as well as the contract carrier, if he has authority to reach those points.

What Mr. Ginnane was saying as I understand it is that here you have a man in one state, seeking authority to serve every point, that would be thousands of points in 33 states in the United States and no one motor carrier has the authority to do that and that's why they can't reach all of these points and make all of these multiple deliveries.

They could make some in many instances but in some cases, their operating authority didn't go that far.

Chief Justice Earl Warren: But he said there was a substantial difference and undoubtedly that that would result in the benefit to the shipper.

Mr. Roland Rice: There would be some benefit.

I think the Commission realized that, but at about 394, as I recall it in the record here, the Commission weighed all that and came up finally with the conclusion that the act and the policy made it come to the conclusion that the authority should not be granted.

And one of the reasons I think for that is that unless that was so, unless there was some restrictions upon the entry, the right of entry into regulated transportation, we probably have multiple thousands of carriers and I'm not at all sure that that is in line with the transportation policy expressed with the Congress.

Every little shipper all over the United States would be wanting a carrier to serve all of his consignees throughout all of 48 states or 50 or such of them as those to which he sent his goods.

And I think the Congress has looked at that and decided that that is not a good way to establish a national transportation system.

You've got to have some single line and some interline in order to have a sound economic transportation system to serve all the needs of all the people and it cannot be perfect in either situation.

Thank you.

Chief Justice Earl Warren: Mr. Solomon.

Argument of Richard A. Solomon

Mr. Richard A. Solomon: Mr. Chief Justice, members of the Court.

I don't agree for a minute that the only question here was cost and maybe I'll have time to get back to the other factors but I think they've been fairly well canvassed already.

But let me direct myself immediately to the cost problem which is a serious one and a recurring one and this is merely an example of a Commission decision in which they say we won't consider cost.

Now, let's see what we're talking about and let's us look at what the claim was and what the Commission did.

You look at page 388 of the record.

The Commission in its decision says what the contract carrier applicant claim and after the -- about halfway down that long paragraph, three or four lines after the reference to the Schaffer case, you will see that they're discussing the claim made by the contract carrier and he said that in determining an application for contract carrier authority, we, the Commission, must consider whatever distinct advantages contract carrier service may have overcome in carrier service including the possible ability of a contract carrier to offer service at lower rates.

That's the claim.

How does the Commission respond to this claim?

Look at page 395.

This is how they respond to the claim.

The only serious complaint which shippers have against existing service, I'm reading from the final paragraph on that page, is with the less than truck load rates of motor common carriers.

I don't think that's true, but that's what the Commission says.

Even should the application be granted, they assert, they will continue to use common carrier service to some extent.

That's true, but irrelevant.

That is with respect to the car loan service not the less than car loan service, then they go on and say, “It may clearly be concluded, we believe, that the support of the application rests entirely on a desire to obtain lower rates” and their answer, “This is not a sufficient basis to justify a grant of authority to a new carrier.”

Let me go on to say as Mr. Rice does that the solution is to handle this matter in a rate proceeding.

Justice Potter Stewart: Mr. Solomon would you disagree if the Commission had said and added one word and it said, “This alone is not a sufficient basis to justify grant of authority to a new carrier?”

Mr. Richard A. Solomon: I don't quite know what that would mean.

How that word alone change the situation?

Justice Potter Stewart: Well, exactly.

If the Commission was factually correct and would usually disagree that the only --

Mr. Richard A. Solomon: Yes, I understand the question.

Justice Potter Stewart: -- the only advantage on here was a possibility of lower rates.

Would you agree that as against maybe --

Mr. Richard A. Solomon: I understand your question.

Justice Potter Stewart: (Voice Overlap) on the other statutory criteria, would you have agreed to the Commission that if they have said this alone is not justification?

Mr. Richard A. Solomon: I would not agree with them. Particularly in the case here where --

Justice Potter Stewart: I thought it was your position that nothing alone is necessarily justification for any projection or --

Mr. Richard A. Solomon: Nothing alone is justification for anything. You have to just look at the whole facts.

Justice Potter Stewart: All the statutory criteria.

