American Trucking Assns. v. Frisco Transportation Company

PETITIONER:American Trucking Assns.
RESPONDENT:Frisco Transportation Company
LOCATION:Union Station

DOCKET NO.: 15
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 358 US 133 (1958)
ARGUED: Oct 13, 1958
DECIDED: Dec 15, 1958

Facts of the case

Question

  • Oral Argument – October 13, 1958 (Part 1)
  • Audio Transcription for Oral Argument – October 13, 1958 (Part 1) in American Trucking Assns. v. Frisco Transportation Company

    Audio Transcription for Oral Argument – October 13, 1958 (Part 2) in American Trucking Assns. v. Frisco Transportation Company

    Earl Warren:

    Mr. Ginnane you may proceed.

    Robert W. Ginnane:

    May it please the Court.

    In this case the commission authorized to Frisco, a wholly owned subsidiary of a railroad, to acquire the motor carrier operating rights of four existing motor carriers.

    Now Section 5(2)(b) of the Interstate Commerce Act provides that such acquisitions by a railroad or its affiliate maybe authorized by the commission if the commission finds that the proposed acquisitions not only are in the public interest but also will enable such railroad carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition.

    Now this congressional policy against unlimited motor carrier operations by railroads has been before this Court several times.

    Specifically in the first Rock Island Motor Transit case in 340 United States this Court held that to carry out this congressional policy, the commission in authorizing such an acquisition by rail affiliate may insert in the certificate which it issues to the rail affiliate a reservation of power to impose future conditions necessary to ensure that the motor carrier service remains auxiliary and supplemental to the train service of the railroad.

    And also just this last term in the American Trucking Association case, this Court held that while the commission may authorize unrestricted motor carrier operations in special circumstances that its action in doing so must be supported by appropriate findings and edits.

    That’s in the 207?

    Robert W. Ginnane:

    207.

    Do you take a position that the commission cannot (Inaudible)

    Robert W. Ginnane:

    The commission has taken the position in several cases that it may — even under 5(2)(b) it may authorize unrestricted operations in special circumstances.

    A feature of this case is that it did not purport to do so.

    William O. Douglas:

    You are going to distinguish the Watson case.

    Robert W. Ginnane:

    Well briefly we take the distinction there as it is and a major feature in that case which is absent here is that there the commission purported to correct or modify a certificate without opportunity for a hearing to the certificate holder.

    Here there has been a hearing, hearings and due process to the extent of some years.

    In other words, when the commission acts to authorize a rail affiliate to acquire motor carrier operating rights, act to define the scope of the operations when it permits, its actions must be supported by findings, and the law is clear in the absence of such findings the courts upon challenge will set aside the commission’s orders.

    At the same time these proceedings are not just a matter between the commission and Frisco.

    Competing independent motor carriers have a right to be heard before the commission, they have a right to challenge the commission’s orders in the courts and we think they are entitled to assume that the findings and conditions set forth in the commission’s reports fairly describe the action which it’s about to take.

    Now the four certificates involved in this case were issued on the basis of three reports of the commission.

    And it’s undisputed that in each report the commission, Division 5, made the findings required by Section 5(2)(b) where the acquisition is by a rail affiliate.

    And that at each report these crucial findings were made subject to a reservation of power to impose the future conditions.

    No later report of the commission or of any division of the commission ever purported to modify or vacate those findings or the proviso reservation which was a part of the findings.

    The requirements of hearings and findings are valuable procedural rights.

    And where the commission acts after a hearing required by law and makes findings required by law, it disclaims any power to make a farce out of the hearing and out of the findings by taking action that substantially differs from the findings, to issue a certificate that differs substantially from the findings that are made in the commission’s report.

    Rather the commission believes that when such a matter is discovered, called to its attention, it has both the power and duty to correct the certificate to confirm with the findings as required by law.

    Now we submit that every tribunal, court, or administrative agency inherently has this power to put back the integrity of its proceedings and the case of the courts, rule 68 or the Federal Rules of Civil Procedure is express that clerical mistakes in judgments orders or other parts of the record and errors therein arising from oversight or omission maybe corrected by the court at any time of its own initiative or on the motion of any party and after such notice if any as the court orders.

    Section 17(3) of the Interstate Commerce Act provides that the commission shall conduct its proceedings under any provision of law in such manner as we are conduced to the proper dispatch of business and the ends of justice.

    Now we submit that under this provision the commission has the same power of a court to correct clerical errors in its orders and certificates.

    In our brief, we call attention to other cases, other examples in which the commission has occasion to correct obvious error in certificates of public opinions and necessity.

    An example which is not in our brief, but which illustrates the point more sharply than any which we do mention, the commission once issued a certificate authorizing service among other points to Norris Town, New Jersey.

    Robert W. Ginnane:

    There is no Norris Town in New Jersey.

    Well the section of certificates that it would be helpful and clarify the matter so they issued the certificate, Morristown, New Jersey, a substantial industrial center, but to point for which the applicant had not even asked authority to serve.

    Finally the commission issued a supplemental report in a new certificate reading as it should have been from the beginning Norristown, Pennsylvania.

    Now the commission grants in whole or in part, even at the present time, about 2000 applications for permanent certificates and licenses a year and back in the 1940s the annual volume was more.

    Occasional mistakes, crude silly mistakes occasionally will happen and we think it’s in the public interest and fairness to parties that the commission should be able to correct such mistakes.

    Now —

    (Inaudible) that order at issue to preserve the power of the commission, is that right?

    Robert W. Ginnane:

    Yes.

    And it’s true to all four?

    Robert W. Ginnane:

    As to all four.

    And there were two other that are not involved in this case where —

    Robert W. Ginnane:

    Well there were two others Bennett and Rose.

    When the Bennett certificate was issued by the commission section of certificates, the Bennett certificate contained the reservation of power.

    The Rose case is no longer — the Rose certificate is no longer involved here because under the peculiar facts of those cases — of that case the commission waived the limitation.

    (Inaudible)

    Robert W. Ginnane:

    As I recall it wasn’t.

    Now in the Seatrain case back in 329 U.S., this Court specifically refrained from passing up on the question of whether the commission has power to correct errors in certificates.

    In the mean time the District Court and judges that have dealt with the matter have divided.

    The court below in this case, with Judge Moore dissenting, apparently believed that Section 212(a) of the Interstate Commerce Act precludes the commission from revoking or modifying a certificate for the purpose of correcting errors.

    Now the text of 212(a) is set forth at Pages 32 and 33 of our brief.

    As pertinent here Section 212(a) does two things, first it provides that certificates, permits, and licenses shall be effective from the date specified therein and shall remain in effect until suspended or terminated as herein provided.

    Now clearly that provision is intended to provide finality and stability for properly issued certificates.

    We think it’s distorted if it’s read to prevent the correction of errors in certificates, errors which can impair the value and the stability of other outstanding certificates in the hands of competing carriers.

    And we think there is no reason to believe that Congress intended to give greater finality to certificates against correction of error than it gives to judgments under Rule 68 of the Rules of Civil Procedure or to these which everywhere today tend to reform to eliminate obvious errors.

    I read the District Court’s opinion little differently than perhaps the state did.

    I thought that the premise, the majority of District Court was that the commission — the evidence was showed that the commission had not acted (Inaudible) that the certificate had not — issued incorrect and therefore 212 came into play.

    Robert W. Ginnane:

    That was certainly a premise of that opinion and one which we had to meet here.

    It seem to us that probably they were holding and I am not sure but probably they were holding that correction of a certificate once issued amounted pro tanto to a modification or revocation prohibited by Section 212(a).

    Earl Warren:

    Mr. Ginnane was there any challenge made to that reservation that was put in the report of Division 5?

    Robert W. Ginnane:

    In those original reports?

    Earl Warren:

    In original reports.

    Robert W. Ginnane:

    No sir, Frisco Transportation Company did not petition for reconsideration by the entire commission.

    Earl Warren:

    Is there anything in the record that would indicate that that the, the whole commission reconsidered that question as to whether that reservation was proper?

    Robert W. Ginnane:

    No the full commission didn’t get to this matter until several years later.

    Earl Warren:

    But I mean one of the — before they issued the first order without the reservation.

    Robert W. Ginnane:

    No indications.

    Earl Warren:

    There was nothing of that kind in the record?

    Robert W. Ginnane:

    Nothing, no indication at all.

    Earl Warren:

    Yes.

    Robert W. Ginnane:

    Nothing in the record and nothing that I know of from any other source.

    Charles E. Whittaker:

    Mr. Ginnane does the acquisition orders say that the conditions would be placed in the certificates or only that they might be depending upon what the commission later concluded?

    Robert W. Ginnane:

    The four reports or opinions of Division 5 said that the authority herein granted is subject to the reservation of power to impose such future conditions as is necessary to restrict the motor carrier service to service auxiliary and supplemental for the train service.

    When the compliance orders were issued, describing the certificate which would be granted, which would be granted to Frisco the compliance order said nothing about such a reservation.

    And as I pointed out when the certificates themselves were issued, they did not contain the reservation of power.

    Has a third interested party competition has any standing to be heard when a compliance order issues?

    I tried to find out about that, or ascertain was (Inaudible) – there does seem to be a provision for a hearing, an opportunity to be heard, and I was wondering what the situation was now.

    Robert W. Ginnane:

    It originated in the original grandfather procedure the commission so far as possible diluted with thousands of grandfather applications tried to process as many as possible without hearing procedures.

    Of course they were dangerous to them.

    So that when it had determined tentatively what grandfather certificate it would issue, it would issue this compliance order and the compliance order would describe the terms of the authority which the commission proposed to grant upon compliance with the rate and insurance provisions of the act.

    Felix Frankfurter:

    Is the compliance drafted by in the secretary’s office?

    Robert W. Ginnane:

    No in the section of certificates in the Bureau of Motor Carriers.

    So under those circumstances, the compliance order in those days served a valuable notice function to competitors.

    Now when you get to the later proceedings or even grandfather proceedings which are the subject of hearing and reports — and published reports by the commission then the compliance order doesn’t particularly serve that function.

    At that point it becomes more or less a recording document.

    It goes to the applicant and says when you comply with the insurance and rate requirements and you must do so in so many days then we’ll issue your certificate.

    So it could not fairly be said that the competitor would have an opportunity at that stage to assist the compliance order in the form (Inaudible)?

    Robert W. Ginnane:

    My associate Mr. Beardsley has some information on the extent to which the compliance orders were served in this matter.

    Of course the commission’s report was served and then was a public document and of course before the certificates, the public convenience necessity was entered in this case.

    Competing motor carriers had filed a compliant, a formal compliant with the commission alleging that on these routes Frisco was engaging in operations more extensive than those authorized by Division 5.

