American Trucking Associations, Inc. v. Atchison, Topeka & Santa Fe Railway Company – Oral Argument – April 17, 1967

Media for American Trucking Associations, Inc. v. Atchison, Topeka & Santa Fe Railway Company

Audio Transcription for Oral Argument – April 13, 1967 in American Trucking Associations, Inc. v. Atchison, Topeka & Santa Fe Railway Company

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Earl Warren:

American Trucking Association, Incorporated et al. versus the Atchison, Topeka, and Santa Fe Railway Company et al.

Number 57, National Automobile Transporters Association of Detroit, Michigan versus the Atchison, Topeka and Santa Fe Railway Company et al., number 59 and United States et al. versus the Atchison, Topeka and Santa Fe Railway Company et al. number 60.

Mr. Sigmon, are you speaking next or —

Richard R. Sigmon:

Oh, I had —

Earl Warren:

You had — you have finished?

Richard R. Sigmon:

I believe Mr. Miller.

Earl Warren:

Mr. Miller?

Richard R. Sigmon:

Yes sir.

Earl Warren:

You may proceed.

Thormund A. Miller:

Mr. Chief Justice and may it please the Court.

May I first return to the question asked by Mr. Justice Fortas towards the close of our Thursday argument concerning the relationship of a ferry operation to our contention that a motor carrier must operate a motor vehicle on a public highway.

Ferries are exempted from Part III dealing with water carriers under Section 303 (g) (2) unless the Commission finds that in order to carry out the purposes of the National Transportation Policy, they should be made subject to Part III.

Our exploration of that turns up no action by the Commission to make them an ordinary ferry subject to Part III regulation.

In —

Abe Fortas:

Mr. Miller, I don’t think — perhaps I’m wrong but I don’t think that was quite purported, that you and I were exploring.

As I understand and as I understood the first part of your argument, it was to the effect that trucks by definition are restricted to the public road system.

Thormund A. Miller:

Yes sir.

Abe Fortas:

And therefore, they should — that indicates a congressional intent, I suppose, that they should not be permitted to be a feedback passenger on the railroads and I asked you what that — to rephrase that argument in light of the fact that trucks are carried on ferries.

Thormund A. Miller:

Yes Mr. Justice Fortas, I am proceeding to get them out from under the regulation under Part III and then go to their position as operating over the public highways if a ferry is considered a part of a public highway by reason of the fact that it’s not subject to regulation as a water carrier.

And we have in the decision of this Court in St. Clair County versus Interstate Transport Company, 192 U.S. 454 language quoted approvingly by the Court at page 466 that a ferry is a continuation of the highway from one side of the water over which it passes to the other and that consequently an ordinary ferry and I’m distinguishing that from a railroad car ferry or something of this nature is considered a part of the public highway system unless the Commission for some reason concludes that it constitutes a line hole water movement subject to Part III.

Hugo L. Black:

May I ask you to explain to me exactly what that means, the language?

Thormund A. Miller:

We were trying to establish Mr. Justice Black whether or not a ferry operation over an ordinary river crossing would be a part of the public highway system so as to become a part of the operations of a motor carrier over a public highway pursuant to Part II of the Act where its authorized service is to operate a motor vehicle over a public highway and the — I think the question went to the definition of a public highway as embracing or not embracing the operations over an ordinary ferry.

And —

Hugo L. Black:

Did we not have a case some years ago under the FELA that touched on that subject?

Thormund A. Miller:

I’m not —

Hugo L. Black:

I thought we had one where we have what they call the sea-going (Inaudible).

Thormund A. Miller:

I’m not familiar —

Potter Stewart:

Even the Kiff case written by Mr. Justice Reed?

Hugo L. Black:

That was on a ferry as I recall it.

Thormund A. Miller:

Well, I’m not aware of it.

Thormund A. Miller:

I’m sorry sir that —

Hugo L. Black:

It seems to me like it might have something bearing on that definition whatever effect it might have —

Thormund A. Miller:

Yes.