Mr. Richard A. Solomon: And that is particularly true in this case where the Commission accepts the examiner's findings and in fact makes themselves that these shippers are going to go back to private carriage.

They accept those findings and yet by applying this presumptions, which I discussed I'm afraid too long this morning, they say nevertheless -- although the shippers are going to go back to private carriage, nevertheless the protestants are going to be injured.

Now, certainly in the light of that type of thing, even if this was the only factor, it would be an important factor.

It isn't the only factor, but even if it was, it would be.

Justice Felix Frankfurter: Mr. Solomon, what is the legal significance of a threat of going back to private carriage?

Mr. Richard A. Solomon: The legal significance of a threat of going back to private carriage --

Justice Felix Frankfurter: Going through it if not (Voice Overlap)

Mr. Richard A. Solomon: Yes.

I'm picking up your word threat.

I don't think there is much legal significance of a threat.

I think a threat can be analyzed against the facts of what's going on.

They could have looked to see whether -- what other shippers were doing in this area.

It turns out, however, when you look to see what other shippers are doing in this area that the other shippers in this area are engaged in private carriage for their-less-than truckload goods.

They could have looked to see whether he --

Justice Felix Frankfurter: And so what?

I want to know and so what, you said particularly if as the record shows in this case, this could be in the belief they go back -- they back go back to private carriage.

Suppose they do, what other -- why is that -- I want to --

Mr. Richard A. Solomon: But that is --

Justice Felix Frankfurter: I just don't understand it.

Mr. Richard A. Solomon: -- that is important.

Justice Felix Frankfurter: I want to know what is the legal relevance of that --

Mr. Richard A. Solomon: The legal relevance of that is sir, that if that is true, the common carrier protestants cannot be hurt because they're not going to get this business anyway and the legal relevance of that is that Mr. Justice Stewart asked me if cost were the only factor.

Justice Felix Frankfurter: Well that -- is that genuinely (Inaudible) to say they won't be hurt.

There maybe a difference between having a contract carrier as a competitor and having Boeing and Swift and Schaffer and well who not do their own trucking.

I don't think those are equations.

Contract carriers are in business for money and a fellow who carries his own stuff, a private carrier isn't in business for trucking, he is in his business.

Mr. Richard A. Solomon: The question is the effect upon the common carrier.

Justice Felix Frankfurter: Well, that's all speculated.

We have (Voice Overlap)

Mr. Richard A. Solomon: The Commission doesn't say speculative.

The Commission says that -- the Commission accepts and makes findings that there will be no real damage to them.

The only damage the Commission finds is this presumption.

Justice Felix Frankfurter: This is about the money.

Isn't it about the money?

Mr. Richard A. Solomon: Well in large part.

Let me get back to the question.

Justice Felix Frankfurter: (Voice Overlap) in what part is this money?

This is a question of drawing upon the available transportation resources, revenues of the country is that this is about?

Mr. Richard A. Solomon: Much more than money as Mr. Ginnane --

Justice Felix Frankfurter: Well, this is about additional things from the point of view of the United States and the Government, but as between the protesting carrier and the private -- and the common carrier, its money.

Mr. Richard A. Solomon: Sure, sure.

Justice Felix Frankfurter: Alright.

Mr. Richard A. Solomon: yes.

Justice Felix Frankfurter: I'm not saying this in an invidious sense.

Mr. Richard A. Solomon: Yes, I agree completely, yes.

But the cost problem, the Commission has taken a ball statement that it won't consider cost factors and it won't consider them in the context that was made which I read you and which is more expanded up in their actual pleadings before the Commission of an alleged inherent efficiency.

We have exactly the same Commission determination here that this Court dealt with in the Schaffer cas

e.The only problem, real problem is whether this is different from the Schaffer case because of the fact that Schaffer or maybe Schaffer happened to deal with the competition between motor carriers who were the applicants there and railroads who where the protestants, whereas this case deals with conflict between two types of motor carriage.

That's the whole question as far as we can see.

That there's no distinction between those distinctions I have made, Schaffer is clearly applicable here.

