United States v. Drum Regular Common Carrier Conference of American Trucking Associations, Inc v. Drum, s. 23

• Decision Date: 15 January 1962
• Docket Number: Nos. 23,24,s. 23
• Citation: 82 S.Ct. 408,368 U.S. 370,7 L.Ed.2d 360
• Parties: UNITED STATES of America et al., Appellants, v. Henry E. DRUM et al. REGULAR COMMON CARRIER CONFERENCE OF AMERICAN TRUCKING ASSOCIATIONS, INC., Appellants, v. Henry E. DRUM et al
• Court: U.S. Supreme Court

368 U.S. 370

82 S.Ct. 408

7 L.Ed.2d 360

UNITED STATES of America et al., Appellants,

v Henry E. DRUM et al.

REGULAR COMMON CARRIER CONFERENCE OF AMERICAN TRUCKING

ASSOCIATIONS, INC., Appellants,

v. Henry E. DRUM et al.

Nos. 23, 24.

Argued Oct. 11 and 12, 1961.

Decided Jan. 15, 1962.

Robert W. Ginnane, Washington, D.C., for appellants in No. 23.

Roland Rice, Washington, D.C., for appellant in No. 24.

William L. Peterson, Jr., Oklahoma City, Okl., and Charles R. Iden, Akron, Ohio, for the appellees in both cases.

Mr. Justice Brennan delivered the opinion of the Court.

In an investigation initiated by it under 49 U.S.C. § 304(c), 49 U.S.C.A. § 304(c),¹ the Interstate Commerce Commission held that appellees who leased their motor vehicles and hired their services as drivers to the appellee Oklahoma Furniture Manufacturing Company (hereinafter 'Oklahoma') were contract carriers within 49 U.S.C. § 303(a)(15), 49 U.S.C.A. § 303(a)(15)² and subject to the permit requirements of 49 U.S.C. § 309(a)(1), 49 U.S.C.A. § 309(a)(1).³ 79 M.C.C. 403.

A three-judge court in the District Court for the Western District of Oklahoma, convened under 28 U.S.C. § 2325, 28 U.S.C.A. § 2325, in a proceeding commenced by appellees pursuant to 28 U.S.C. §§ 1336 and 1398, 28 U.S.C.A. §§ 1336 and 1938,⁴ set aside the cease-and-desist order by which the Commission required the lessors to refrain from their operations unless and until they received appropriate authority therefor from the Commission. 193 F.Supp. 275. The District Court held that Oklahoma was engaged in private carriage as defined in 49 U.S.C. § 303(a)(17), 49 U.S.C.A. 303(a)(17).⁵ We noted probable jurisdiction of the appeals lodged here under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. 365 U.S. 839, 81 S.Ct. 800, 5 L.Ed.2d 807.

The Motor Carrier Act of 1935⁶ subject many aspects of interstate motor carriage—including entry of persons into the business of for-hire motor transportation and the oversight of motor carrier rates—to administrative controls, on the premise that the public interest in maintaining a stable transportation industry so required.⁷ However, although aware that 'Both (contract carriers and common carriers) * * * are continually faced with actual or potential competition from private truck operation * * *,'⁸ Congress took cognizance of a shipper's interest in furnishing his own transportation, ⁹ and limited the application of the licensing requirements to those persons who provide 'transportation * * * for compensation'¹⁰ or, under a 1957 Amendment, 'for-hire transportation.'¹¹ The Commission, therefore, has had to decide whether a particular arrangement gives rise to that 'for-hire' carriage which is subject to economic regulation in the public interest, or whether it is, in fact, private carriage as to which Congress determined that the shipper's interest in carrying his own goods should prevail. This case is a recent instance of the Commission's developing technique of decision.