Hugo L. Black:

— in the case, I don’t know.

Thormund A. Miller:

Our finding with respect to the decisions of the Commission and the courts until the case at bar has been at operations of a common or a contract carrier by motor vehicle within the meaning of Part II do not include the use of other carriers, rail, water or motor under their open tariffs and the first line of cases that arose, came up under the grandfather provisions of the Act where one of the crucial issues was whether purchased transportations from other modes constituted the operations of a motor vehicle over the public highways and the Commission and the courts until the case of bar had held uniformly that it did not.

The issue here is similar that is whether or not the purchased transportation from a railroad in TOFC operations constitutes the operations of a motor vehicle over the public highways.

This line of cases begins with the Acme Fast Freight litigation which we have reviewed in our brief.

There, a forwarder operation was conducted in part by operating motor vehicles directly by the forwarder and in part by the purchase of transportation from rails, water and motor carriers.

It was held by Division 5 of the Commission and later by a full Commission decision by Commissioner Eastman that the authority of the motor carrier was limited to operations by motor vehicle upon the public highway and they granted the grandfather right certificate only as to those portions of the operation which they prove they were actually conducting themselves on the public highways.

The reviewing court said flatly that a forwarding company could hardly be in operations on a public highway when it contracts for transportation there by independent connecting carriers.

This Court affirmed the Acme decision in 309 U.S. and it has been followed in four other court cases involving grandfather rights, three of which have been affirmed by this Court.

Mr. Miller, what is the practical reason why the railroads don’t want to accept this business in the truck issue?

Thormund A. Miller:

Well, there are three — there are a number of reasons but I think I can instance three.

One is that these rules have an anticompetitive effect.

That is if we published a reduced TOFC rate for the specific purpose of bringing business to the railroads in TOFC service and under Rules 2 and 3, that rate becomes automatically available to our competitors.

The goal of competition is certainly blunted.

The — a second reason is that under the rules, under certain of the plans where we publish our rates for the provision of equipment, our equipment would become available to our competitors.A substantial amount of business is rooted by shippers, by those carriers which protect them in the provision of equipment.Here, we would be sharing our equipment under our obligation to provide nondiscriminatory service not only to our ordinary shippers but to our competitors.

Third reason —

Earl Warren:

Well, on that — on that one, I’m just wondering, could the — could the motor carriers charge more to carry let’s say produce that has been carried part of the way by railroads than it would charge any other person — any other person who is shipping.

Thormund A. Miller:

Its tariffs — let me use this as an illustration.

If it were to employ a Plan III service which embraces rail TOFC service from ramp to ramp, the motor carrier’s tariff could be at a higher level if it embraced the additional pick up and delivery service or other services —

Earl Warren:

Well, that — that isn’t exactly what I’m talking about.

I’m saying, suppose the railroad of the trucks were in the business of carrying some farm produce —

Thormund A. Miller:

Yes.

Earl Warren:

— from the farm to the canners and the railroad carried it a part of the way from the farm to the railhead, could — could the carriers, could the motor carrier then charge the shipper more for carrying it from the railhead to the cannery then it would anybody else who might want the goods carried over the same route.

Thormund A. Miller:

I believe, if I understand your question correctly Mr. Chief Justice, that if the motor carrier publishes a tariff for movement from points A to B, and under Rules 2 and 3 elects to move that shipment in part by the use of rail TOFC service.

It would charge the shipper the same rate as it would if it had moved it directly all the way by highway.

Does that reach the illustration that you have in mind?

Earl Warren:

No, I don’t — I don’t think so.

I’m talking about whether the motor carriers engaged in — in carrying produce from the farm to a cannery.

Earl Warren:

Now, the railroad doesn’t go as far as the cannery.It goes — it goes halfway —

Thormund A. Miller:

Yes.

Earl Warren:

— and suppose it carried the same kind of produce from the — from the farm to its railhead.

Thormund A. Miller:

Yes.

Earl Warren:

And then it had to be picked up there by the motor carrier and carried to — carried to the cannery.