Now, we don't think that there's any distinction.

We don't even think this Court need -- get to the problem which is discussed in some of the briefs under which the lower court didn't feel that had to get to.

The verbal problem as to whether contract carriage by motor transport is a different mode of operation than contract carriage by motor transport.

I don't know the answer to that.

There's no definition of the word mode and you'd been in a verbal more asked.

But we don't think that that's necessary anyway because the National Transportation Policy which is involved here and which is what this Court in Schaffer said the Commission had to apply and was incorrectly not applying when it made exactly the same statement about rates.

Isn't limited to inherent advantages of different modes.

On the contrary as the court below correctly pointed out, one of the major important factors of the National Transportation Policy is to promote safe, adequate, economical and efficient service among the several carriers.

And we haven't got the slightest doubt that within the context of that language, if a type, I won't use the word mode, if I type a motor carriage is capable of providing cheaper service that that is something that the Commission must consider.

If there was any doubt about this.

If there was any doubt about this, we think it's eliminated by the Amendment to Section 209 (b) because three months before Schaffer, Congress put in to the Act an expressed requirement of the Commission in passing upon these contract carrier applications, consider the effect of a denial upon the shippers.

Now, it didn't say consider only effects of the denial upon the shipper's except whether the cost factors here are significant to them.

It said, consider the effect of a denial upon the shippers, and we take that to mean what it says.

Whatever the effects maybe, they should be considered.

Now, consideration, one of the difficulties in this whole business is that some of our friends on the appellant side seemed to equate with the word consideration with the word decision.

Of course, the Commission has broad discretion after it gives full weight to whatever cost factors are involved, to point that they are outweighed by other factors.

And particularly, I'd be the first to agree that if there's any serious threat to the common carriers in an area which is necessary that might often outweigh this thing.

But the problem here is the Commission never stops to consider it and we think it's perfectly clear that the cost problems must be considered.

Let me say a word, however, about something that Mr. Rice said which Justice Frankfurter picked up, and that is the efficacy of a rate proceeding to settle this type of problem.

And I think Justice Frankfurter is quite right, presumably the Commission could maintain this temporary authority while it went through a rate proceeding.

It would be one of longest temporary authorities of all time since this rate proceeding would be from five points, from four points to 35 or 40 points throughout the country involved in many carriers, but it could do that.

But I think Mr. Justice Frankfurter that the main answer to this rate proceeding as a way out of this problem, is that it doesn't settle anything.

It is quite possible, quite probable I would say that what is a reasonable rate for a common carrier in the view of its other responsibilities to the public, is still a much higher rate than a contract carrier can provide.

And therefore, after you get through with your rate proceeding, you are -- with all likelihood will still have an inherent advantage which it has to be considered.

Justice Felix Frankfurter: But the rate, the rate -- question of the rate problem, with the rate claim may evaporate after the application proceeding is finished.

Mr. Richard A. Solomon: Well I agree.

Justice Felix Frankfurter: Rate proceedings evaporate very often.

These are counted in the game.

Mr. Richard A. Solomon: I agree that the problem here really isn't rates.

The problem here really is inherent cost advantages.

This isn't a rate problem that has to be worked out to decimal points by accounting techniques.

The problem is -- the problem of administrative agency such as the CAB in cases we mentioned in our brief, handle all the time looking at a problem in its logical sense and saying is there something inherently important here which should be considered and there obviously is and they should give it some reasonable way instead of --

Justice Felix Frankfurter: When this Court rejects an argument, it doesn't mean it hasn't considered it.

Mr. Richard A. Solomon: But when this Court rejects an argument which it has considered, it doesn't say it hasn't considered and that's what the Commission has said.

Justice Felix Frankfurter: No, it simply says that that is an insufficient answer.

That's all they said and the question that Justice Stewart put is an inflicted argument.

The answer is implicit that means this alone is isn't because there are other considerations.

Mr. Richard A. Solomon: There's no -- there's no area for ambiguity Justice Frankfurter.

