American Trucking Associations v. Frisco Transportation Company Railway Labor Executives Association v. Frisco Transportation Company Interstate Commerce Commission v. Frisco Transportation Company

• Decision Date: 15 December 1958
• Docket Number: Nos. 15,16,19,s. 15
• Parties: AMERICAN TRUCKING ASSOCIATIONS, Inc., et al., Appellants, v. FRISCO TRANSPORTATION COMPANY. RAILWAY LABOR EXECUTIVES' ASSOCIATION et al., Appellants, v. FRISCO TRANSPORTATION COMPANY. INTERSTATE COMMERCE COMMISSION, Appellant, v. FRISCO TRANSPORTATION COMPANY
• Court: U.S. Supreme Court

358 U.S. 133

79 S.Ct. 170

3 L.Ed.2d 172

AMERICAN TRUCKING ASSOCIATIONS, Inc., et al., Appellants,

v FRISCO TRANSPORTATION COMPANY.

RAILWAY LABOR EXECUTIVES' ASSOCIATION et al., Appellants,

v. FRISCO TRANSPORTATION COMPANY.

INTERSTATE COMMERCE COMMISSION, Appellant,

v. FRISCO TRANSPORTATION COMPANY.

Nos. 15, 16, 19.

Argued Oct. 13, 1958.

Decided Dec. 15, 1958.

Mr. Robert W. Ginnane, New York City, for appellant Interstate Commerce Commission.

Mr. Peter T. Beardsley, Washington, D.C., for appellants American Trucking Ass'ns et al.

Mr. Ernest D. Grinnell, Jr., St. Louis, Mo., for appellee.

Mr. Chief Justice WARREN delivered the opinion of the Court.

The issue here is whether the Interstate Commerce Commission has the power to modify certificates of public convenience and necessity containing inadvertent errors, and, if so, whether, in the circumstances of these cases, the Commission could modify certificates which had inadvertently authorized the performance of unrestricted motor carrier services by a wholly owned subsidiary of a railroad.

Appellee, a wholly owned subsidiary of the St. Louis-San Francisco Railway Company, is a common carrier by motor vehicle engaged primarily in the transportation of property in interstate and intrastate commerce. The greater part of appellee's motor carrier system was acquired in 1938 and 1939 by the purchase of existing independent motor carriers. These purchases were made pursuant to the predecessor of § 5(2)(b) of the Interstate Commerce Act, 49 U.S.C. § 5(2)(b), 49 U.S.C.A. § 5(2)(b), which permits the acquisition by a rail carrier of the rights and properties of a motor carrier if the Interstate Commerce Commission finds that the acquisition 'will be consistent with the public interest and will enable such (rail) carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition.'¹ In 1938, appellee began seeking permission to operate as a motor carrier over substantial mileage in seven States including routes in issue here. On some of the routes eventually acquired by appellee, the Commission authorized it to carry on unrestricted operations. On others, the Commission imposed restrictions limiting service to points within ten miles of the rail stations of appellee's parent corporation or to transportation of shipments from, to, or through certain cities. In addition, on some routes the Commission imposed additional restrictions to assure that appellee's service would be 'auxiliary or supplementary' to the services performed by its corporate parent.²

This case concerns four of appellee's routes aggregating some 284 miles. Prior to appellee's purchase, each of the routes was serviced by an independent motor carrier which engaged in unrestricted motor carrier operations. During 1938 and 1939, appellee made application to the Commission for permission to purchase the properties and operating rights of these independent carriers. Finance hearings were held before a Commission examiner to determine whether the acquisitions met the applicable statutory standards. Although appellee sought to continue the acquired carriers' unrestricted operations, it represented to the Commission in each of its applications that acquisition of the carriers would enable it to establish coordinated truck service with the train service of its parent railroad along these routes. A number of motor carriers opposed appellee's applications, but the hearing examiner recommended approval of each, subject to various conditions. Among these was the recommendation that the authority granted be subject 'to such further limitations, restrictions, or modifications as the Commission may hereafter find necessary to impose, in order to insure that the service shall be auxiliary or supplementary to the train service of the (parent) railroad, and shall not unduly restrain competition.' The protestant motor carriers filed exceptions to the hearing examiner's report on one of the purchases and all went to Division 5 of the Commission for action. It reviewed the reports and adopted the examiner's recommendations including the above-quoted condition. Although appellee had asked for authority to operate unrestricted service, it took no exceptions to the Division reports and did not ask for review by the full Commission. Rather, it notified the Commission that it would consummate the approved pur- chases subject to the terms prescribed, and, within thirty days of the reports, it did consummate the transactions and commence operations.