    Felix Frankfurter:

    My question was a loose one or an unclear way of asking whether the compliance orders of (Inaudible) report of the commission, of a division of the commission.

    Felix Frankfurter:

    Why don’t you tell us what the proceeding is in the report and then there’s a compliance order applied, is that right?

    Robert W. Ginnane:

    That’s correct.

    Felix Frankfurter:

    Now, is that an intra commission affair —

    Robert W. Ginnane:

    No —

    Felix Frankfurter:

    — in order to have a document?

    Robert W. Ginnane:

    No the compliance order is addressed primarily to the applicant, send out to the applicant.

    Felix Frankfurter:

    Yes, but–

    Robert W. Ginnane:

    And it tells him that upon compliance the insurance and rate requirements, a certificate will issue to him.

    And as in these cases the terms of the proposed certificate are set forth as an appendix to the compliance order.

    Felix Frankfurter:

    But is the document, is the piece of paper of formal authorization of that which is spelled out, reasoned and concluded in the report of the division?

    Robert W. Ginnane:

    No those are separate.

    Felix Frankfurter:

    If there are 2000 of these, as you indicated the mere, the mere bookie thing, the mere writing, the mere scrutinizing of the formal order addressed in the applicant and that which is spelled out, what I have often thought was too narrative of form to mingle the form into commission’s report myself, I think they have (Inaudible) follow that English custom of paragraphing the numbers instead of having it co-mingled it starts with the usual (Inaudible) commission.

    But — so I want to know what the compliance, whether the compliance order is merely that a formal document prepared by somebody and you tell in the compliance certificate division of motor act, putting in technical concrete legal form that which is contained narratively in the report, in the output report.

    Robert W. Ginnane:

    The formalization is in a separate order which comes out with the report.

    Now on Page 431 in the record–

    Felix Frankfurter:

    Wait a minute, 431 Mr. Ginnane?

    Robert W. Ginnane:

    Yes.

    Felix Frankfurter:

    The order, there’s an order there.

    Robert W. Ginnane:

    That’s an order.

    Felix Frankfurter:

    Is that the compliance order?

    Robert W. Ginnane:

    No, and if you’ll turn to Page 448, there is a compliance order.

    Felix Frankfurter:

    Now in this order would you address our attention, issued at the time that the report comes out?

    Robert W. Ginnane:

    At the time or very shortly thereafter, essentially it accompanies the report.

    Felix Frankfurter:

    Okay it’s alright.

    Robert W. Ginnane:

    Formal order accompanying the report.

    Felix Frankfurter:

    Now go up to next document.

    Robert W. Ginnane:

    Then the compliance order issued separately, and that’s months afterwards, an example that as on Page 441 of the transcript.

    Felix Frankfurter:

    Months after that did you say?

    I am not criticizing, it’s not my business because I — they have burdens there of which I am not unaware now, I am just trying to get the normal course of procedure since the dealing here was procedural devices or procedural facts.

    Robert W. Ginnane:

    Well I agree —

    Felix Frankfurter:

    And that’s the secretary, (Inaudible) secretary, that’s the secretary of the commission?

    Robert W. Ginnane:

    That’s correct.

    Felix Frankfurter:

    That’s what I would assume but you say no, it’s not in the secretary’s role.

    Robert W. Ginnane:

    Well it’s over the secretary signature.

    Felix Frankfurter:

    Yes, but it’s preparedly —

    Robert W. Ginnane:

    Section of Certificates of the Bureau of Motor Carriers.

    Felix Frankfurter:

    And that is months after?

    Robert W. Ginnane:

    No I have to withdraw that statement, it normally would follow.

    Felix Frankfurter:

    Pretty promptly wasn’t it, as soon as the business permits —

    Robert W. Ginnane:

    In that period probably within a matter of two or three weeks.

    Felix Frankfurter:

    Yes.

    They both came down 1939 (Inaudible)

    Robert W. Ginnane:

    Yes.

    Now we submit that the issuance of a certificate of public convenience necessity does not cut off judicial review of the commission’s action of authorizing — in authorizing the issuance of a certificate.

    That is Section 212(a) can’t cut off judicial review just because the certificate was issued.

    Felix Frankfurter:

    Well they can seek review on the basis of the order on page 431, can’t they?

    Robert W. Ginnane:

    That’s right.

    And frequently do –

    Felix Frankfurter:

    Yes.

    Robert W. Ginnane:

    — but in the American Trucking Association case, back in 326, the certificates had actually issued, and in other cases in which the certificates have actually issued, and no one has seriously contented, the issuance of a certificate cut off judicial review of the commission’s action in authorizing issuance of a certificate.

    And we submit therefore that it will pointless to interpret 212(a), as precluding the commission from voluntarily correcting its own errors, but the same, even though we recognize an obvious error, we must wait until a suit is brought in court, until judicial action compels us to clean up the situation.

    Felix Frankfurter:

    The certificate gets a serial certificate number, doesn’t it?

    Robert W. Ginnane:

    Yes.

    Felix Frankfurter:

    I mean and that’s the — when the trucker is challenged on the road, he produces that piece of paper or a photostat copy has it, isn’t that true? The certificate number is on these trucks that (Inaudible)

    Robert W. Ginnane:

    That’s correct.

    But the question through, the numbers —

    Felix Frankfurter:

    And that’s —

    Robert W. Ginnane:

    The number by itself tells nothing as to what the scope is about?

    Felix Frankfurter:

    No, but that’s a technical document, whereby he is on the road.

    Robert W. Ginnane:

    That’s the technical document.

    Robert W. Ginnane:

    The second thing that Section 212(a) has is to prohibit the suspension, modification or revocation of certificates, except for willful failure to comply with the act or with the commission’s rules or orders under the Act.

    Now we submit that this delineation of the grounds on which certificates can be modified or revoked, relates only to the substantive ground for revocation.

    We think as this Court suggested in Seatrain, that it protects the holder of a certificate, against retroactive changes in commission policy.

    But we don’t think it was ever intended to preclude the correction of errors, which if the Commission doesn’t correct itself, the courts will surely do so.

    Now we think the proper concept of Section 212(a) was suggested by this Court last term in the Nelson case.

    That was a case in which there was a disagreement between the commission and the carrier, as to the proper interpretation of a certificate.

    And always as in such interpretation problems, the carrier claims that the Commission by its interpretation is modifying the certificate in violation of 212(a).

    And to that contention and that case, this Court said, it is true of course that limitations and commission power to modify motor carrier permits established in Section 212(a) of the Act cannot be bypassed under a guise of an interpretive action.

    Commission interpretation of the meaning of a permit, being simply a definitive declaration of what rights existed from the very beginning under the permit, cannot be equated with modification however, unless found to be clearly erroneous.

    And we say here, that the correction of an error in a certificate, to conform it to the findings required by law, is not an attempt to bypass the requirements of 212(a), anymore than the legitimate interpretation of a certificate.

    As this Court held in the Nelson case, is the bypassing or evasion of Section 212(a).

    Now the second theme in the decision below, perhaps the major theme as Justice Harlan pointed out, was the finding of the majority below, that the Commission’s action in modifying Frisco certificates, wasn’t merely a correction of error, but an attempt to apply to Frisco’s outstanding certificates an intervening change in commission policy.

    Now we submit there is no basis in law or in fact by that conclusion.

    It’s undisputed that neither the commission, nor any division of the commission ever modified or vacated the findings in the original reports.

    It’s undisputed that the commission did not, and as a matter of law may not delegate to its section of operating rights, any power to issue certificates, which do not conform to the Commission’s findings as required by law, and it’s settled by decisions of this Court, that neither a member, nor an employer of the Commission may modify the Commission’s decisions or bind it contrary to law.

    Felix Frankfurter:

    Suppose after the report by division a certificate doesn’t issue and no step is taken by the commission or any interested party having standing to reconsider the report and the order based on it, would mandamus allow it for the issue of the certificate, on the basis of the report?

    Robert W. Ginnane:

    The equivalent of mandamus has been issued in a variety of cases to compel administrative agencies to take action, which they have withheld without any justification.

    Felix Frankfurter:

    (Inaudible) I remember the old (Inaudible) case —

    Robert W. Ginnane:

    I am thinking of that.

    Felix Frankfurter:

    — mandamus was allowed to issue.

    Robert W. Ginnane:

    And a similar case was issued under — similar order was issued under the Emergency Price Control Act to require action which had been delayed.

    And indeed that the principal is expressly embodied in Section 10 of the Administrative Procedure Act, which gives to reviewing courts, power to compel agency action which is unlawfully withheld.

    Felix Frankfurter:

    Well is it fair say then using the technical term that whoever acts on the order following the report, exercises a ministerial act?

    Robert W. Ginnane:

    Only ministerial acts.

    Felix Frankfurter:

    I’m assuming that the question of reconsideration of the report and the order upon it, an order like 431 is not (Inaudible)

    Robert W. Ginnane:

    As here, there were no petitions for reconsideration, of the reports and conclusions at Division 5 in the original acquisition proceedings.

    Will you, before you sit down will you address yourself to Justice Whittaker’s question on how you tie in the Bennet certificate, that the inadvertency in a case of these others?

    I don’t —

    Robert W. Ginnane:

    I think a plausible — I do not in fact know through the passage of time, I would explain it simply that we don’t make the same mistake all the time.

    Earl Warren:

    Who is next?

    Peter T. Beardsley:

    Beardsley.

    Earl Warren:

    Mr. Beardsley, you may proceed.

    Peter T. Beardsley:

    Thank you Your Honor, may it please the Court.

    The parties in numbers 15, the parties appellants at five independent motor carriers whose operations are competitive with those of the Frisco, the rail subsidiary here and it’s parent railroad, two trade associations, one of them American Trucking Associations, which is simply the trade association of the motor carrier industry and the regular common carrier conference of American Trucking Associations which represents the special interests of independent motor carriers operating over regular routes in the transportation of general commodities, pursuant to certificates issued by the ICC.

    All of the parties in number 15 have participated in these proceedings, both before the commission and the district court.

    The questions as we see them are three-fold in this case.

    The first question is whether the commission has power, in any event, to allow a railroad or its affiliate to conduct unrestricted truck service through the purchase of a outstanding certificate under Section 5, I’ll deal with that question if I may last.

    The second question as we see it here is could the commission, under of the facts of this case, and even assuming that it has power under Section 5 to issue an unrestricted certificate, could have authorized such service by Frisco here, as Frisco alleged it did intentionally, even though in the only proceedings which were conducted in connection with the rights, which are involved in this case, the commission clearly indicated that the rail subsidiary was to acquire only a right to operate a so called auxiliary and supplemental service and to this day Frisco has never asked for reconsideration of that basic decision.

    The third question here as we see it, is whether the Court below erred in holding that the certificates here in issue, weren’t issued inadvertently by the commission.