The Commission's brief makes perfectly clear that if this Court accepts the statement here, they're going to continue until the Court tells them not to, to ignore any rate factor, that's their position and that's what they're going to do.

Now, very, very briefly, let me get to the problem, the non-rate factors here.

I think this has mostly been canvassed in the colloquy between Mr. Ginnane and the Chief Justice and it's perfectly clear as Mr. Ginnane frankly admitted that a single carrier devoting himself to these shippers who can serve all of their points that they originate from and go to all of the points that they're going to, can get there faster than the common carriers.

Not one of them, not one common carrier protested in this record can serve even the four originating points, to say nothing of serving all the points where particular loads have to go to.

It doesn't mean anything to say that canned goods is a typical product carried by railroad common carriers and motor common carriers, of courses it is.

But although, canned good require as far as the makeup of the truck, that ordinary truck, the particular problem that we're dealing with here is the problem of a shipper of canned goods who has -- certainly enough adequacy into this record, a need for shipping at short notice, small orders to a number of shippers and it cannot be done by the complicated interlining consolidation drop off techniques that the common carriers because of their limitations of authority after hand.

Justice Hugo L. Black: Why?

Would you mind spelling it out in the language that the layman could understand it?

Mr. Richard A. Solomon: The record makes --

Justice Hugo L. Black: I'm trying to see what is the real difference of these two carriers?

Mr. Richard A. Solomon: The difference is this.

Supposing you have a -- we're talking about small shipments.

There are 300,000 pounds --

Justice Hugo L. Black: We're talking about the shipment of the contract carrier here as it's contrasted with the common carrier which nobody explained fully to me as (Voice Overlap)

Mr. Richard A. Solomon: The contract carrier can pick up three smaller shipments from the Steele plant in Springdale and go on to the warehouse in Westville, Oklahoma and pick up three more and then take them directly, in the same truck without any interchange or anything like that to five or six points in different states on his way out.

The common carriers in the first place if there is a -- there's no common carrier who can pick up from all of these four places.

They just don't have the authority to do so.

There are many --

Justice Potter Stewart: Do you mean no one?

Mr. Richard A. Solomon: No one.

One can pick up from one place and another can pick up from another place and they can get together to the third place and move it from one place on one truck to another place on another truck, but obviously that takes time.

That's not the way you get an efficient split minute transportation system.

Similarly, as they go along even if we -- even if the particular shipments could all be picked up by one common carrier at the originating point, the record makes clear there are a lot of these shipments which are not going to where that common carrier can drop off beyond his area of his limited license.

Therefore, for those shipments, he can drop off somewhere along the line then he has to transfer to another truck.

The result, the record indicates its damages in this transporting from one thing to another, delays, the type -- they just can't -- they can do it, but they just can't do it as fast and efficiently.

Justice Hugo L. Black: I gather from what you say that this is only -- these shippers get to some extent, the advantage they get by carrying their own and deciding when they leave and where they go and have the delivery

Mr. Richard A. Solomon: Exactly.

Exactly that's what contact carrier service --

Justice Hugo L. Black: Instead of planning to go through -– except the regular schedules and the stops of the different companies would deliver it through online (Inaudible).

Mr. Richard A. Solomon: Exactly, exactly and this is agreed to by the Commission.

The Commission itself admits on page 394 that although protestant carriers especially those operating over regular loads, they don't quite admit it, they almost admit it that they may be hindered in some instances by their authorities and the nature of their operation from achieving complete flexibility, the Commission admits this and Mr. Ginnane was perfectly candid about it.

Justice Hugo L. Black: Do you know what was behind the legislative policy to permit a contract carrier, a special contract as well as common carrier?

Mr. Richard A. Solomon: Permit them to do what?

Justice Hugo L. Black: To permit contract carrier, have a system of carriers, which would include some instances, the right -- for the shipper to make this contract for the carriers, other instances have a common carrier, what's the premise behind --

Mr. Richard A. Solomon: The original premise --

Justice Hugo L. Black: -- a policy for having a contract carrier at all?

Mr. Richard A. Solomon: The premise was that they were there by the time Congress got around to regulating motor carriage in 1934 or 1935, there were three types of carriers.

