Boylan v. United States

• Decision Date: 19 November 1962
• Docket Number: No. 17672.,17672.
• Parties: Darrell V. BOYLAN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

310 F.2d 493 (1962)

Darrell V. BOYLAN, Appellant, v. UNITED STATES of America, Appellee.

No. 17672.

United States Court of Appeals Ninth Circuit.

November 19, 1962.

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Dusenbery, Martin, Beatty & Parks and Alex L. Parks, Portland, Or., for appellant.

Sidney I. Lezak, U. S. Atty., Charles H. Habernigg, Asst. U. S. Atty., and Thomas R. Jones, Atty., I. C. C., Portland, Or., for appellee.

Before HAMLEY and KOELSCH, Circuit Judges, and TAYLOR, District Judge.

HAMLEY, Circuit Judge.

Darrell V. Boylan was convicted on all three counts of an information charging him with engaging in the business of a contract carrier by water without first obtaining a permit from the Interstate Commerce Commission (Commission). A fine of four hundred dollars was imposed on the first count. On the other two counts the imposition of sentence was suspended and Boylan was put on probation for a period of three years. Boylan appeals.

It is provided in section 309(f) of the Interstate Commerce Act (Act), 49 U.S. C. § 909(f), that, with exceptions not here material, no person shall engage in the business of a contract carrier by water unless he or it holds an effective permit issued by the Commission authorizing such operation.¹ Under section 317 (a) of the Act, 49 U.S.C. § 917(a), a knowing and wilful violation of section 309(f) is a misdemeanor.

The cause was tried to the court on the following stipulated facts. In April and May, 1960, Boylan was engaged in business as Richland Tug and Ferry. On April 27, May 5, and May 11, 1960, under individual contracts or agreements, he furnished for compensation the tug "Bonnie B" to Montag-Halvorson-McLaughlin and Associates, a construction firm. On these occasions the tug was used by that firm in the Columbia River to tow its barge, loaded with the firm's construction equipment, from the Ice Harbor Dam Site in Washington, through the territorial waters of Oregon to the John Day Dam Site in Washington. On none of these occasions did Boylan hold a permit from the Interstate Commerce Commission authorizing him to engage in the business of a contract carrier by water.

Boylan concedes that in furnishing the tug for compensation to the construction firm so that the latter could transport its own property in interstate commerce, he was engaging in the business of a contract carrier by water, as that term is defined in the Act. Section 302(e), 49 U.S.C. § 902(e), provides in part:

"* * * The furnishing for compensation (under a charter, lease, or other agreement) of a vessel, to a person other than a carrier subject to this Act, to be used by the person to whom such vessel is furnished in the transportation of its own property, shall be considered to constitute, as to the vessel so furnished, engaging in transportation for compensation by the person furnishing such vessel, within the meaning of the foregoing definition of `contract carrier by water.\' * * *"

He contends, however, that in embracing the kind of vessel-furnishing business which he operates within the statutory term "contract carrier by water," and consequently requiring one who would engage in such a business to obtain a permit from the Commission, section 302(e) of the Act offends the Due Process Clause of the Fifth Amendment.

Two arguments are advanced in support of this contention. The first of these, and the one which we will first discuss, is that under the Due Process Clause no business may be subjected to permit or certificate regulation unless it is one which is "affected with a public interest," or stated differently, "impressed with a public purpose." The business of furnishing a vessel for compensation to one who intends to and does use it to transport his own property in interstate commerce, appellant asserts, is not a business affected with a public interest or impressed with a public purpose.

Appellant concedes that the United States may constitutionally exercise some regulation over the water transportation equipment which he furnishes for use in interstate commerce. He cites rates, safety and security to the public for liability incurred in the operation of leased equipment as permissible subjects of federal regulation.

He argues, however, that his business is not one which he may be constitutionally precluded from conducting. The record does not indicate that appellant has ever applied for and been denied a permit, to lease his equipment to private shippers for use in transporting their own goods. But appellant argues that since his operation is characterized as that of a contract carrier, and since contract carriers are required to obtain a permit which the Commission may grant or deny on the basis of public convenience and necessity, this entire aspect of the Act is based on the assumption that his operation might be prohibited entirely.²

In support of his thesis appellant relies primarily on three decisions of the Supreme Court and three state court decisions. In discussing these and other cases we will consider first, whether the concept "affected with a public interest" currently receives federal judicial recognition for any purpose, and second, whether in any event it has applicability in testing the validity of federal legislation under the Commerce Clause.