    Now coming first to the finding of the Court below, and we must agree that they squarely held that the commission did intend to issue these certificates, of course we adopt the argument that counsel for the commission has made and I would just like to add a little to it if I may.

    First let me recap the situation very briefly.

    Frisco filed applications before the commission to purchase the operating rights of independent motor carriers.

    A commission conducted hearings in these cases, and other independent motor carriers came in and protested to the commission in effect that these rights should not be granted.

    First — the commission however did in its reports from the finance cases, allow the purchase by Frisco of these independent carriers.

    But it said that Frisco was not acquiring the right to continue to conduct operations, just as the independent carriers had conducted, but rather that Frisco was to get these rights to be used in auxiliary and supplemental service.

    Now Frisco never to this day, with all this time intervened, has asked the commission to reconsider those decisions in the original finance cases.

    Now at that stage of the game the independent motor carriers were obviously satisfied.

    The commission in the finance cases had met the mandate of Section 5(2)(b) and that Section is cited in our brief at Page 23 and it says in essence that the commission in order to authorize a railroad or subsidiary to purchase an independent motor carrier must in its order define that the operations purchased will be used to public advantage by the railroad, “In its operations” and I think it will be gilding really for me to talk much more about that.

    This Court will understand that that is the basis for the commissions coming up with this term of auxiliary and supplemental service.

    And here is the situation that the independent motor carriers find themselves in or found themselves in there.

    Without any further proceedings of any kind before the commission, they woke up one day to find Frisco operating up and down the road just as any independent motor carrier would operate.

    They then filed a complaint with the commission and that is the Campbell Sixty-Six, complaint that has been referred to, to the effect of such operations were illegal.

    Now in the year following their complaint, the commission issued these unrestricted certificates to Frisco.

    Now as we see it the decision of the court below of majority at least has two basic infirmities.

    First it completely failed to hold as it should have held that the independent motor carriers just like Frisco have some rather important chips in this game.

    They were entitled to rely on the commission’s findings and the underlying finance proceedings that Frisco was to get only restricted operating rights.

    And second we believe that the court below failed to hold and improperly failed to hold that the congressional policy which embodied in the proviso of 5(2)(b) absolutely prohibits and here is where we depart with the commission, prohibits the commission from issuing unrestricted motor carrier authority to a railroad or its affiliate in any event and that therefore whether the commission did in fact issue these certificates inadvertently or otherwise, they were a novelty because they exceeded the commission’s power.

    Under that view, the reservation order would be meaningless?

    Peter T. Beardsley:

    Well perhaps so, but the reservation order would indicate that commission had complied with the mandate of 5(2)(b) Mr. Justice Harlan and I would stop right here and point out that the court below refers to the fact that the commission was changing its policy.

    The fact of the matter is, this isn’t the commission’s policy to change or not to change, this is a congressional policy which as we see it, the commission is bound to obey.

    Felix Frankfurter:

    Would you mind address yourself before you sit down Mr. Beardsley to findings 11, 12 and 13 of the conclusions of law and I am using — jurisdiction of statement would be commission — Page 40 jurisdiction of states, findings of 11, 12 and 13.

    Peter T. Beardsley:

    Yes, but let me assume for the purpose of the argument that I now about to make that as the majority below held the commission did change its mind somewhere along the line, we are not told when, how, what or why?

    But let’s say that the commission changed its mind after it had formerly issued its reports and orders in the finance cases holding that Frisco was to receive only restricted operating rights.

    At some time between that time and a time that these so called compliance orders were issued, the commission had decided well we were wrong and we will give them unrestricted rights and we will evidence that by these compliance orders which we are now issuing, which is the essence of Frisco’s claim.

    We say that if the commission did that that it decried the motor carrier protestors in the underlying finance cases of even the rudiments of due process.

    We do not think this Court for a minute will hold — would hold still for that argument, because what would the — what would have been the result of that type of thing, carriers have gone before the commission, they have been satisfied that the commission has complied with the mandate of 5(2)(b), there is nothing more they can do.

    They know then and there that Frisco is not to get anything more than the so called auxiliary and supplemental settlements.

    Now if the commission by some process of a star chamber operation and that’s what is suggested here in the final analysis it couldn’t be anything else, there have never been any formal record with court proceeding on anything of that kind where the independent motor carriers who once knew that Frisco was getting only restrictive rights, have ever been told anything different.

    You got no notice of the compliance orders?

    Peter T. Beardsley:

    Now it’s interesting in that connection that while Frisco makes an effort and contends throughout that this compliance order went out to everybody, they have never gone to the commission and gotten a certificate from the Secretary of the Commission with respect to just whom those compliance orders were served.

    Now I am trying to say that, what I have here is not in the record, but then what Frisco was talking about is not in the record either.

    We have researched these cases in the commission’s files and we find that as a practical matter, the compliance orders were served on council who were protestors in the reason of grandfather cases; and where the same council was not a protestor in the finance case he didn’t resort to receive the compliance order.

    But I would go farther Mr. Justice Harlan and say this that even if a carrier in this — in one of these cases received a copy of a compliance order that this statute which perhaps in the policy which is embodied in 5(2)(b) is not for him to wait — and if he wants to.

    Congress didn’t say in effect that the commission shall not grant unrestricted rights unless some of the motor carriers have no objection to it.

    Congress said that the commission shall not grant unrestricted rights and I don’t believe that — I believe that the receipt or non-receipt of a compliance order is really a collateral matter.

    As you speak with great assurance on that 5(2)(b) but commission as a matter of practice, I think it has some flexibility and I don’t know of any case is decided — the American Truckers case certainly doesn’t decide it.

    Peter T. Beardsley:

    As you quickly — as you pointed a while back ago that was a 206 case where we were asking this Court to read the provision of 5(2)(b) into 206.

    Here we don’t have to ask you that, the provisions of 5(2)(b) either apply in this case or they are written out of the statute and that in effect is what the decision of the court below does.

    We are not asking you to read anything in here because 5(2)(b) is specifically applicable through the finance cases before the commission.

    Now only Judge Moore dissenting below seems to realize as a practical matter that if the commission hasn’t in fact made a clerical error here, as a matter of lawistic pride the independent motors carrier is a due process.

    We think it completely and properly is disposed of this phase of the case, at record 173, when he said this, “I do not see how plaintiff would justify changes in the commission’s findings made without giving notice or an opportunity to be heard to those appearing at the acquisition proceedings.”

    Charles E. Whittaker:

    Is it true Mr. Beardsley that every acquisition order in a rail subsidiary acquisition contains this language that the commission may insert a condition?

    Peter T. Beardsley:

    No sir, Mr. Justice Whittaker, I would ask you remember this that at the findings procedures, the finance we are the dealing before the commission, this law was fairly new.

    The commission over the course of years has changed its mind for example as to what specific restrictions ought to imposed in any given case to carry out the original congressional policy.

    For example when they first stated issuing certificates to railroad affiliates, they include a so called prior and subsequent rail haul, which meant that for the freight to move in the truck it had to either moved by the railroad or would have to be scheduled to move by rail after they are moved by the truck.

    Then in the Parker case, the proceedings which became a proper case here, the commission substituted a so called key point restriction for a prior and subsequent haul.

    But what I am saying is this that in every case in which the commission issues authority to a railroad or its affiliate pursuant to Section 5 that Congressional mandate is there and we frankly with all due respect don’t believe that is for the commission to ignore in any given case, particularly in a case such as this where they have never been a claim before the commission, but they are an unusual circumstances which would require the commission to waive the mandate or the proviso even if it has the authority.

    Now I think some of the questions here have suggested that there maybe some equities in this thing that Frisco might be in effect subject to inequitable results if this decision by the court below is set aside.

    In fact Frisco raised that point before the commission as long ago in 1946 and it’s in the record here at 227.

    We say that no validity whatsoever is denied.

    Peter T. Beardsley:

    Frisco by its admission knew when Campbell Sixty-Six filed its complaint before the commission and that was before it got its certificates, its right to conduct an unrestricted operation was challenged.

    In addition to the fact Frisco has defined it, received these certificates as a well staffed and well counseled railroad subsidiary, certainly knew that it had received property to which it wasn’t entitled either equitably or (Inaudible).

    And I believe it’s fair to say that Frisco in effect had clearly simply decided to move this situation through, it simply sort of gambled and so far as I can see so far it has been a gamble which has returned a handsome profit to Frisco.

    If any one has an equitable compliant here, it’s the independent motor carriers who went all the way they could before the commission, found that their efforts was successful in having the commission enquire with the mandate of Frisco and then having cases of paper issued to Frisco which were contrary to the commission’s findings in the underlying finance cases and having to sit back and watch Frisco over the years conduct its operation which has never been authorized by commission.

    Hugo L. Black:

    What kind of operation are those exactly?

    Peter T. Beardsley:

    Unrestricted.

    Hugo L. Black:

    They are unauthorized according toy our statement?

    Peter T. Beardsley:

    Unrestricted truck operation, having no —

    Hugo L. Black:

    Applied here what?

    Peter T. Beardsley:

    Beg your pardon?

    Hugo L. Black:

    As applied here, I’d like to get if I can a little more concrete knowledge.

    Peter T. Beardsley:

    Well as applied here that the difference is that Frisco has no obligation under the certificates which were issued to conduct a so called auxiliary and supplemental operation.

    If they do conduct one, it’s only because they want to, whereas the statute requires the commission to authorize only those so called auxiliary and supplemental operations, in essence operations which are designed to use truck service not as an all out truck operation, as an independent truck operator will do, but an effort simply to speed up the rail service, for example by substituting a truck for a so called peddler car or a so called railway car, a railway car.

    Hugo L. Black:

    What have they been doing if they would have to stop and what have your people been losing if they would thereby gain?

    Peter T. Beardsley:

    Well, to the effect that they conduct unrestricted truck operations, they can take freight which they would not get tendered to them in the first instance by the shipper who wanted truck service.

    I’m not prepared to state Mr. Justice Black with any degree of —

    Hugo L. Black:

    I’m just trying to find out exactly, this is a line from what point to what point?

    Peter T. Beardsley:

    Well Frisco, I don’t know if you have it before you now, but Frisco —

    Hugo L. Black:

    Joplin to Miami?

    Peter T. Beardsley:

    There is a pretty good sized operation which has been laid out here.

    I have a map which I believe that the Court has before it, by Frisco, and they have shown this operation —

    Hugo L. Black:

    What is that in?

    Peter T. Beardsley:

    Just a separate map, which I believe Frisco has made available for the purpose of the argument and the map itself shows pretty well.

    Charles E. Whittaker:

    Well the area involved here is physically around (Inaudible)

    Peter T. Beardsley:

    Yes, that’s the area directly involved, but you can see that, how that hooks up with the balance of the map, the difference of the make, if this decision of the court below is upheld.