There was private carriage, there was common carriage and there was this third type of carriage where individuals engaged in the transportation business were transporting not as common carriers, but as contract carriers and the Commission felt that if it -- the Congress felt they have to regulate this existing type of service.

Justice Hugo L. Black: Did it regulate all the three?

Did it regulate number one, the private carrier?

Mr. Richard A. Solomon: Only to a very limited degree.

Justice Hugo L. Black: Did it regulate number two the contract carrier?

Mr. Richard A. Solomon: Yes sir.

Justice Hugo L. Black: To the same extent that did the common carrier?

Mr. Richard A. Solomon: Not in our opinion, but that's the argument I made in the first argument.

That's the difference in the language between 207 and 209 as example -- as enlarged upon in the --

Justice Hugo L. Black: There was no inclination on the part of the Congress, I don't recall.

I don't recall the history.

But was there's any indication on the part of the Congress, they want to make it harder for a company to transfer its goods to a common -- to contract carrier than to its own employee?

Mr. Richard A. Solomon: I don't think so sir.

I think the answer is no, but I do want in fairness say, it's perfectly clear that Congress was regulating contract carriage among other things, one of his primary reasons in regulating contract carriage was to prevent an undo burden upon common carriage by a overlooking (Voice Overlap)

Justice Hugo L. Black: Overlooking through that area.

Mr. Richard A. Solomon: That's right.

Justice Felix Frankfurter: But Mr. Solomon, when the Congress dealt with the contract carrier, it wasn't indulging in permission.

It was restricting the area of freedom.

Mr. Richard A. Solomon: When Congress passed the 1935 Motor Carrier Act it was imposing restrictions on both common and contract carriers.

Justice Felix Frankfurter: There were always more restrictions in common carrier.

Mr. Richard A. Solomon: No sir not until 1935.

Justice Felix Frankfurter: I didn't say that there was a Congressional Act permitted with them.

I say there were always restrictions on common carriers and there were no restrictions on contract carriers, and Congress by 1935 wasn't giving permission for largest contract carriers.

It was imposing very severe restrictions, is that right?

Mr. Richard A. Solomon: It was imposing restrictions.

Justice Felix Frankfurter: Well anyhow, they had -- they had freedom in law both under the state and federal law which thereafter did not have.

Mr. Richard A. Solomon: Well, I don't want to get -- their state law is more complicated than that.

They --

Mr. Richard A. Solomon: Mr. Chief Justice, if the Court please, I represented Mr. Reddish below and the -- before the Commission and I'm representing here.

I think that it would not be of assistance to this Court, certainly would not be to the industry, if the matter of the application of the statutory standards was allowed to go by the board and if this Court was not aware of the circumstance, which brought forth the five criteria which are now specified in Section 209 of the Act, you will recall that with respect to what Congress was doing in 1957, it was imposing on contract carriers in that statute, a new restriction, something entirely new and different and intended to have a very distinct limitation on the competitive impact of an individual contract carrier on the common carrier operation.

And that restriction was to be found in giving the Commission new power, never before held in 1957, to identify the shippers by name that that contract carrier would be permitted to serve.

And that had a very significant effect upon the ability of the contract carrier to compete then and in the future as it does on Mr. Reddish.

Let us take for example, the question here just before this Court.

If it is a fact that the Steele Canning Company is not going to refuse to go to private carriage, Mr. Reddish would be one who suffers if they go because he no longer has the authority which he would've had prior to 1957 to search for another canning company in this area to serve.

He is bound now and for all of the time into the operations of the Steele Canning Company or the Cain Canning Company and then the Keystone Canning Company.

Now, that competitive impact that that carrier can make as a result of the 1957 Amendment made a very distinct difference and what the Commission was to consider when they came to considering the impact on existing carriage.

And if you will look at the criteria in the statute, you will see that the criteria is not a direction to the Commission to consider the impact on all common carriage or the entire common carriage system of the United States.

The question the Commission is directed to or points its attention to is whether or not the grant of the authority will affect the services of the protesting carrier, not the services even of all carriers in United States, but the protesting carriers alone.