Thormund A. Miller:

Yes.

Earl Warren:

Could the — could the motor carrier charge more for carrying it from the railhead to the — to the cannery than if it was merely carrying the produce of some farmer that it picked up at that place?

Thormund A. Miller:

I would assume that if the arrangement is made independently by the shipper with the motor carrier for movement from the railhead to the cannery, the tariff charge would have to be the same regardless of whether it was an ongoing movement having had a prior rail haul as compared with the shipment originating at that point where the rail service terminated.

The only instance in which the charges might differ would be in circumstances where there was a joint haul or a partnership arrangement between the motor carrier and the railroad in which they had a through route in a joint rate and in that —

Earl Warren:

Yes.

Thormund A. Miller:

— situation, the revenue or compensation received by the motor carrier might differ from the local rate from the railhead to the cannery.

But otherwise, apart from that, any shipment originating at that point in terminating at the cannery, moving by the motor carrier, I would assume, would be handled at the same tariff charge.

Earl Warren:

Now, in principle, how would that be different from this — from this piggyback situation of the — of the motor carrier who carries the goods for some distance, puts it on a railroad, carries this another portion at a distance and then takes it off and carries it the rest of the way.

What is the difference there, in principle, between the two?

Thormund A. Miller:

Well, we of course urge on the Court that a through route is established when a motor carrier operating in its carrier capacity tenders traffic to another carrier and they jointly haul — they haul the service through a course of conduct, they give rise to a through route.

And that we say, has to be established under voluntary arrangement such as are provided for in Section 216 (c) that —

The Commission has no authority to compel this service?

Earl Warren:

That’s correct sir.

That it is not necessary to have a formal publication of a joint rate nor is it necessary to have even expressed arrangements for a through route to be established, it is only necessary for the cooperating carriers to receive and transmit traffic which the two carriers are handling.

Well, is there any — any provision in the Act that would permit the railroads to refuse to carry even though they didn’t have a joint — a through rate?

Is there anything in the Act that would permit the railroad to refuse to carry this truck’s piggyback?

We urge Mr. Chief Justice that Congress has provided in Section 216 (c) for voluntary establishment of coordinated transportation between motor carriers and railroads.

And this question of the manner on which this coordination can be affected has risen in these lines of cases that I mentioned, in the Parker case where the problem was the extent to which authority should be granted to railroad motor carrier subsidiaries.

They have to consider in the process of determining whether grants of that authority was warranted in the public interest.

What kinds of coordination could be created?

And in Parker, the Court said, following a number of decisions by the Commission that the — there was no way to compel motor carrier and railroad coordination.

It could only be done on a voluntary basis under Section 216 (c) that that was the congressional policy in the area.

And in that case, therefore, they granted certain limited motor carrier rights to the railroad subsidiaries in order to affect this kind of transportation.

Earl Warren:

Did that necessarily exclude the right of the carrier to — motor carrier to have his trucks carried on the same terms as anybody else without a through rate?

Thormund A. Miller:

Well, for an answer to that Mr. Chief Justice, we come back to the definitional provisions of Part II in defining what the authorized service of the motor carrier is and you will recall in defining a motor vehicle, the provisions of the Act specifically exclude the use of a car or vehicle operated exclusively on rails.

Thormund A. Miller:

Therefore, we argue that by definition, those provisions do not permit the motor carrier to utilize a rail car by purchasing transportation from a railroad under its open tariffs in the performance of its authorized service under Part II certificate.

Earl Warren:

Well, how do the railroads then operate their own piggyback system and have their own trucking on either end of the trip?

Thormund A. Miller:

We have within the internal areas an exemption which makes certain motor carrier operations in that limited geographical area of Part I or an operation in conjunction with a railroad.

Therefore, to that extent, we are free to establish the piggyback service.

Earl Warren:

I see.

Thormund A. Miller:

If we extend beyond that and our motor carrier subsidiary seeks authority, they have to go to Part II and get the authority just as any other motor carrier would.