    Hugo L. Black:

    What is that distance?

    Peter T. Beardsley:

    I don’t know sir precisely.

    In addition to every thing else that’s been said here Frisco for example can move freight — that’s if these certificates, if they are enable to keep these certificates Frisco can move freight at truck rates for example instead of rail rates, that is just another factor in that.

    Charles E. Whittaker:

    (Inaudible) Joplin to Missouri is about 8 miles and from Joplin over to Miami it’s about what, 15 miles.

    Peter T. Beardsley:

    Yes sir.

    Charles E. Whittaker:

    Then you got another section way over on the top (Inaudible)

    Peter T. Beardsley:

    Yes sir, but this is all part of a jigsaw puzzle if you please Mr. Justice Whittaker and if you leave these pieces in here with no restriction, you’ve got a considerable operation, which Frisco has never had to prove public convenience and necessity for it, as it would have to do even if it had the right (Inaudible).

    Hugo L. Black:

    Well which part of this is the one that’s been amended, which part of this line?

    Peter T. Beardsley:

    They are the Cooper, the Hamm, the Tolson and the Parker purchases and they are between (Inaudible) and Blytheville, between Walnut Ridge and Memphis between I believe (Inaudible) and Lake City and between — I’m somewhat color blind, so I have a little trouble with this map, between Carthage and Joplin.

    Hugo L. Black:

    Frisco has been running a system there, is operating there, an unrestricted operation during this time?

    Peter T. Beardsley:

    Let me say this, I don’t know what Frisco has been doing, but they have had the right to do it if they wanted, in other words it’s been a matter of their managerial discretion and not a matter of complying with a congressional mandate set forth in Section 5(2)(b) of the Act which is specifically applicable to the purchase proceeding before the commission.

    Felix Frankfurter:

    Did you say that in the restricted certificate which you contend, they must charge rate — railroad rates as against charging independent trucker’s rate if they’re not still confined, is that right?

    Peter T. Beardsley:

    Yes sir.

    Felix Frankfurter:

    Well, now there must have been tariffs on file indicating the difference in rate, is that right?

    Am I wrong about that?

    Peter T. Beardsley:

    Well, ordinarily, let me put it this way Mr. Justice Frankfurter, ordinarily a restricted certificate as one its features requires a transportation of the traffic involved on rail billing and at rail rates, that’s just one, then you have the other restriction —

    Felix Frankfurter:

    But if the certificate does not still bind them, and then they charge different rates, there must tariffs on file indicating they are charging different rate.

    Peter T. Beardsley:

    Yes sir.

    Felix Frankfurter:

    Now what I would like to know is whether in fact there was such rate on file but it’s non-railroad rate on file, on the basis of non restricted certificate.

    Peter T. Beardsley:

    Quite frankly I will have to leave to Frisco to answer, they could if they — if they wanted to —

    Felix Frankfurter:

    (Inaudible)

    Peter T. Beardsley:

    Yes.

    If they wanted to charge motor carrier rates that is no problem, the motor carrier rates (Inaudible) —

    Felix Frankfurter:

    I just wanted — this is not — my question wasn’t an argument with entirety, whether in fact there had been on file with the commission over the years, rate based on the assumption of the unrestricted certificate for which they now claim?

    Peter T. Beardsley:

    Yes, I don’t know, I will leave that to Frisco.

    Felix Frankfurter:

    And whether the practical thing, this has been going on (Inaudible) you don’t know but theoretically they couldn’t do it, whereas if the opinion changes they would be allowed to do it, that’s your position.

    Peter T. Beardsley:

    Yes sir.

    Has the commission ever issued an unrestricted certificate under 5(2)(b) or —

    Peter T. Beardsley:

    Yes, I have to be completely candid, the commission has issued unrestricted certificates under 5, which we specifically say is beyond their authority to do, and I’m certain that if —

    It’s been asserting the authority to do it.

    Peter T. Beardsley:

    In exceptional circumstances, it’s just that it has never been raised in these proceeding, now of course.

    Charles E. Whittaker:

    Have they ever issued any order in an acquisition proceeding without reserving the right to condition a certificate?

    Peter T. Beardsley:

    I don’t know, but I wouldn’t say that in all the certificates which has been issued to rail subsidiaries, that there has never been a certificate issued which didn’t contain a reservation of the right to subsequently do something about it.

    Charles E. Whittaker:

    The significance of that to me is that, be a complete answer to the argument that this (Inaudible)

    Peter T. Beardsley:

    Yes sir and that is the complete answer as we say it is.

    Peter T. Beardsley:

    At Frisco, if they had wanted to insist that they had the right to conduct an unrestricted operation, what bound at some stage or another this proceeding to have asked the commission to reconsider its decision.

    The Court has never done to this day.

    Felix Frankfurter:

    But the Court below says there is no evidence that this was inadvertently done —

    Peter T. Beardsley:

    Yes and I think that the Court below —

    Felix Frankfurter:

    I thought that Justice Whittaker’s question implied that by the very nature of the course of business it was an inadvertence.

    If they know in large quantity, is never done and it once is done, unless there is some good reason for doing it in that case, which is contradicted by the finding of the division, one would naturally infer it was an inadvertence and yet the Court, the findings for which you are appealing or the decision of this case, the findings supporting the decision from which you (Inaudible), makes an explicit finding that there is no evidence that it wasn’t inadvertence.

    Now that is meant, by that is meant affirmative testimony of evidence, I can understand that but it wouldn’t get you anywhere.

    Peter T. Beardsley:

    You end up it seems to me Mr. Justice Frankfurter with two alternatives, either you hold the that commission issued these certificates inadvertently or you hold that there is no other holding you can make, that they conducted some sort of a star chamber process, never going on the record and never giving the independent motor carriers an opportunity to come before them and state their views and by that star chamber process reversed the only written decision they ever made in these finance cases, now it seems to me that’s the alternative this Court has and I don’t believe you —

    Felix Frankfurter:

    (Inaudible) an argument, neither one thing nor the other was intentional, but somebody in the book keeping department wrongly transcribed the journal entry as it were.

    Peter T. Beardsley:

    I want to make it cleat that we are not here accusing the commission doing this kind of thing, it’s Frisco that says that they did it, and of course the other alternative I spoke, there is a third alternative.

    Felix Frankfurter:

    They are standing on the basis of the certificate.

    Peter T. Beardsley:

    Correct.

    Charles E. Whittaker:

    How then do we explain that after your objections were filed in 1941 saying that Frisco (Inaudible) and that protest is pending before the commission one year later it issues the unqualified certificate.

    Peter T. Beardsley:

    Because sir the commission certificates are issued by a clerk (Inaudible) called the section of certificates which at that time and even today is up there grinding out those pieces of paper thousands upon thousands, and because the — I’m not here to defend the commission’s administrative practice, I think it’s short of what it ought to have been in the case, (Inaudible) there was here a very poor liaison between the proper organizations within the commission, but that’s the way I explain it, that’s the only explanation I can give because I don’t believe that anybody on the commission for example went and whispered in somebody’s ear in the section of certificates, now it’s true we said in these finance cases that we are going to issue only restricted authority, but don’t pay any attention to that, give them an unrestricted certificate, I’m not accusing the commission of that.

    Well the record you are here on is that the reopening in these proceedings, the examiner finds that this was all unintentional and inadvertent, Division 5 says the same thing and the full commission says the same thing and the district court says no they are all wrong, is that right?

    Peter T. Beardsley:

    Yes and that — the trouble as I previously pointed out in the District Court decision is, they cast aside in that find, any right which the independent motor carriers had before the commission and just almost put on line, they were careful to take Frisco’s rights down to the last iota, but you cannot read the decision and escape the opinion as Judge Moore points out, that they’ve completely overlooked the rights of the independent carriers who were protesting Frisco’s applications before the commission finish.

    They never had a chance.

    Felix Frankfurter:

    You don’t think it’s quite as accurate to say to the Court below that they are all wrong, simply says there is no adequate support in the evidence.

    Peter T. Beardsley:

    Yes

    Felix Frankfurter:

    So it’s a very different thing from saying they are all wrong.

    Peter T. Beardsley:

    Well I think they said Mr. Justice Frankfurter.

    I said it rather specifically I thought.

    They pointed out, and it’s contained in 171 on the record here, that despite the tenancy of the compliant that Frisco was operating illegally, the commission issued these unrestricted certificates and then the Court went on to say, in the face of all this, the commission would have us believe that the purported changes were made as a result of clerical error and later it said that what the commission is trying to do is limit the force of — then it gets in line with the present policy of the commission and use a claim clerical error that does not exist to justify such.

    Now I see that my time has expired Mr. Chief Justice, except I wanted to take one minute to advert to Justice Douglas’ question on the Watson case.

    Earl Warren:

    You may.

    Peter T. Beardsley:

    We think that there is a considerable difference between this case here and the Watson case.

    Principally the Watson case was this.

    Watson operated over approximately 85 routes, with respect to which, as far as about 65 of them, it had general commodities authority and authority to transport dangerous explosives.

    Watson filed an application with the commission trying to fill in all of its rights so to speak.

    It said it wanted to handle dangerous explosives to the other 18 and 19 points as to which it didn’t have authority.

    Peter T. Beardsley:

    During the course of the Watson proceeding, it developed that there were four government installations, very close to Watson’s operating rights, which it hadn’t asked for authority to serve, and Watson’s counsel said right during the course of the proceedings we would also like authority to serve both.

    Counsel for the protesters there, before the commission examiner said we have no objection to that broadening of the application so long as Watson is restricted to service of government organizations, the satisfactory (Inaudible).

    Ultimately the examiner issued his report and the report became the order of the commission.

    (Inaudible) certificate was issued in the Watson case.

    The certificate authorized the transportation of dangerous explosives as well as general commodities to these four government installations.

    But Watson operated under that certificate for four years and then without any notice or opportunity to be heard, such as has been afforded to Frisco in this case time and time again, the commission simply issued an order for purporting to revoke Watson’s right to serve these four government installations, except with respect to the transportation of dangerous explosives.

    Now the three judge court in the face of that record, said that the commission couldn’t do it, and Court affirmed, and of course it’s pretty difficult to try to read this Court’s mind and I won’t try to do it except to explain what we think is the distinction.

    First Watson was an independent motor carrier, and there was no question in that case, that the (Inaudible) had no application to that Watson operation.

    Watson was an entirely different category to start with, than is Frisco a real subsidiary.

    Second, Watson had been given no opportunity to be heard with respect to this alleged inadvertent error.

    The commission simply issued an order, said your certificate is revoked here is a new one and third as it seems to be important, in the view of the fact that this Court sits only to review important federal question as this.