And secondly, the impact on the services of those carriers because now for the first time in 1957, it was possible for the Commission to determine precisely what the effect would be now, and in the future perhaps or at least to make a judgment with that respect in that connection because they could now, for the first time, determine what the shipper was and who he would be now and in the future.

And so, you can look at Steele Canning Company's present services.

You can look at their present transportation.

You can look at what has been performed in the past and what is likely and make a judgment as to what is to what's likely to be performed in the future and be able to make a determination of whether the services of the protesting common carriers or protesting contract carriers although how there could be and in view of the limitation of by shipper's by name, I don't not know.

But in any case, you could make a determination precisely of the effect, that that kind of a grant would have on the protesting carrier.

And the Commission never did that in this case.

The Commission instead resorted to precisely those tests which they had adopted prior to 1957 under a definition of a statute which said that they were to determine whether it was consistent with the public interest in the National Transportation Policy unguided by any specific criteria.

The Commission applied in this case in short, precisely those standards that they had applied previously to a contract carrier who would have the free and unrestrained right to, as this Court held in the Contract Steel Carriers case the right aggressively to search for and add new contracts within the scope of these geographical license and within the scope of the commodity was authorized transport.

Now, that this 1957 Amendment constituted a marked departure from the Act prior to 1957 is I think crystal clear from the determination of the way in which Congress ordered the Commission to deal with the pre-existing contract carrier.

Prior to 1957, the contract carrier is free to compete for potential traffic as well as the traffic of the shippers who appeared before the Commission and testified.

These pre-1957 contract carriers were to be given under this 1957 Amendment, certificates of public convenience and necessity to operate as common carriers and they were to be given these solely on the basis of whether or not they conform to the new definition of contract carriage, one that said for one or a limited number of shippers meeting the distinct needs of those individual shippers.

If you did not meet that new standard, you were to be given a common carrier of certificate.

You were to be turned into what Congress found you were in fact to wit a common carrier.

And therefore, when you approach and apply the five criteria, that are now specified in Section 209 (b) of the Act, you have a situation in which it is entirely possible that you have specific criteria by which you can -- in a specific factual situation by which you can measure that impact.

The Commission never did that here.

There is nothing to suggest that the services of the protesting carriers in this case would in anyway be affected, nothing.

Their finances, their equipment, the services that they are rendering to the public generally, nothing in this record suggests one word as to what in any way that would be affected and that is the precise and as I take it, legal significance of the fact that this shipper has -- or the shippers involved here have in the past transported these shipments in their own private carriage, and this illegal significance of the fact that these -- the finding of the Commission that these shippers would do so in the future because of their distinct need if not met by contract carriers.

The 1957 Amendments to the Part II of the Interstate Commerce Act were designed to give the Commission that which said it needed so desperately.

A yardstick by which they could distinguish between a contract carrier and a common carrier, one that the Commission told Congress at the time or the committee is considering it that contract carriers have inherent differences and inherit advantages in the way in which they operate.

They have inherent advantages because they are keyed in.

They are locked in to the shippers operation.

The shipper loads their vehicle.

The vehicles are scheduled to go into their production either inbound or outbound movements of it.

You don't have to employ a core of solicitors to go around and find new freight.

You have only one or two shippers and you're so coordinated with them.

You are, in fact, as the examiner in fact found in this case the shippers wanted Mr. Reddish to be, the transportation department of these canning companies.

You don't need solicitation expense and Mr. Reddish doesn't have any solicitors or any solicitation expense in getting that kind of traffic.

You don't have to have any terminal.

Mr. Reddish doesn't have a terminal.

He has a garage where he keeps his equipment off.

You don't need to have a terminal because you are not involved in the handling and re-handling of the freight as a contract carrier.

And as a consequence, you have precisely those inherent advantages that the Chairman of the Commission himself pointed out that Congress when they were considering common contract carriers in the 1957 Amendments to this Act, that realized cost advantage.

Cost advantage is that the Chairman told the committee they had and that the Commission has always recognized that they had.