Earl Warren:

Well, I see.

Thormund A. Miller:

I would like to mention three things with respect to the National Transportation Policy and the general arguments that have been raised.

First, the specific provisions of the Act, of course, cannot be changed by resort to the National Transportation Policy and therefore, the definitions of a motor vehicle and a motor carrier service cannot be amended by a resort to the National Transportation Policy.

Secondly, as I mentioned Rules 2 and 3 would have an anticompetitive effect and that Plans II, two and-a-half, III and IV rates covering those services would be available to our competitors under Rules 2 and 3.

Thirdly, very broad assertions have been made as to the economic effect of these rules and we believe that since these rules were not before the parties at the time that the fact finding stage of the case was involved.

There is no record upon which solid conclusions can be reached as to the economic effect of the routes.

Thank you.

Earl Warren:

Mr. Shea.

Francis M. Shea:

Mr. Chief Justice, may it please the Court.

I should like to deal briefly with one of the issues in this case that seems to me dispositive of the case.

As I understand Mr. Ginnane, he seeks to derive from the provisions of Section 2 and 3 (1) of the Act, a principle of equality as he puts it.

I should note and I’ll have more to say this later that the Commission did not rely on 3 (1), a good reason I think.

But in any event, what is sought to be derived from these provisions is a principle of equality and I think Mr. Ginnane states it in these terms that one man have looked to the ownership of the goods, one man have looked to the competitive situation, if traffic is tendered by a shipper or a freight forwarder or a motor carrier to a railroad, the same service must be afforded at the same rates.

Now, if any such principle is to be derived from the provisions of Section 2 and 3 of the Act, I suggest that that principle condemns rather than supports the rules which had been promulgated by the Commission.

Be sure, under these rules, the motor carrier is entitled under the open tariff to move its traffic — to move the traffic that it’s moving for a customer, at the same rate as the shipper or the forwarder.

But it’s entitled to move it under these rules at a preferred rate, at a better rate.

It’s entitled to enter into through routes and joint rates and to work out divisions pursuant to which the motor carrier will move the traffic of its customer over the railroad at a lesser rate than the rate at which the shipper may or its competitor, the freight forwarder man, so that in the matter of — under this principle of equality, on the matter of rates, it is clear under these rules that the motor carrier may move its traffic at something that isn’t governed by a principle of equality under divisions and through routes and joint rates at a lesser rate.

Moreover, turning to the matter of service —

It also — it can also establish a higher rate.

Francis M. Shea:

Yes, higher or let’s just say a different rate.

That is the principle of equality, I take it, is violated as much by a greater as a lesser rate.

Abe Fortas:

But it can do that only with the consent of the railroad, isn’t that right Mr. Shea?

Francis M. Shea:

That is true, under 216 —

Abe Fortas:

Now, what happens if the railroad doesn’t want to enter into a joint through rate arrangement?

Francis M. Shea:

As 216 (c) makes it voluntary, I take it that it is clear that if the railroad refuses to enter into it, it doesn’t have to enter into it.

But I’m suggesting that through the joint route, through — a joint rate through arrangement which is provided for in these rules by a separate agreement between the railroad and carrier, what would certainly be a rebate if arrived at by special agreement to secure a lesser charge for the movement.

These rules authorized a lesser or a different charge at least to be secured by the motor carriers.

Earl Warren:

I suppose Mr. Shea that would take us to the point, would it not, where the railroads could say to the motor carriers, “You just can’t — you just can’t bring your trucks piggyback on our railroad.

We won’t let you”.

Abe Fortas:

I suppose that’s right.

Now, may I note not merely on a matter of rate but a matter of service, the result is also that no principle of equality governed.

So far as service is concerned, the shipper can operate at any service point but not the motor carrier, under these rules, he must offer at a joint service point.

The shipper or the freight forwarder may say, “You must take it by the most direct route”, but not the motor carrier, he can’t use it unless it’s at least 85% as roundabout as his highway route.