    There was no objection of Watson serving these four government installations, in the transportation of both dangerous explosives and general commodities before the commission, all that the counsel for the production tried to assure himself up with this, that Watson wouldn’t serve anybody but the government.

    So I think this Court must have known when the matter came before it, before happening, that if it had gone along with the commission and upheld its correction of that certificate, Watson within 6 months would have been back at the commission, have failed an application to provide general commodity service to those four government installations, who bear in mind had no truck service whatsoever and would have been authorized by the commission to conduct such operation and so in addition to all the other questions, you were faced with the question of is this an important federal question.

    Thank you.

    Earl Warren:

    Mr. Grinnell

    Ernest D. Grinnell, Jr.:

    Mr. Chief Justice, may it please the Court.

    It will be my purpose to discuss first with you the facts, and the various questions that have come up during the comments argued.

    Then I intend to discuss briefly this 5(2)(b) question, and then the question raised by the commission under Section 212(a), and it will be my purpose to close with a discussion of the adequacy of the evidence.

    There has been handed to each of Your Honors a map, on which the geographical extent of the operations of the appellee are shown.

    You will note that the appellee operates from the (Inaudible) and up a motor carrier system that covers about — that covers seven states and now totals approximately 3,400 miles.

    Of these 3,400 mile operations, 2,700 miles are operated in unrestricted motor carrier service of the type that has been discussed here today, that is the handling of motor freight on motor billings directly for the public.

    This system was gathered together largely through the acquisition of previously existing independent motor carriers in the latter part of 1938 and the early part of 1939.

    The four cases which give rise these appeals are only four of many acquisitions, which the appellee made during that period.

    You will note that they, I have them located on the map in the circle, altogether the six cases which were considered by the commission are designated in the record as 284 miles.

    Now I don’t know the exact number of milage, my milage has been dropped when the two cases went to — other cases went out of this case, but I think it would be safe to say that it is approximately 200 miles that is involved here.

    Now you will note from their location, in these circles that their importance far exceeds their mileage because if we no longer have the right to conduct an unrestricted business from St. Louis through the red and green (Inaudible), Hamm and Cooper, we can’t reach Oklahoma and Texas, and if we no longer have the right to operate the full through which — which is shown in yellow in unrestricted service, we cannot reach Memphis from Kansas City and consequently we are left with the sparsely populated areas of Missouri, so that their importance far exceeds their size.

    Now the red dots shown on here in the nature of key points are the key points which were included in the commission’s order which the District Court has enjoined.

    The major key point restriction that we — under which we operate, outside of this particular order is that we may not handle traffic directly for the public on motor carrier rates between Memphis and St. Louis.

    In others words, if we — if someone in Thomas, Mississippi sends this traffic to us destined for St. Louis, we may take it only as far as Memphis, and must then turn it over some other truck line to take it to St. Louis, we cannot handle it from Memphis to St. Louis, but that restriction was placed in another case.

    Now you note the dotted line down the river, that is the result of a purchase called the rider purchase where the commission specifically refused to authorize us to engage in unrestricted operations, and specifically said it must be auxiliary and supplemental.

    Ernest D. Grinnell, Jr.:

    So that’s our restricted operation, the balance is unrestricted.

    Now it’s listed in the appendix in our brief the citation of those cases, and I might note that in none of the other cases was this reservation, which is present in the four cases here involved, and three opinions really, was this reservation included in the commission’s decision.

    Felix Frankfurter:

    I hope it won’t take too much time for you to indicate if you will Mr. Grinnell, why in this dotted line from (Inaudible) to wherever it is up in St. Louis, why commission denied to un-restrict that?

    Ernest D. Grinnell, Jr.:

    Well that was one of the last ones, if Your Honor pleases, that we got at that time when we were considering — when we were buying the right, my understanding is, I was not with the company then, but —

    Felix Frankfurter:

    Did they write?

    Did they give reasons?

    Ernest D. Grinnell, Jr.:

    They did –

    Felix Frankfurter:

    What was it –

    Ernest D. Grinnell, Jr.:

    — because it was after this error of the Rock Island case really.

    It’s the last one and they were getting into the reason that we just don’t give them without the restrictions anymore except in unusual cases.

    Felix Frankfurter:

    Well, right did they give any reasons?

    Ernest D. Grinnell, Jr.:

    If Your Honor please, I don’t recall any specific ones other than that they were generally not doing it at that time.

    Now I think it’s informative and it might be well to bring it up right at this point.

    Counsel for the appellants that have — at least I got the impression that they didn’t bring up this unrestricted operation that we have.

    Now the Interstate Commerce Commission noted in the Rock Island White purchase which gave rise to Rock Island decision, the commission said this, “As previously stated, from the date of the decision in the Barker case,” which was the Pennsylvania railroad subsidiary and which is referred to by you in the Rock Island and in the Texas and Pacific case, “to shortly before the enactment of the Transportation Act of 1940, the principles there recognized,” that’s the Barker principle, “and applied, controlled the disposition of practically every rail-motor acquisition case.

    However, beginning with Frisco Transportation Company Purchase of Reddish,” which is 35 M.C.C. 132, “and continuing until quite recently,” this was March 4th 1946, “the practice of specifically reserving the right to later impose such restrictions as might be necessary to ensure that the future operations under the acquired authority should be limited to the rendition of service auxiliary to or supplemental of the train service was not followed.

    With such departure from the former practice there also appears to have developed a tendency in rail-motor acquisition proceedings to treat the Barker case restrictions as geographical or territorial only in their intent rather than as substantive limitations upon the character of the service which might be rendered by a railroad or its affiliate under the acquired right.”

    Felix Frankfurter:

    But the acquisitions in controversy here had in the original report of the commission based on the finding of its examiner, recommendations and demands for reservations?

    Ernest D. Grinnell, Jr.:

    Your Honor they were and in answer to a specific question which you ask about the adoption or about the existence of tariff rates, the record here shows and I think it’s the most important part of the record, it contains six exhibits one covering each one of the purchases which were involved before the commission.

    Now the — in each one of those, the correspondence between the appellee’s assistant general manager and the commission is gathered together.

    Shortly after these finance proceedings came out, the appellee received a letter, which — there is one for each one of these purchases, saying it’s been approved, undertake the adoption of the tariff’s of your predecessor, file you are adoption notices and your powers of attorney and other the other formal matters, we replied and did it.

    Where are those?

    Ernest D. Grinnell, Jr.:

    Those are Exhibit 10-A covers the Hamm purchase, it beings on record 402, Exhibit 12-A covers Cooper, it begins on 433.

    Now those, we may take the Exhibit 10-A beginning on 402 because principally there each one follows the same pattern.

    Now and so that — the adoption was done then and there and the compliance orders are also included in those exhibits, they were the next step.

    Now there is one question about these compliance orders that I would like to clear up while I am on, while we are at that point in fact.

    This Court has had occasion to comment upon compliance orders, in the Crescent Express Line against the United States, which is cited in our brief, and has said, “The compliance order gave opportunity to the applicant or other parties in interest to protest its conclusions.”

    And in the present Case, the actual fact was that the other people, others were the ones who brought the case up and they were the ones who brought the complaint about the compliance order.

    Now it’s my understanding, I of course am not old enough to have dealt with these compliance orders, but it’s my understanding that in a pure grandfather case, the man didn’t go through a hearing procedure, he went in and filed a lot of a bills to show what he had been doing prior to the grandfather date and then he got his compliance order, that’s it and that’s when the objection came up.

    Now if his competitors thought that what he had applied for through his bills and what the commission had told him in the compliance order he could do was too great, too much authority then you got your hearing procedure or reexamination of his data or documents by the appeal courts.

    Ernest D. Grinnell, Jr.:

    Now in these cases in each situation the man whom we were purchasing had gone through the initial phases of his grandfather, true but he had not yet received a compliance order.

    And then we purchased, now the appellants or the appellant trucking companies that appear here are not necessarily the people who appeared in opposition to those finance proceedings and I might add that it is impossible by any intimation that the people who did appear there were worried about us having an all out truck service.

    It’s acknowledged in the committee’s report that we did say that we were going to continue that business and in addition thereto engage in the handling of the substitute for the railroad, of the railroad freight.

    Does your original application for permission to acquire shows one way or the other as to whether you intended to operate on an unrestricted basis?

    Ernest D. Grinnell, Jr.:

    I am sure that it does Mr. Justice Harlan.

    Sure that it does?

    Ernest D. Grinnell, Jr.:

    I am sure that it does, but I couldn’t specifically point to the section where that it is.

    Those applications were a printed form and they had a lot of documents and data attached to the printed form.

    And I think that there is a provision in there which probably doesn’t say that exactly that we were going to do that was but it said that we are going to continue the operations that the vendor had previously conducted.

    Felix Frankfurter:

    Mr. Grinnell are you — would you be good enough to enlighten me on the significance you wish us to draw from directed planning rather 403 and 404 that could be a certificate or a compliant order that was an outstanding at that time was it —

    Ernest D. Grinnell, Jr.:

    Well, these are not in chronological order —

    Felix Frankfurter:

    But I don’t —

    Ernest D. Grinnell, Jr.:

    If Your Honor will look through the index it begins on 402.

    Felix Frankfurter:

    I think January 11, 1939 the Hamm business at that time I don’t — I wish you tell me what the significance is because at that time there were really outstanding from the point of view of the commission’s description the reservation is —

    Ernest D. Grinnell, Jr.:

    Correct.

    Felix Frankfurter:

    — and the reservation wasn’t sort to be made effective, it’s a very different question from the one we have now, namely whether subsequently they could draw the reservation in the report and in the order although it was not putting to the compliance order.

    Ernest D. Grinnell, Jr.:

    Well of course they are drawing on it is the Rock Island case and here it did not survive.

    Now the only hesitation —

    Felix Frankfurter:

    But I don’t know what comfort you get–

    Ernest D. Grinnell, Jr.:

    Well —

    Felix Frankfurter:

    — if you haven’t found (Inaudible)

    Ernest D. Grinnell, Jr.:

    These were the only correspondence that we had with them and this particularly one, let’s see now, it says, in the event the transaction authorized by the order had been consummated, has — you are required to issue and file and post for public inspection an adoption notice adopting all terms, powers of attorney et cetera filed with the commission by or behalf of the selling carrier, I think that’s the reason probably that that is put in there.

    Now the only explanation that I can give Your Honor about this whole situation is this.

    If you will note the four cases here involved are Division 5 cases before the commission.

    Our other cases are Division 4 cases before the commission.

    Now — one thing that has constantly occurred to me is that the members of Division 5 thought that it was necessary as the satisfaction to the statute to include this proviso that the members of Division 4 did not so construe the statute and consequently when the certificates were issued, they were not, it was not a set policy to always fast forward that reservation into the certificates.