The question that the shippers were trying to put forward to the Commission was not that the common carriers were charging them an unreasonable or a burdensome rate considered as a common carrier rate, considered as the necessary to carry out the expenses to discharge the obligations and the burdens and the kind of service that a common carrier is expected and required to do under the Act.

These rates are entirely lawful.

They are reasonable judged by that standard.

But we're not judging them by that standard.

We're not -- the shipper is not asking for them by that standard.

The shipper is asking for something entirely different.

He's asking for that which prior to 1935 would have been called private for hire transportation, a kind of a transportation that is a substitute not for common carriage but a substitute for his own private carriage.

And now what happened in this case, what the Commission finally did by insisting that the shippers' reasonable transportation need as they would choose to define, found within their prior concepts of transportation, by doing that, the Commission has ignored what was intended, what -- I believe that the legislative history and what the Act itself suggests that private carriage was to be supplanted by or at least the shipper was to have an alternative of, to private carriage contract carriage, a contract carriage that was so distinctly related to what he needed, that it would perform the kind of job that a regular common carrier serving off the public generally could not perform.

But the Commission, by refusing to apply the statutory criteria, and by saying that the criterion of the impact or the effect upon the shipper of the denial of this application, is in effect that we will judge solely in terms of whether or not someone can in fact physically transport a shipment of canned goods from point A to point B regardless of the time it takes them to transport it and most importantly for a canned good shipper regardless of the cost that which that will be performed for you is denying to the private -- to the contract carriers under the 1957 Amendment, precisely what Congress was intending to give them.

If we are going to limit you on the one hand, to serving this precisely identified shipper, then we will give you the opportunity on the other hand to serve his distinct needs and we will measure whether or not you should be a new entered into the field by the considerations of those shippers, by consideration of whether you will in fact hurt in some way that the existing common carrier transportation system of the United States.

Justice William J. Brennan: But what do you envisage was the appropriate consideration on the question of hurt in some way?

Mr. Richard A. Solomon: As for example Mr. Justice Brennan, supposed that this shipper was not in fact a shipper who was giving to the contract carrier something they hadn't transported before that is where it was not a private carriage situation but where the shipper said we want you to transport these goods and these goods were already being transported by a number of common carrier.

It seems to me that under those circumstances the common carrier should come in.

Justice William J. Brennan: Well, how about the situation where the common carrier had never transported these goods to this particular class of act?

Mr. Richard A. Solomon: I think if he could show that he is in such financial condition that he must be given an opportunity to transport them, that his existence to the common carrier industry because of his financial standing --

Justice William J. Brennan: Even though he's never had it before --

Mr. Richard A. Solomon: Even though -- if he could show that his financial existence required that he'd be given an opportunity to transport all potential traffic because to do so would destroy in some way, the fabric or the kind of system that the Commission has built up.

It is conceivable that the Commission might then say, “Show us your financial condition.

Show that your needs or -- for this traffic outweigh the shippers specialized in individual needs.”

That is a conceivable possibility.

I wouldn't -- I wouldn't restrain the Commission's ability to consider what they thought was necessary to maintain a common carrier system of transportation by rail or by motor but that's not what they did here.

They didn't do that at all.

There was no suggestion that the loss of this traffic now or in the future would in any way affect the finances of the protesting carriers or would in any way affect the kind of operation that they were conducting or would in any way do anything else to these carrier of a specific nature.

What the Commission held here was consistent with their holdings prior to 1957, that a common carrier expressing a willingness and showing to the Commission satisfaction at least the ability to transport these shippers, that that common carrier was to be permitted the opportunity to transport those goods and that no other service was to be authorized even though the Commission at the same time held that on this record, they would never transport those goods and that is a flat and specific finding by the commission.

Justice William J. Brennan: Even though the common carrier, the protesting common carrier would --

Mr. Richard A. Solomon: Would never handle it.

If you'll just take a look at --

Justice William J. Brennan: Well, that's -- that's by reason of the use of the alternative of a private carriage?

Mr. Richard A. Solomon: Certainly sir.