From the beginning underlying principles have been, and have remained, clear. A primary objective of the scheme of economic regulation is to assure that shippers generally will be provided a healthy system of motor carriage to which they may resort to get their goods to market. This is the goal not only of Commission sur- veillance of licensed motor carriers as to rates and services, but also of the requirement that the persons from whom shippers would purchase a transportation service designed to meet the shippers' distinctive needs must first secure Commission approval. See Contracts of Contract Carriers, 1 M.C.C. 628, 629; Keystone Transportation Co., 19 M.C.C. 475, 490—492. The statutory requirement that a certificate or permit be issued before any new for-hire carriage may be undertaken bespeaks congressional concern over diversions of traffic which may harm existing carriers upon whom the bulk of shippers must depend for access to market.¹² Accordingly, the statutory definitions, while confirming that a shipper is free to transport his own goods without utilizing a regulated instrumentality, at the same time deny him the use of 'for compensation' or 'for-hire' transportation purchased from a person not licensed by the Interstate Commerce Commission. Because the definitions must, if they are to serve their purpose, impose practical limitations upon unregulated competition in a regulated industry, they are to be interpreted in a manner which transcends the merely formal. From the outset the Commission has correctly interpreted them as importing that a purported private carrier who hires the instrumentalities of transportation from another must—if he is not to utilize a licensed carrier—assume in significant measure the characteristic burdens of the transportation business. The problem is one of determining—by reference to the clear but broad remedial purpose of a regulatory statute committed to agency administration—the applicability to a narrow fact situation of imprecise definitional language which delineates the converage of the measure. Private carriers are defined simply as transporters of property who are neither common nor contract carriers; and the statute will yield up no better verbal guide to the reach of its licensing provisions than transportation 'for compensation' or 'for-hire.' Compare Bates & Guild Co. v. Payne, 194 U.S. 106, 24 S.Ct. 595, 48 L.Ed. 894; Rochester Tel. Corp. v. United States, 307 U.S. 125, 144—146, 59 S.Ct. 754, 764—765, 83 L.Ed. 1147; Gray v. Powell, 314 U.S. 402, 412—413, 62 S.Ct. 326, 332—333, 86 L.Ed. 301; National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 130—131, 64 S.Ct. 851, 860—861, 88 L.Ed. 1170. Because the Commission's resolution of the issue does not seem to us to violate the coherence of the body of administrative and judicial precedents so far developed in this area, we are of the opinion that there was no occasion for the District Court to disturb the conclusion reached by the Commission. We therefore reverse the District Court's judgment.

It was a wish to rid itself of certain burdens of its existing transportation operation which caused Oklahoma to enter into the arrangement here involved. Prior to 1952 Oklahoma, a manufacturer of low-cost furniture, had maintained a full fleet of tractors and trailers in which all its furniture was shipped. A full crew of drivers was employed. Oklahoma absorbed all the expenses, and carried all the risks, of its transportation operation. It utilized a system of delivered pricing which eliminated transportation charges as an identifiable element of the price of its furniture. Its status as a private carrier exempt from licensing requirements was never questioned under the pre-1952 arrangement. But that method of operation was found to incorporate certain burdensome disadvantages. Oklahoma discovered that its employee-drivers were embezzling its funds through the misuse of credit arrangements which the company had established for the purchasing of fuel and minor repairs on the road. In addition, Oklahoma became convinced that its equipment was too often involved in accidents, and too often in need of repairs and maintenance which could have been avoided by careful operation.

In an effort to eliminate these disadvantages, Oklahoma in 1952 altered its modus operandi. It decided to terminate its investment in tractors for long hauls and, instead, to lease them from the drivers. The original lease agreements encountered difficulty when, in 1956, the Supreme Court of Arkansas held that the resultant operation constituted for-hire carriage by the owner-operators which required licensing under the applicable Arkansas statutes.¹³ Following this turn of events, Oklahoma revised the leases, and also entered into a collective agreement with the union representing its workers setting forth the terms under which the owner-operators were to be employed as drivers. The current lease and collective agreement provide the factual predicate of the present litigation.

The Company presently owns 26 trailers and 6 tractors. It leases 11 tractors for long-haul use in connection with the trailers which it owns. It is solely in connection with the 11 leased tractors and the services of their owner-operators that the Commission discerned the provision of for-hire transportation. The leases are for renewable terms of one year, but they are terminable by either party on 30 days' notice. Oklahoma is granted the sole right to control the use of the tractor through drivers employed by it; in return, it covenants that such use will be lawful and will be confined to the transportation of the Company's property. Oklahoma pays for its use of the tractors strictly on a milease basis. The owner receives weekly rental payments of 10 or 11 cents for each mile the vehicle is driven, plus an extra 3 cents per mile on the backhaul if there is a load of raw materials. Oklahoma does not guarantee any minimum mileage. Operating costs—including gasoline, oil, grease, parts, and registration fees—are paid by the owners. Oklahoma assumes no responsibility for wear and tear or damage to the tractors, nor does it provide collision or fire and theft insurance coverage—although it does pay for public liability and property damage insurance. The owners assume no responsibility to Oklahoma for damage to the cargoes.

Under the collective agreement covering the drivers among its employees, the drivers enjoy certain common employment privileges such as collective bargaining, seniority rights, death benefits, immunity from discharge except for cause, military-service protection, and vacation pay in an amount based on their average weekly pay. Owner-drivers may be discharged for cause.¹⁴ Their remuneration is calculated strictly on a mileage basis, and they are obliged to pay their own living expenses while on the road. No minimum weekly pay or mileage is guaranteed.¹⁵ Drivers are required to maintain their trucks in good...