The shipper or the motor — or the freight forwarder can say, “Take it to the service point nearest destination”, but not the motor carrier.

The motor carrier has to say, “Take it to a joint service point”.

All I’m saying is that if there is any principle of equality could be derived from 2 and 3, these rules do not carry out any such principle either as to rates or as to service as between the motor carrier and the shipper or the freight forwarder and I suggest that that kind of a principle of — either of the principle must be wrong or the results are wrong and I think both now.

I take it that that he know this agreement, I should hope between Mr. Ginnane and myself that the Commission must find some substantive authority in this Act to justify these rules and if it justifies these rules on any grounds, it’s under Section 2.

That is the only Section to which reference is made.

I should like to ask the Court if it will to read with me the provisions of Section 2 which we find on page 35 of our brief, this is the yellow brief, and I will admit words not critical.

If any common carrier subject to the provisions of this part shall charge any person a greater or a less compensation for any service in the transportation of property subject to the provisions of this part, than it charges for doing — than it charges any other person for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination which is prohibited and declared to be unlawful.

Now, this is language which says that it shall be an unjust discrimination to charge for a like service a different rate.

But how does the Commission read it.

If you will turn to page 38, right at the top, we quoted what the Commission said.

The Commission says, “Section 2 requires rail carriers to make like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and divisions available to any person at a charge no greater and no less than received from any other person” and if you’d look to page 8 of the Appendix of our brief, next to the last page.

They just adopt that language which they say Section 2 provides as their Rule 2.

Now, I suggest to the Court that it is clear on the face of it that what Section 2 and this is the only provision of the Act on which the Commission rely.

What Section 2 said is that you may not charge a different rate and what the Commission is saying is that —

Thormund A. Miller:

— Section

Hugo L. Black:

(Voice Overlap)

Francis M. Shea:

— 2 provides that you must render the same service.

Abe Fortas:

Are you saying —

Francis M. Shea:

Now —

Abe Fortas:

— Mr. Shea that there’s nothing in this Act that requires a rail carrier to furnish the same service to everybody?

Francis M. Shea:

If the Court — if — Mr. Justice Fortas, Section 3 which is in pari materia, Section 2, deals specifically with it.

Francis M. Shea:

I could understand the language of Section 2 being stretched if it were the only language of discrimination.

Abe Fortas:

Well, I —

Francis M. Shea:

But Section 3 provides expressly and there’s no disagreement that I take it between us that you can’t let a preference in service but there’s a difficulty with Section 3 which the Chief Justice noted and that is that it has a proviso.

And that proviso says that this paragraph shall not be construed to apply to discrimination, prejudice or disadvantage to the traffic of any other carrier of whatever description.

Now, I suggest to the Court that that language is clear and it is general.

Section 3 doesn’t — can’t be construed to apply to any discrimination or disadvantage to the traffic of any other carrier.

Mr. Ginnane would have you read it as saying that it may not be construed as applying to discrimination or disadvantage to the traffic of any other carrier if that discrimination or disadvantage is accomplished by undercutting the rates of the other carrier — the other carrier.

Well, I think that no amount of legislative history would permit a rewriting of that proviso to that extent but in any event, there is no legislative history to support any such contention.

The one piece of legislative history which is referred to as the statement of Senator Wheeler in introducing this proviso into 216 (d) in Part II but it was taken over from there.

And to be sure, Senator Wheeler said, the occasion for putting this proviso in is that some of the motor carriers fear that Section 3 would be construed to extend to discrimination or disadvantage resulting from undercutting the railroads rates.

But he goes on to say, this proviso was unnecessary, Section 3 (1) from which 216 is derived, has always been construed as applying only to preferences or discrimination preference or prejudice, the language of 3 (1) between patrons or to the traffic of patrons.

And he says this, reading it quite clearly, in contrast of the proviso relating to discrimination or preferences to the traffic of any other carrier.

And indeed, the cases construing 3 (1) before the proviso had held that it was not applicable to discrimination against another carrier or the traffic of another carrier but only discrimination relating to shippers.