Now, it maybe if the Commission did not believe the shippers, the Commission could weigh that fact and say, “We do not believe the shipper” but they never did that.

They believed the shipper.

They believe they would but what they chose to do was to adapt an interpretation of the statute that said even so you must.

Justice Felix Frankfurter: That's because they were concerned with the decision of the revenues to be obtained from commercial trucking.

And the Senate report emphasizes that their chief concern was with protecting common carriage because then it is a matter of reporting to the committee they had emphasis on that fact and he said that the public interest -- your committee is of the opinion of public interest and a sound transportation system and particularly in a stable and adequate system of common carriage require this bill.

Mr. Richard A. Solomon: He said that and he said it in my judgment because he was about to report a bill which would give the power to the Commission for the first time seriously to limit contract carriers, by specifying the shippers that they would --

Justice Felix Frankfurter: I don't know why he said it.

All I -- I don't go behind documents particularly of a Senate Committee that reports a bill which have these provisions.

Mr. Richard A. Solomon: Well that --

Justice Felix Frankfurter: Without any private information.

Mr. Richard A. Solomon: That was the effect of what he was reporting out at that instant and that --

Justice Felix Frankfurter: In fact, he said it in words for the committee that they were concerned to protect, and to share that the common carriage was to have if there was to be any commercial transportation.

Mr. Richard A. Solomon: And the statute did so Mr. Justice Frankfurter in my judgment by adapting a new restriction on contract carriage, and at the same time by adapting criteria that were relevant to the new and change status of the contract carrier, a new and distinctly limited, competitive service that the contract carrier would be able to perform and if the judgment is as transportation law, that you should not regard the existence of private carriage as an alternative, then all I could say would be that the statute will be wholly out of step with the reality of the economic need which moves these goods across the country.

Justice Felix Frankfurter: I find that one word of reference and even the committee reports or the statute to the part that private carriage is to --

Mr. Richard A. Solomon: There is nothing in the Committee's report but there is substantial amount that was before the Committee at the time they were considering this bill and the substantial shippers all appeared before Congress and pointed out precisely the dilemma in which this kind of a judgment would place it.

Justice Felix Frankfurter: Of course private interest properly present their private view, their particular private interest but that doesn't mean that every private interest represented before a committee requires me to assume that that was right into the committee report or into a statute when it doesn't appear there.

Mr. Richard A. Solomon: In any case, the Interstate Commerce Commission and in passing upon the question of whether or not there would be an impact on the shipper from an effect of the denial of the application and the suggestion made to this Court that there was any finding by the Commission that the existing service of the common carrier was in fact adequate to meet the needs was never meant in any terms exclusive of cost or even laying aside an issue of cost.

The Commission said that such an issue is the other side of the coin, perhaps it is.

If common carriage is in fact demonstrated to be adequate to meet the shippers' transportation needs then it would seem that there would be less of an effect upon the shipper if you deny the application of the contract carrier.

Although, the Commission in the Reddish case said that such a determination was necessary upon them under the new 1957 Amendments of the Act, they never made such a determination, never.

The Commission's decision in the Reddish case is couched wholly in terms of -- the shipper has failed to prove that the existing service would not meet his reasonable transportation needs and despite the fact that the shipper resided a number of instances, in which for example, it was proposed by one common carrier to him that in order to transport goods to Iowa and to Illinois that they transport them to Denver, Colorado from Fort Smith, Arkansas and then back.

They said this is generalized kind of comment.

This is a generalized kind of objection and that they never, however, reach any determination that the existing service would in fact meet any need of the shipper whether it's couched wholly in terms of cost or whether it's couched in terms of near service to get their canned goods that they had produced.

If there are plants in Arkansas to the kinds of customers that they have to sell in order to remain in business and in order to sell that they will after either do and this kind of transportation service or in the carrier that is not regulated by the economic views of the Commission.

Thank you Mr. Chief Justice.

Chief Justice Earl Warren: Well, I think the other side has about two minutes if it wishes to use it.

Mr. Richard A. Solomon: We having nothing more to say.

Chief Justice Earl Warren: Alright, thank you.