    Now if you will look at the certificate on Page 500 in the record I believe, 500 that is the first certificate which covered the Hamm and Cooper operation.

    You will note the first thing on that page is a restriction upon the operations that were covered immediately prior to the Hamm certificate, they are on the previous page and they specifically mentioned that it was being — it was a railroad operation or is a railroad type restriction.

    And yet the very next thing which is the Hamm purchase certificate did not include any restrictions.

    Now there is one another item in these exhibits particularly with regard to Hamm and Cooper, which I think will be interest to Your Honor.

    Ernest D. Grinnell, Jr.:

    It is a quotation from the Ozark common carrier application which appears at 32 MCC 459.

    Now Frisco Transportation Company, the appellee purchased Ozark or a part of Ozark, and after they had conducted the purchase and the commission had passed it for it, and before the final certificates and orders I think had been issued, there were two or three intermediate points for our ability and authority to serve was not clear.

    So the Ozark Common Carrier application was reopened for the purpose of considering it.

    Now at Page 414 of the record this appears.

    It’s starts on the bottom of Page 413 and its excerpts from that proposition from that case.

    Now in — the commission Division 5 on February 19th 1942 about a month or six weeks before the certificate was issued, specifically comments on what we got in Hamm and Cooper and there is no intimation that there was any restriction upon it.

    Now if Your Honors please those are some of the things we thing must have brought the District Court to comment, and I think it’s more in the nature of comment that the commission was changing their policy because I think they just disposed of the case prior to making that comment and it was just their view of what the evidence —

    Of course fundamentally the factual premise is, what you are really saying is that the commission in representing that this was an inadvertency on its part in issuing unrestricted certificates is really not acting in good faith that is underlying your —

    Ernest D. Grinnell, Jr.:

    Basically that is —

    Isn’t that it?

    You’ve got to go to that length?

    Ernest D. Grinnell, Jr.:

    I have told some of the members of their staff specifically this.

    It seems to me that there should have been some evidence put in this case by the commission as to the manner of issuance of these certificates, who issued them, by what authority they issued them, their instructions, what they did, none of this appears.

    All that appears in this record surrounding the issuance of the certificates is that it contained in Exhibits 10-A through 15-A which is — some of these exchanges of correspondence and each one of them includes a quotation from some other case, where the commission commented upon the rights involved and with the — indicating that they were all-out or unrestricted rights, and the compliance orders are also in there and then Exhibit 16-A draws together all of the certificates here issued.

    Felix Frankfurter:

    Mr. Grinnell, may I suggest, anybody who had any kind of long experience with the commission’s doing whether it counts or (Inaudible) of the subject know the kind of elegant standard that you expect from the commission is not to be had in view of the volume of their business and they very often do things that people do when they have a massive business.

    And I think the second one here is not that the commission should explain why they submitted but perhaps it is up to you to explain why they should have changed from the basis of their report, to the absence of the condition of the reports in the orders, in the certificate that requires explanation.

    Ernest D. Grinnell, Jr.:

    Well, they apparently felt that way if you look at the notice.

    Felix Frankfurter:

    Pardon me.

    Ernest D. Grinnell, Jr.:

    I say the commission apparently felt that way if you look at the notice.

    Felix Frankfurter:

    Felt what way —

    Ernest D. Grinnell, Jr.:

    That we had to make some sort of an explanation.

    Felix Frankfurter:

    Never mind that the commission just is an outsider, if you have a response, if you have a Division 5 putting that in its report as a condition of it, it includes and then it is absent in piece of book what I call book and that’s what the compliance order is, a formalization of what they rationally found and expressed and if there is this gap between what their reason was and the former statement of them, there must be some explanation to that, why should they be changing their basic —

    Ernest D. Grinnell, Jr.:

    May I just at this point Mr. Justice Frankfurter, reverse the order of my argument and comment upon the adequacy of the evidence because that is exactly the point that we raised before the District Court.

    Now the commission’s decision in this case holds that the certificate were inadvertently issued, not the compliance orders, although they do comment at one point thus if the error occurred, it must have occurred first in the compliance order, but they find that inadvertence existed from two facts, appearance of a proviso reserving the power to restrict in the Division 5 and failure of that proviso to appear in the certificate —

    Charles E. Whittaker:

    Well say (Inaudible) exercise the right reserve is what you mean?

    Ernest D. Grinnell, Jr.:

    Well sir the — that was the second step of our case.

    You see then this case before the commission and in the order here is really a two step order.

    First of all on grounds that the certificates had been inadvertently issued, they revoked it and issued in there instead new or amended certificates.

    Now they say we could issue these and then go into the Rock Island procedure and determine what condition should be attached, but we will do it all in one step here.

    So it seems to me that the first step is all that we are really — that I am really concerned with right at this point, and that is that there was not sufficient evidence on those two facts alone to find that inadvertence existed because with those two isolated facts certainly it is permissible to infer that the certificates were inadvertently issued, but it is equally permissible to infer that they were intentionally — that the omission was intentional.

    Felix Frankfurter:

    Plus there’s — those are facts — there is another very important factor one which Mr. Justice Harlan called the attention to, the assurance of the responsible body that it wasn’t inadvertence.

    You can’t cast that aside as having no significance.

    Ernest D. Grinnell, Jr.:

    Mr. Justice Frankfurter I am afraid I would have to disagree because that came after I mean —

    Felix Frankfurter:

    Yes it came but for a body with the responsibility of interstate commerce at least.

    I say that because in a way that has a longer tradition of good conduct and excessive volume of business in my point of view, when they think that you can’t just say well, prove it, the fact that they make it (Inaudible)

    Ernest D. Grinnell, Jr.:

    Well, I think that Division 5 of the commission and the briefs of the appellants here virtually admit that the evidence was not sufficient because the Division 5 in considering this problem included — apparently saying we may of course take official notice of the administrative practices and procedures of our section of certificates and then describes the procedure by which the certificate is issued.

    Now that particular finding was a very important subject in our petition for reconsideration of that order and that language was dropped from the commission’s report.

    It was dropped because this Court’s Ohio Bell Telephone case says that in administrative body may not use official notice in that way and then finally in the report advise the parties that they used it.

    The actual fact here is that if there had been evidence of inadvertence which we have been called upon to rebut we would have brought in evidence to build this record of with — of rebuttal evidence now in the —

    Felix Frankfurter:

    That is the little puzzle because if I say something I leave out of phrase in the letter and then say oh that’s inadvertence, on the whole what kind of proof can you have (Inaudible) except there is evidence to indicate that he is a liar.

    Ernest D. Grinnell, Jr.:

    I think this Mr. Justice that the evidence that should have been there was the chief of the section of certificates describing the method by which certificates were issued and the authority of his section.

    Charles E. Whittaker:

    Does not the judge in Parker rely heavily at least among other things upon the specific statement made by the hearing examiner at the beginning the hearing saying it is not what’s in the certificate, it is what desirable and I want him permission to sustain his order of what’s desirable, now those aren’t exactly the words but that’s (Inaudible) now Judge Hoffman relied on that did he not?

    Ernest D. Grinnell, Jr.:

    Yes he did and I —

    Charles E. Whittaker:

    He made no findings.

    He just found that the findings of the commission were not supported by the record, didn’t he?

    Ernest D. Grinnell, Jr.:

    Yes sir — now I should perhaps —

    Felix Frankfurter:

    Does the hearing examiner has the right to decide what’s desirable to put in a certificate (Inaudible) —

    Ernest D. Grinnell, Jr.:

    That was a statement if Your Honor please that was made during a (Inaudible) hearing.

    The hearing this case was not full all out hearing as you might expect.

    Felix Frankfurter:

    Then we don’t know what complaints.

    Ernest D. Grinnell, Jr.:

    We were told to appear in Kansas City at the hearing and to submit evidence in connection with the application.

    Now our principal position was just exactly the position the Seatrain took before that case came here, if Your Honor will recall they didn’t put in any evidence before the commission when their certificate was attempted to be changed or revoked on the grounds that they were inadvertent.

    So we filed or made at the hearing an oral motion to discontinue the proceedings.

    And in support of that motion we placed in the record or we put on the stand the auditor who put in the financial data to show the financial and statistical history of our operation.

    Witness (Inaudible) who put in these Exhibits 10-A, 15-A that I discussed and then we rested and the hearing examiner said, “Well aren’t you going to put something else in here?”

    And then during that colloquy, this statement to which Mr. Justice Whitaker referred was made.

    And really if you read that, you get the impression that his instruction was to just go out and give enough information because we are going to put on restrictions.

    There never was any inquiry into this proposition whether or not the certificates were inadvertently issued.

    Felix Frankfurter:

    There’s a great deal of difference, isn’t there, between a person charged with responsibility dealing with the subject matter, not mentioning the subject matter and then saying, oh I inadvertently I didn’t attend to that and the person charging the responsibility for which Division 5 putting it in its report not inadvertent omission of the subject matter but latter inadvertent omission of the book keeping of the subject matter.

    Ernest D. Grinnell, Jr.:

    Well of course the compliance order, the language of the compliance order is at a session of division — the Interstate Commerce Commission Division 5, which it seems to me if we cannot rely then those matter have been considered by the commission when they are proposed that way, I don’t know what order we can rely on and particularly —

    Felix Frankfurter:

    You and I, you and I believe that the commission incorporates that around Division 5 and that was wrong — I assume the contrary.

    Ernest D. Grinnell, Jr.:

    Well —

    Felix Frankfurter:

    I think I am entitled to assume the contrary.

    Ernest D. Grinnell, Jr.:

    At any rate it seems to me that if they are going to find that the certificates were inadvertently issued, they must have evidence to support that finding and our contention is that they did not.

    Now with regard —

    Earl Warren:

    Mr. Grinnell before you get away from that, I would like to ask this question on the question of inadvertence.

    As I understood you, you had unrestricted right over 2700 miles of your line, there are only 200 miles here involved approximately.

    You sought the same kind of unrestricted license for these 200 miles.

    Ernest D. Grinnell, Jr.:

    Exactly as a matter of fact.

    Earl Warren:

    You, yes, let me just finish, let me just finish this please and you had your hearing before Department 5, Division 5?

    Ernest D. Grinnell, Jr.:

    Well they were all hearing examiners Your Honor —

    Earl Warren:

    Yes, Division 5 made its report in which it denied to you an unrestricted right to motor carrier service.

    Now how long did — you had 30 days did you not, in which to appeal to the court.

    Well now — why if it was that important to you as you say, you tell us it was, why did you acquiesce in that and not appeal to the main, to the full commission?

    Ernest D. Grinnell, Jr.:

    The only answer to that I can give to you Mr. Chief Justice is that at that time the existence of a reservation in the certificate only reserving the power did not mean that you could not conduct all out motor operations.