And so I suggest to the Court that the language of this proviso clearly indicates that 3 (1) is not applicable as a basis for requiring that the traffic of competitors be treated the same as the traffic of shippers or —

Byron R. White:

You say — would 3 (1) — Mr. Shea, would 3 (1) permit a railroad to charge a dollar to — a dollar to a — or traffic which it receives from its wholly owned trucking subsidiary and charge $2 for a traffic that as we see from an independent trucking establishment.

Francis M. Shea:

Well, now, we get into the — if through routes and joint rates have finally established —

Byron R. White:

Well, I don’t — I don’t — let’s not talk about through routes and joint rates, let’s just talk about 3 (1).

Francis M. Shea:

Yes.

Byron R. White:

Does —

Francis M. Shea:

Well —

Byron R. White:

— 3 (1) permits that or not?

Francis M. Shea:

It seems that — you’re not getting —

Byron R. White:

Well, is that a violation of 3 (1)?

Francis M. Shea:

— you’re not getting into an issue divisions.

Byron R. White:

Well, I’m just saying that here comes the — at one truck line comes up with the — with the — with some — with some trailers full of new cars and wants them hauled to San Francisco.

And the railroad says, “Sure, we will.

We’ll charge you a dollar”.

And the next day, another truck line comes up with the same trailer and same cars and they charged them $2 —

Francis M. Shea:

Well, I say that —

Byron R. White:

— for the same trip.

Francis M. Shea:

— they can — the railroad can say “we won’t take it at all” —

Byron R. White:

They don’t say it —

Francis M. Shea:

— but —

Byron R. White:

— at all.

They say, “$2 we’ll take it.

Sure!

We’ll charge you $2”.

Francis M. Shea:

Well, I think I have to say that as far as 3 (1) is concerned, 3 (1) is not applicable.

Byron R. White:

3 (1) is not but something else is.

Francis M. Shea:

Something else is —

Byron R. White:

That’s Section 2 —

Francis M. Shea:

— that through route

Byron R. White:

— isn’t it?

Isn’t that Section 2?

Francis M. Shea:

No, I think Section 2 is not applicable because I think Section 2 likewise is not applicable to the traffic of competing carriers.

Byron R. White:

It doesn’t have a proviso, does it?

Francis M. Shea:

No, it doesn’t have a proviso.

Byron R. White:

But you would say — and you would likewise say then that the rail — railroad could accept the traffic of the one carrier on the first day, its wholly owned subsidiary trucking establishment and wholly refuse to accept the traffic from an independent establishment the next day —

Francis M. Shea:

Yes.

Byron R. White:

— under 3 or 2 or any other Section?

Francis M. Shea:

Yes, but now, I don’t mean that the Congress has ignored altogether this problem.

It hasn’t.

So far as relations between railroads are concerned or the railroads and water carriers are concerned, they’ve dealt specifically with the problem and they dealt specifically with the kind of a problem which the Government seeks to reach by pressing into service, I think, provisions which were not intended to reach this problem.

Byron R. White:

But is this —

Francis M. Shea:

And they’ve done that —

Byron R. White:

Let me ask you one other — in connection with this — in accepting the traffic from its own wholly owned subsidiary for transportation to San Francisco, could it — would it have to do it via the through route or joint rate or whatever you would call it or would it — or — or could that — or — or — could that truck — particular truck line have an open tariff arrangement and make the sail itself originate the traffic and utilize which device, is it V?

Francis M. Shea:

Five or one — well, under — under Plan I, — they could originate the traffic and fix the rate.

Now, there’s — some of my colleagues consider that a through route and the Commission considered it the through route.

Under V, they could establish a through route-joint rate quite clearly.

Byron R. White:

But you think the only way the — I gather, do you think the only way a truck line can actually have the authority to undertake the — or to furnish part of its service that it undertakes to furnish by railroad, the only way it can do that is to have a voluntary agreement with the railroad.

Francis M. Shea:

Yes.

Now, this isn’t true of course as between railroads.