In two of these Supreme Court cases, Michigan Utilities Commission v. Duke, 266 U.S. 570, 45 S.Ct. 191, 69 L.Ed. 445 (1925) and Frost & Frost Trucking Co. v. Railroad Commission of California, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1131 (1926), the state statutes invalidated required contract carriers by motor vehicle to assume all of the duties and burdens of a common carrier.³ The Court did not specifically refer to the concept "affected with a public interest" in either case. In Duke, however, it did refer to Wolff Co. v. Industrial Court, 262 U.S. 522, 535, 43 S.Ct. 630, 67 L.Ed. 1103, in which that concept was applied.

The import of these cases is illustrated by the Court's statement in Duke (pages 577-578, 45 S.Ct. p. 193, 69 L.Ed. 445):

"* * * it is beyond the power of the State by legislative flat to convert property used exclusively in the business of a private carrier into a public utility, or to make the owner a public carrier, for that would be taking private property for public use without just compensation, * * *."

Considered in the light of the problem there presented, these words do not support the view that a private carrier's right to operate may not be made to depend upon a finding of public convenience and necessity. But if Duke and Frost ever were authority for such a proposition, they are no longer so in view of Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, discussed below.

The third and final Supreme Court decision primarily relied upon by appellant in support of the Due Process argument under discussion is New State Ice Co. v. Liebmann, 285 U.S. 262, 52 S.Ct. 371, 76 L.Ed. 747 (1932). It was there held that the business of manufacturing and selling ice is essentially a private business and not so affected with a public interest that a state legislature may constitutionally limit the number of those who may engage in it, in order to control competition.

But two years after Liebmann was handed down, the Supreme Court decided Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940. In that case the concept "affected with a public interest" was abandoned as a test to be applied in determining whether a business could, consistent with due process, be subjected to economic regulation.⁴

While Nebbia involved price regulation, the rationale there adopted by the Court is equally applicable with regard to all economic regulation.⁵ The contrary rationale of Liebmann has not been applied or approved in any subsequent case.⁶ Quite to the contrary, the Supreme Court, in 1946, cited with approval the dissenting opinion of Justice Brandeis in that case. See Fay v. New York, 332 U.S. 261, 296, 67 S.Ct. 1613, 91 L.Ed. 2043.

In the face of this doctrinal change of position by the Supreme Court, the fact that certain state courts⁷ still adhere to Chief Justice Waite's "affected with a public interest" dictum announced in Munn v. Illinois, 94 U.S. 113, 126, 24 L. Ed. 77, is without significance in federal adjudication.

Moreover, we find no indication that the "affected with a public interest" test has ever been applied to determine the validity of federal legislation enacted under authority of the Commerce Clause.⁸

The exercise of the commerce power is subject to the Due Process Clause of the Fifth Amendment. See United States v. Carolene Products Co., 304 U.S. 144, 147-148, 58 S.Ct. 778, 82 L.Ed. 1234; F. & A. Ice Cream Co. v. Arden Farms Co., D.C., 98 F.Supp. 180, 182-183. But the requirements of due process are satisfied if the law passed in the exercise of the Commerce Clause has a reasonable relation to a legitimate legislative purpose and is not arbitrary, capricious or discriminatory. If "the means chosen are appropriate to the permissible end, there is little scope for the operation of the due process clause." Virginian Railway Co. v. System Federation No. 40, 300 U.S. 515, 558, 57 S.Ct. 592, 81 L.Ed. 789.⁹

Apart from his "affected with a public interest" argument, however, appellant seeks to show that section 302(e), as here applied, has no reasonable relation to a proper legislative purpose and is therefore arbitrary.¹⁰ He does so by quoting a comment in a decision of the Commission concerning the need of such legislation, and then striving to demonstrate the unsoundness of the comment. This Commission comment, quoted below, is contained in G. M. Cox Shipyard, Inc., 260 I.C.C. 20, 21:

"* * * Regulation of applicant and other furnishers of vessels, as contemplated by section 302(e), results from their position in the national transportation system. They provide a pool of equipment from which other carriers draw during emergencies and peak-load periods. Unregulated use of this

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