    This Court’s Rock Island case arises over a similar situation where the time is pretty much the same except that their certificate was issued prior to ours, and they conducted, unbeknown to everybody unrestricted or all-out operations despite the fact that that proviso reserved the power in the commission to further limit or restrict.

    Earl Warren:

    That was in that — if that is true then what, what changed your mind about it so that you felt it was necessary for you to challenge that reservation when the full commission finally put it in.

    Ernest D. Grinnell, Jr.:

    Well, Your Honor.

    Earl Warren:

    If it had no effect, what restricted —

    Ernest D. Grinnell, Jr.:

    Well the full commission did not actually put it in until December 1953 in this case —

    Earl Warren:

    Whatever they put it.

    Ernest D. Grinnell, Jr.:

    And by then they more than just put it in, they put in the additional, they put in the five conditions similar to those which they placed on the Rock Island which every one agrees effectively stopped any sort of operation directly for the public.

    Earl Warren:

    But the one in number five, Division 5 was a pretty broad restriction.

    Ernest D. Grinnell, Jr.:

    That if Your Honor please was, that we may — we reserved the power to further limit or restrict that.

    Now the restrictions that they put in — in this case, in exercising that, is that the service shall be — to be performed shall be limited to their service which is auxiliary or supplemental.

    And you see at the time — at the time we saw this provision and obviously I was not there, but at the time it appeared in those original Division 5 report, the commission had never construed auxiliary and supplemental.

    They did not do that until shortly before they reopened this case.

    Felix Frankfurter:

    They had the power to do so.

    Ernest D. Grinnell, Jr.:

    They reserved the power, but auxiliary and supplemental in the power to keep it that way had never been construed by the commission to mean fully auxiliary and supplemental until the Texas & Pacific case in 1943.

    Earl Warren:

    But in your, is it your supposition then that at that time that reservation was put in there that Frisco considered it as no particular significance.

    Ernest D. Grinnell, Jr.:

    That’s correct, Your Honor and I think the testimony of witness English, who was produced at a request of the examiner, who was the general manager of the company at that time this hearing was held and really was the father of it.

    He had grown up with it.

    I can’t recall any specific statement of his, but he does testify at length on this very subject as to why they didn’t do anything.

    And my recollection is that his conclusion was that they had never, they hadn’t believed at that time that it meant solely auxiliary and supplemental.

    In his testimony, I forgot which one of Your Honors asked, perhaps it was Justice Black, about the percentage of our business, the testimony witness English is that at the time of the hearing approximately 51% to 50% of the business of the transportation company was handling sort of railroad freight as a substitute for the railroad.

    While it does appear in the record I am advised that still the percentage is near that.

    I don’t know exactly what it is, but the nature of our business really has not changed much since the hearing.

    We have not expanded the way the motor carrier industry had.

    Of course there is — none of that can be in the record, but the fact is that that the other people operating in the same territory have expanded greatly and Frisco Transportation Company’s figures that appear in witness Essex’s testimony are fairly representative.

    I think that we’d probably gone down a little bit because of the — such is the amount of freight tenders of the railroad which can’t be used or handed over to the truck company has reduced through the years.

    Now may I address myself to section 5(2)(b) of the Interstate Commerce Act?

    It’s our position that the language of that proviso does not, in and of itself, prohibit the commission from issuing unrestricted certificates.

    It’s my view that under that proviso the commission must make these findings which this Court has recognized in the Rock Island case and the Interstate Commerce Commission against Parker, but that it is not required to restrict the rail affiliated truck line.

    Charles E. Whittaker:

    If it makes those findings?

    Ernest D. Grinnell, Jr.:

    I think that even to approve an auxiliary supplemental operation, you must make those same findings –

    Charles E. Whittaker:

    And you –

    Ernest D. Grinnell, Jr.:

    — findings are tied to the railroad applicant, not to the resolving the case.

    So I think that they got to make them no matter what kind of an operation we proposed to conduct and I think that their current cases where they are using an unusual circumstance rule that they originated in the Rock Island case, they are perfectly sound construction of the statute.

    We have no dispute with that at all and as I understand the American Trucking Association’s argument on 5(2)(b), they say that that the commission has no power whatsoever to issue these certificates, therefore they were void ab initio.

    And so that they just could not, all of our certificates really, if they are successful, you can see these certificates that are not even involved in this case would no longer be any good.

    And there they have been completed, there has never been any inquiry to them, never been any intimation that there was any error in those certificates.

    And as the quotation that I read you early that for a while they did it without any restrictions in, without putting these restrictions, and these certificates were issued right in the time that they have been talking about between the time of the Transportation Act of 1940 and 1946 when it was approved, when they said that to our (Inaudible)

    Earl Warren:

    Mr. Grinnell may I ask you one other question.

    Mr. Beardsley talking about the effect of this reservation said that if there was no hearing given to the opponents of your protestors of your license after the division had found in its favor on the restrictions and did it in a sort of a star chamber way that that would be depriving them of some right, what would you have to say about that?

    Ernest D. Grinnell, Jr.:

    My position is, Justice, he said that the compliance orders were served on someone.

    Now I assume that that since they bore the number not only of the finance cases but also the number of the grand — of the purchase case, I would define one of them, there is a compliance order on —

    Earl Warren:

    Well my point with this would be — main commission have any more right to reverse its division without giving the protestors any notice at all and it would do it without giving you notice?

    Ernest D. Grinnell, Jr.:

    Well I think they must give notice of their intended action, as a general proposition but I think that —

    Earl Warren:

    Did they give the —

    Ernest D. Grinnell, Jr.:

    But I think the compliance orders here were noticed.

    Earl Warren:

    Did they give any notice to the trucking concerns?

    Ernest D. Grinnell, Jr.:

    Well the compliance order is entitled MC89913 sub number 1, it mentions at the bottom as a footnote this order embraces the authority applied under docket, 54 under docket number so and so John B. Ham, or John Ham doing business with Southwest Freight line purchased by the applicant named there in pursuant to finance docket number so, approved November 30th 1938.

    Now I assume they do it now I think that where — that they serve their orders upon all parties of record in all the cases involving their order.

    Earl Warren:

    You assume that.

    Ernest D. Grinnell, Jr.:

    Now this basically says that he is checking that they did not in this case but that doesn’t appear in the record here and there is nobody that I know off made any great complaint about not receiving a notice until after we finally got to go ahead in this case.

    We were behind for all of time and we were the ones that were making the claim and then all of sudden they out of the District Court decided that they would enjoin the commission orders, a lot of claims that it had never been and there is no, found nothing wrong with their —

    Even —

    Ernest D. Grinnell, Jr.:

    And they replied all the way through and then all of sudden they had to take the advantage.

    Even though it’s not in the record why do we have to be (Inaudible) doubt about it?

    Ernest D. Grinnell, Jr.:

    It would be perfectly alright to put it in there something.

    Is there something can be —

    — agreed to by you gentlemen in this case as to whether or not these people did have notice?

    Ernest D. Grinnell, Jr.:

    Well that would be perfectly alright with me.

    The proposition is if Your Honor please that the — here is the thing that you run into now and I have tried to trace this back from my own information, if you look at 15 MCC 318, 19, 20 where these original two or three of these original cases appear, you’ll see that before the interveners appeared to Stanley Clay, now in the discussion as to his position, his position was that we did not have the corporate authority to engage in the motor carrier business and that’s the only, as I recall the only thing that the examiner discussed as his contention.

    He wasn’t complaining that we were been engaged in the all-out truck business down in the little, as Mr. Justice Whitaker pointed out, the eight mile segment.

    It was the first one we had.

    This idea of the construction that Mr. Beardsley now contends for what was in Section 213(a)(1) was never even heard of.

    I mean the contentions were never made and I assume that Mr. Clay got a copy of this order and said, “Well, we’re going to see, they let him go and that was it.”

    Well it seems — we all remember this.

    Ernest D. Grinnell, Jr.:

    I would be perfectly willing to supply it for the record, if the record still exists as —

    William J. Brennan, Jr.:

    Does the commission know that who may send the copies of orders.

    Ernest D. Grinnell, Jr.:

    I am not well enough acquainted with their recordkeeping.

    If they have that information I would be perfectly willing to have it submitted by letter.

    But in connection with 5(2)(b) we also think that this reason would indicate that the commission must have the file in the proper regulation of the transportation system as a whole to issue to these unrestricted certificates upon the proper findings.

    The ones that are — unfortunately the current cases where they are still doing had not been reported yet.

    And Mr. Beardsley who is appearing in those cases has maintained the same contention he makes here today.

    In all of those there appears to be a reluctance of the independent trucking industry to handle what’s called peddle freight.

    And as a practical matter, the Frisco Transportation Company is handling some of that peddle freight for other truck lines if they don’t want to handle.

    You got, you — many little towns where they’ll have no service if they don’t know all-out common carrier service if they don’t get it from the rail affiliated carrier.

    In this case it connects with Diaz, Arkansas, they made an exception because we couldn’t go out there only on substitute service, right, we just couldn’t — we had to find in the operation and so they allow us to do it.

    Ernest D. Grinnell, Jr.:

    In our Rose certificate in the same case, they, after inquiring into the matter, they thought that it was best since we had as a result of the 206 application, authority to go on one direction, we could get purchase authority to go in the other.

    Now that one was that disconnected to our operation, but I think that on that question it’s absolutely necessary that the have this discretion and I think this Court’s opinion in Rock Island and in the Barker case both are cast entirely in permissive terms as far as the commission is concerned and both emphasize that the commission must have this discretion.

    Now as I said I think in answer to Mr. Justice Whitaker, I think they must make the findings no matter what kind of a case it is or what kind of an operation is proposed but I think that after having made those findings in the principal one or the last one is not what — we want to unduly restrain competition; the other one is maybe able to use this trucking business, trucking operation in connection with or coordination with its railroad that after they have made those that it is perfectly proper for them under the statute to issue an unrestricted certificate.

    Now their position in the Rock Island case is that they must have some unusual circumstance and I think as a practical matter they have done that, but if you look at our Blake and our Reddish, in those purchases, they gave us the unrestricted rights.

    So perhaps they didn’t feel that way then, that was before Rock Island and it’s in that period that they comment upon in Rock Island where they didn’t, they were not as a practical matter including these reservations in the certificate and that’s when these certificates were issued and I think that the legislative history also backed it up.

    This Court has commented upon it, and I think this is the only thing that you can find no matter how far you search in Commissioner Eastman’s statement and then purpose of the proviso and that was discussed in the Rock Island case, and also in the Barker case it’s in the foot note.

    And Your Honors also have examined the congressional record and when Senator Wheeler introduced the bill or brought the bill on before the Senate, there is nothing in his discussion that would indicate any intention of Congress to completely restrict the right of the commission to issue an unrestricted certificate and the same thing was represented (Inaudible) who handled the bill in the house, it’s not there either.