Thereafter, in 1939, compliance orders issued to appellee in connection with the four routes in question. These informed appellee that certificates of convenience and necessity authorizing it to engage in interstate and foreign commerce as a common carrier according to specifications set forth in the orders would be issued as soon as appellee complied with applicable statutory requirements, including the filing of rate publications and evidence of security for the protection of the public. The specifications in the compliance orders did not include the condition adopted by Division 5 reserving the right to the Commission to take steps to insure that appellee's service would be 'auxiliary or supplementary' to its parent's rail services.

In 1941, prior to the issuance of certificates covering the four routes, a complaint was filed by various competing motor carriers which charged that appellee was performing unauthorized motor carrier service which was independent of its parent's rail services. During the course of this proceeding, a number of certificates of convenience and necessity issued to appellee. Those concerning the four routes in question contained no reservations of authority similar to the ones stated in the finance hearing orders issued by Division 5. On August 1, 1944, Division 5 entered findings in that proceeding stating that appellee was performing unauthorized direct motor carrier service which it had not been authorized to perform by the original acquisition orders. The Division further stated that appellee's original authorization had been limited to services 'auxiliary or supplementary' to the rail service of its parent. Because appellee had acquired unconditional certificates, however, the Division did not enter an order, but indicated that the acquisition pro- ceedings would be reopened to determine what, if any, conditions should be imposed in appellee's certificates.³ Subsequently, the Commission disapproved the Division's findings that appellee had engaged in operations unauthorized by its certificates, but it stated that the conditions, if any, which should be imposed would be considered in the reopened proceedings.⁴

The reopened proceedings commenced on motion of the Division in 1945. All parties to the proceeding were served with an examiner's proposed report based on the records of the Commission. This report stated that the Commission had approved appellee's acquisitions subject to the right to impose conditions to assure that appellee's operations would be auxiliary or supplementary to the rail service of its parent, but that such a reservation inadvertently had been omitted from the certificates issued to appellee. The report proposed specific conditions to effectuate the original purpose of the Commission—i.e., to assure that appellee's services were solely 'auxiliary or supplementary.'

Appellee filed exceptions to the proposed report and requested hearings. Thereupon, the Division reopened the proceedings for further hearings which were held in 1946, after which the matter was referred to examiners for further appropriate proceedings. In an exhaustive report, the examiners discussed the history of appellee's operations and the circumstances surrounding the issuance of the unconditioned certificates. They concluded that the certificates could not authorize operations broader than those approved by the Commission in the finance proceedings and that the certificates inadvertently had omitted relevant restrictions. The Division, in its report, reviewed the Commission's administrative procedures and practices and pointed out how the error probably had occurred. It showed that certificates are prepared by a staff section of the Commission which, after a prescribed lapse of time from the adoption of reports or orders by the Commission authorizing the issuance of certificates, inserts on mimeographed forms containing stock paragraphs the authority described in the findings of the report. It further stated that, under the Commission rules, this staff section has no discretion to alter anything contained in the reports and is charged with the sole responsibility of transposing the Commission findings into certificate form. Different action, if any, which might be desired can only be taken by the Commission or a Division through a formal supplemental report. The certificates are reviewed by a supervisor, who is also without discretionary authority to make changes, and are then issued. The Division reasoned that as no supplemental report had issued between the conclusion of the finance hearings and the issuance of the certificates, the staff section of certificates obviously had made an inadvertent error in transposing the relevant findings.

The full Commission, after oral arguent, stressed another aspect of the matter in affirming the action of the Division. In its view, the findings of the finance proceedings which specifically authorized appellee's purchases, subject to the stated limitations, could not be changed to eliminate such limitations without a formal proceeding at which opponents of the unlimited application could be heard. Each opinion within the Commission thus found that the omission from the certificates of the stated reservations had been due to clerical inadvertence which should be corrected. These corrections were ordered, and in addition specified conditions were imposed...