United States v. Seatrain Lines

• Decision Date: 06 January 1947
• Docket Number: No. 61,61
• Parties: UNITED STATES et al. v. SEATRAIN LINES, Inc
• Court: U.S. Supreme Court

329 U.S. 424

67 S.Ct. 435

91 L.Ed. 396

UNITED STATES et al.

v SEATRAIN LINES, Inc.

No. 61.

Argued Dec. 9, 1946.

Decided Jan. 6, 1947.

Appeal from the District Court of the United States for the District of Delaware.

Mr.Edward M. Reidy, of Washington, D.C., for appellants.

Mr. Wilbur LaRoe, Jr., of Washington, D.C., for appellee.

Mr. Justice BLACK delivered the opinion of the Court.

Seatrain is and long has been a common carrier of goods by water. Its harbor facilities and vessels have been constructed to enable it to perform a distinctive type of water carriage. Loaded railroad cars can be hoisted and transported in its vessels, thereby eliminating such things as trouble, time and breakage, said to be incident to loading and unloading goods from railroad cars. See United States v. Pennsylvania R.R., 323 U.S. 612, 65 S.Ct. 471, 89 L.Ed. 499. Seatrain vessels also have tank space for carriage of liquid cargoes in bulk.¹

Part III of the Interstate Commerce Act, 54 Stat. 929, 49 U.S.C. § 901 et seq., 49 U.S.C.A. § 901 et seq., subjected water carriers to the jurisdiction of the Interstate Commerce Commission. Section 309(a) of that Act, 49 U.S.C.A. § 909(a), required them to obtain certificates of public convenience and necessity from the Commission. The same section contains a proviso commonly referred to as the grandfather clause. It provides that any water carrier, with an exception not here material, which was in bona fide operation as a common carrier by water on January 1, 1940, shall be entitled o a certificate to continue operations over the route or routes which it had been serving previous to that date without determination by the Commission of the question of public convenience and necessity.

May 28, 1941, Seatrain filed two applications with the Commission to obtain certificates for two different routes, one of which it had operated since 1932, and another which it had begun to operate in 1940 shortly after passage of the water carrier provisions. Seatrain's application described its operation on each route as that of a 'common carrier by water of commodities generally.' After due notice had been given to all interested parties, Division 4 of the Commission conducted investigations, satisfied itself as to the right of Seatrain to be granted both applications under the provisions of the Act, made appropriate findings, and concluded that Seatrain was entitled to engage in transportation on both the routes as 'a common carrier by water of commodities generally.' A single certificate to carry 'commodities generally between the ports of New York, New Orleans, and Texas City, by way of the Atlantic Ocean and the Gulf of Mexico' was accordingly issued to Seatrain. By its terms it became effective August 10, 1942, subject 'to such terms, conditions, and limitations as are now or may hereafter be, attached to the exercise of such authority by the Commission.'

A year and a half later, January 27, 1944, the Commission, on its own motion, ordered that the proceedings be reopened for the purpose of determining whether the 1942 certificate should not be modified so as to deprive Seatrain of the right to carry commodities generally. Seatrain appeared and moved to vacate and rescind the Commission's order to reopen the proceedings on the ground that the Commission was without statutory authority to make the alteration proposed. Seatrain's motion was rejected. At the subsequent hearing on the proposed modification, Seatrain declined to offer evidence, resting its case entirely on the Commission's lack of authority to reconsider and alter the original certificate. After argument, the Commission entered an order canceling the former certificate and directing that a different one be issued. 260 I.C.C. 430. The proposed new certificate in effect deprived Seatrain of the right to carry goods generally between the ports it served, and limited it to operations only 'as a common carrier by the 'Seatrain' type of vessel, in interstate or foreign commerce, in the transportation of liquid cargoes and bulks; of empty railroad cars; and of property loaded in freight cars received from and delivered to rail carriers and transported without transfer from freight cars between the ports of New York, N.Y., New Orleans, Louisiana, and Texas City, Texas.'

Seatrain then brought this action before a three-judge District Court under 28 U.S.C. §§ 41(28), 47, 28 U.S.C.A. §§ 41(28), 47, to set aside the Commission's order. The District Court set aside the order on the ground that the Commission had exceeded its statutory authority in reopening the pro- ceeding and altering the certificate. The District Court further held that even if the Commission would have had power under different circumstances to alter a certificate, it should not have done so in this case where, as the Court found from evidence before it but which had not been before the Commission, Seatrain had expended large sums of money in reliance upon the complete validity of its certificate. 64 F.Supp. 156. We need not consider the Commission's objection to the District Court's admission of evidence not heard by the Commission since we agree with the District Court that the Commission was without authority to cancel this certificate.

In altering Seatrain's certificate, the Commission held that a certificate authorizing the carriage of 'commodities generally' does not embrace the right to carry loaded or unloaded railroad cars; that consequently the original certificate granted Seatrain actually deprived it f any future right to carry railroad cars its chief business; that issuance of the original certificate to carry commodities generally was consequently an inadvertent error patent on the face of the record which the Commission has the right and power to change at any time the matter comes to its attention. But Seatrain argues that, far from restoring the right to which it was entitled under the original proceedings, the new order actually results in a drastic limitation on the nature of the equipment and service Seatrain is privileged to employ in loading and carrying freight, and could bar delivery or receipt of freight to or from any consignees except railroads.

We need not determine the Commission's statutory power to correct clerical mistakes, since we are persuaded from Seatrain's applications for its certificates, from the information supplied to the Commission indicating that Seatrain had long transported goods of all kinds loaded in freight cars to consignees other than railroads, from the findings of the Commission, and from the course of the earlier decisions of the Commission regarding Seatrain, that the issuance of the original certificate was not an 'inadvertent' error which the Commission's subsequent action was intended to correct. For all these indicate that prior to and at the time of the issuance of the Seatrain certificate it was the understanding of Seatrain and the Commission that its transportation of 'commodities generally' included carriage of freight cars and that carriage of freight cars would not exclude carriage of commodities generally. Moreover, the Seatrain application was not reopened for consideration by the Commission until its decision in Foss Launch & Tug Co., 260 I.C.C. 103, decided December 18, 1943. There the Commission pointedly ruled for the first time that a certificate to carry 'commodities generally' did not authorize water carriage of loaded or unloaded freight cars—so-called 'car-ferry service.' Thus it seems apparent that the Seatrain proceedings were reopened not to correct a mere clerical error, but to execute the new policy announced in the Foss case. This conclusion is supported by the fact that in prior proceedings involving Seatrain, the Commission had rejected the contention that Seatrain's vessels could be classed as 'car ferries,' and had concluded that they were ocean going water carriers.²

Since the proceedings apparently were not reopened to correct a mere clerical error but were more likely an effort to revoke or modify substantially Seatrain's original certificate under the new policy announced in the Foss case, the question remains whether the Act authorizes such alterations. The water carrier provisions are part of the general pattern of the Interstate Commerce Act which grants the Commission power to regulate railroads and motor carriers as well as water carriers.³ The Commission is authorized to issue certificates to all three types of carriers. But it is specifically empowered to revoke only the certificates of motor carriers. Section 212(a), Part II, Interstate Commerce Act,...