    So most of what you find as you delve into the legislative history of the thing is negative proposition.

    As a matter of fact Commissioner Eastman’s statement was after the bill had been entered, it was in 1939 when they were considering amendments to the bill and if — the bottom connection was the (Inaudible) amendment information.

    Now one point I think I might bring upon that, just after Commissioner Eastman testified, the General Counsel, the American Trucking Associations testified at those same hearings and that he commented — in commenting on the (Inaudible) amendment he said that this thing is not strict enough for us, we think some language ought to be added, which would make it — without question if they could not engage in this direct motor carrier business, and that he even suggested the words that would have to be added to the (Inaudible) amendment in order to accomplish that purpose and of course is suggesting in the (Inaudible) amendment both went out when Commissioner Eastman assured them that they were exercising a certain amount of restrain on these carriers.

    Now in connection with Section 212(a), and particularly the Watson case, it seems to us that it is beyond question that what the commission did here was to revoke certificates, that’s the language of their opinion, their report, it’s the language of their order, it’s the language of their finding, and as a practical matter, when they changed the form of the operation authorized, they have revoked it.

    Felix Frankfurter:

    (Inaudible) change one document, I think you must to trial when you can have both of these.

    Ernest D. Grinnell, Jr.:

    That’s correct, but I think that if the change that was accomplished by that procedure resulted in an increase in the amount of rice then you would not have (Inaudible)

    Felix Frankfurter:

    All I’m saying is that doesn’t go against your argument, but they has to be a revocation —

    Ernest D. Grinnell, Jr.:

    There has to be a revocation.

    Felix Frankfurter:

    They have to nullify that with some of the other one match if it can match?

    Ernest D. Grinnell, Jr.:

    But I think that you have to look beyond to what actually happen to the certificate.

    Felix Frankfurter:

    That’s what I was suggesting.

    Ernest D. Grinnell, Jr.:

    Now the commission said in their Smith Brothers case, which this Court has occasion to cite, and which is cited I think probably in all the briefs and in the opinion, that a certificate is the final act.

    They may issue order upon order, but when they’ve issued the certificates that’s the final act and it compares to a final judgment and then the next thing that they said in the Smith Brothers case and it gives rise to this entire inadvertent (Inaudible) that they seem to have assumed in connection with certificates, they said this should not been taken as meaning that if — that we cannot revoke the certificate issued as a result of fraud or mistake or one issues in error.

    Now, it’s our view that — and they say no such problem is involved here, so that what they said in the Smith Brothers case and the thing that has been used as a basis of all their inadvertent cases was open.

    And they should not have permitted that overt statement is control the result in subsequent cases.

    Now when they came to Watson they had a real pure case where they were claming they had made an error and so in that case also they said we do not have to be bound or to consider the 212 procedures and so they without notice and hearing revoked the certificate and the District Court condemned it.

    Now the revocation there was a reduction in the number of commodities that could be hauled to specific points, here is a complete change in service.

    So I think we come within the Watson principle as far as the fact that it is a reduction and I see no reason why in the statute, why there should be a different rule on revocation, applying to railroad affiliates than applied to independent truck liners, and that seems to be the basic distinguishing factor that all of the appellants point to and that is the fact that here you have real a rail affiliated carrier.

    Now —

    Earl Warren:

    They had no notice at all.

    Ernest D. Grinnell, Jr.:

    They had no notice.

    Earl Warren:

    Doesn’t that make a difference?

    Ernest D. Grinnell, Jr.:

    That makes a difference, but the District Court, and the three judge court in the Watson case specifically said now — now I think I’ve quoted it for Your Honors, actually it’s a very short one, they said counsel for the commission argues that the order of August 25, 1953 merely corrects the clerical error in the certificate.

    Ernest D. Grinnell, Jr.:

    Even if the Court were to assume, that the commission has authority to correct clerical errors without notice of hearing, the result in this case would not be different, because it is the holding of the Court, that the order of August 25th is more than the correction of a clerical error, and it is an attempt made contrary to Section 212 to revoke a certificate duly issued.

    Now I take that to the issued to mean one, that’s within the commission’s power because otherwise they could say well, we just do it inadvertently.

    So that I think the Court a consideration in the Watson case, took into consideration, this contention about notice and hearing and they removed that from the case and said it still can’t be done.

    Now I think one of the reasons that, that may have been said was this Court’s decision in (Inaudible) against State Freight Line, where the State of Illinois, as a part of their enforcement procedures, had a suspension provision in their statute, and this Court held that a state could not do that, because the power to revoke a motor carrier certificate authorizing and covering an interstate operation, can be revoked only by the interstate commerce commission and only upon the grounds of willful violation of law.

    Now as a practical matter, in the — now I did not find this quotation until after my brief was prepared, but when Senator Wheeler discussion Section 212 on the floor of Congress, he said this.

    “Criticism was directed against the power of revocation, thus conferred upon the commission.

    It was suggested that the effect is to put the future of countless operators wholly in the hands of the commission, which might act arbitrarily, and that the penalties elsewhere provided or ample to secured compliance.”

    And then they go on to say, “however, that the state commission people who had testified indicated that the commission should have some power to revoke because that power was the most effective compliance provision that they could possibly have.

    That they — you could fine people and you could do everything else, but if you could not revoke their certificates, you couldn’t enforce the law properly, and that has been their experience in the states.

    Now I suggest that the indicia of what construction should be placed on Section 212, it seems to me that — and you know this is American Trucking Association makes no contention about this inadvertent issue certificate, because I don’t know how you could advice a client, that his certificate was good, if you always have to have hanging over your head, the possibility that there has been error.

    Now the commission says in our Campbell Sixty-Six case that we didn’t have to go behind the certificate and it was no duty for us to go behind then and make sure that everything was just right when we got them.

    If they’re fair up on their face and they fairly represent what was in the case, it seems to me that ends the applicant or the certificate of carrier’s duly.

    Now for instance I can imagine that Campbell Sixty-Six, one of the appellants here handled the matter of contract performance, (Inaudible) substitute rtes we well.

    Well let’s suppose in a — in the case where they were replying for new authority, this fact that were going to handle substantive service for us came up, and that — so a provision was put in their certificate, limiting them.

    This is service which is auxiliary to and supplemental to train services o this (Inaudible) San Franscisco Railway.

    Well now to remove that will certainly not be a revocation, and I don’t think anybody would say that the commission couldn’t do that.

    The District court here doesn’t say they cannot correct clerical error.

    Could I — oh excuse me (Inaudible)

    This is something that puzzles me, I wanted us to get straight on it, I understood you to say that at the time of the original application, your company had proceeded under the premise that it was gong to get – on the premise that it sought and it was gong to get an unrestricted certificate.

    Now this is what puzzles me.

    In Division 5, in the reopened proceedings it says that at page 651, the approval in each of those cases, that’s the original applications, would have been withheld except for the clear understanding that an auxiliary or a supplementary rail service, instead of an all out independent motor service was to be performed as the transportation company.

    It may be observed that as the transportation company in effect agreed to the imposition of such a limitation either in the approval of the acquisitions or a later date, as a condition subject to which it made the purchases and in fact itself described its proposed services being so limited, there seemed at the time the certificates were issued, no necessity for imposing any particular restrictions upon the character of the service to be performed.

    That puzzles me (Inaudible)

    Ernest D. Grinnell, Jr.:

    Well, could Your Honor give me the page on that?

    Yes it’s volume 43, MCC page 651.

    That’s the Division 5 report under reopened proceeding.

    It’s not put in the record.

    Ernest D. Grinnell, Jr.:

    That’s why I wanted it.

    It’s not in the record.

    I tried to find it in the record, but I got the report from the library.

    Ernest D. Grinnell, Jr.:

    Yeah it’s talking about Campbell case.

    Yes that’s right.

    Ernest D. Grinnell, Jr.:

    Oh! I thought it was Division 5, reporting — reopen case.

    That’s what I thought it was, am I wrong?

    Ernest D. Grinnell, Jr.:

    No, the Campbell case here that report is in the complaint case brought by Campbell Sixty-Six is the first name in the complaint and several other motor lines alleging that we were violating (Inaudible).

    This report was reversed by the full commission, in 46 instances and what the commission said is that we could rely upon those certificates.

    We were not on the face because the certificates authorized unrestricted operation, we were not engaged any unauthorized operation but to say would not upset or set aside the reopening order which is entered in the last paragraph of the case.

    The Campbell Sixty-Six —

    In other words they said that as far as being subject to penalties or criticism for having relied on unrestricted certificate that was wrong and the question of what limitation would be imposed was deferred to a later stage.

    Ernest D. Grinnell, Jr.:

    Well and I think also the question of whether or not certificates were inadvertently issued, I can’t recall the exact quote but I think they refer to that in their paragraph like there’s a constant reference both in the report in this brief and in the brief of the appellant because this Division 5 opinion on Campbell case when actually the decision of the full commission was that we think that (Inaudible)

    Earl Warren:

    Mr. Grinnell may I ask this is question suppose just for the sake of argument that the record clearly showed that this was an inadvertence, but it has just been left out by a copying clerk or someone else?

    Could the commission have acted as it acted in this case, in the procedure — under the procedure which is due?

    Ernest D. Grinnell, Jr.:

    Mr. Chief Justice my view of that is they held as all of the authority say that general power to correct clerical error, the fact that Section 212(a) Interstate Commerce Act severely limits their power to accomplish a revocation of a certificate expect on certain grounds.

    Our position is that they could not correct that error in the certificate if it amounted to a revocation, and we think that is what the District Court has held and that’s what the district — three-judge court in the Watson case held.

    In another words, it seems to us that in the interest of confidence and certificates, Congress has limited the power of revocation and they limited it to the extent that it must — the grounds for revocation must be a willful violation of the statute or a regulation thereon and consequently whenever the correction of a clerical error reaches the point that it constitutes a revocation, then it is prohibited.

    Earl Warren:

    Suppose I gave you my inadvertence say the certificate to Denver instead of Joplin —

    Ernest D. Grinnell, Jr.:

    Then I think (Inaudible) Denver, Missouri and they use Denver, Colorado, I think they can revoke that, that’s (Inaudible)

    Earl Warren:

    It would be revocation, wouldn’t it?

    Ernest D. Grinnell, Jr.:

    No I think they could correct the error and it would not amount to a revocation.

    The example I have in mind is any carrier might have authority from Texas through Oklahoma to Springfield, Missouri and this could have happened in our case.

    We build our system from that and when we got the Ozark purchase and some and one or two other purchase, we went from Springfield to St. Louis.

    Now had they put Springfield Illinois in there so that was disconnected part up here, it gave us no rights to packet with what we have already had to reach St. Louis, I think then that probably would not be a revocation.

    Thanks.