This isn’t true as between railroad and water carriers.

There, the Commission has the authority to force through routes and joint rates and it has the authority to see that the railroad provides adequate facility to carry it on and it has the authority under 3 (4) to see that it doesn’t discriminate between others and Eastman wanted this in Part II and couldn’t get any support for it.

And subsequently on several occasions, the Commission is trying to get this authority.

Now, these are the appropriate provisions to deal with this kind of problem.

I’m not saying that it’s wise that there shouldn’t be provisions that permits the Commission to require proper coordination of service between the motor carriers and the rails, I’m saying that it is clear that they haven’t got it.

It is clear that this has been left to voluntary arrangements and I’d like to make one other comment if I may Mr. Justice Fortas, as Mr. Ginnane will know, can the railroads also hand this over to the truckers?

Can they use their open tariffs?

Mr. Ginnane said, “Yes,” and I suppose there’s any principle of equality a railroad can also hand over the traffic it doesn’t want to another railroad or to another carrier — motor carrier when it gets it from a motor carrier, hand it on to another railroad or another motor carrier.

The dissenting Commissioner must have a way of thought this introduced an incredible confusion and we didn’t know where we’re getting.

I don’t know where it leads.

But certainly, the Commission doesn’t know where it leads.

It’s made no record on this and it hasn’t addressed itself to it and it certainly hasn’t shown the discriminating awareness or the consequences of its acts which appears to be the standard of Burlington and this Court.

I think that there is enormous confusion and some of the questions indicate the problems of confusion, in this situation and the reason there is, is that the Commission has not stated clearly what its position is, what support there is for that position and where it leads.

And a minimum seems to me that should be returned to tell us that.

I’m not sure that it needs to be returned to them.

Just let me make this final point, Mr. Ginnane, I gather, says that this is an interpretive rule and I take it what it means by that is that the Commission’s opinion is nothing but stating what it understands, Section 2 could mean in this context and if it’s wrong, I suppose, the answer of this Court would be that you’re wrong and then it’s up to them to proceed under some other section if they choose to do it.

Now, Mr. Chief Justice I think my time be saved unless there are further question.

Abe Fortas:

Mr. Shea, may I ask you this.

It seems to me that the way you’re reading the proviso of Section 3 cuts very deeply and that would indicate that railroads can disregard Section 3 in any case where it’s to their advantage to do so at least with respect to any matter involving truckers or water carriers.

Francis M. Shea:

No.

I think it can only do so where the issue is — where this provision is sought to be applied, construed to apply to a situation where it is assertive that a discrimination against the service of the traffic of the — of another carrier is the violation that is asserted.

Now, that may cut deep but to that (Voice Overlap)

Abe Fortas:

Well — well, I think —

Francis M. Shea:

— except that cuts deep.

Abe Fortas:

— if I understand you, you’re saying pretty much what I thought you are saying that is to say that where the tariff concern is that of a trucker or a water carrier I suppose that the — you read the proviso, its meaning that any discrimination by the railroad goes.

Francis M. Shea:

I have — well, maybe, perhaps this distinction is not important, Mr. Justice Fortas.

I’m not saying any discrimination goes.

I’m saying that Section 3 does not prohibit the discrimination.

Francis M. Shea:

Now, other sections of the Act prohibit discrimination as between railroads or railroads and water carriers in refusing to coordinate their activities —

Abe Fortas:

Well, here you have —

Francis M. Shea:

— but this doesn’t.

Abe Fortas:

I beg your pardon.

Francis M. Shea:

I’m sorry.

Abe Fortas:

Here you have though a refusal to — I suppose refusal to accept — to provide a service to truckers, namely the service of carrying the trucks on freight cars and I assume that is the Section 3 type of discrimination and that your position is that it’s a Section 3 type of discrimination unless it’s excused by the proviso.

Francis M. Shea:

Well first, may I note that the record doesn’t establish any general refusal.

This is an assertion that’s made in the Government’s brief but Mr. Ginnane didn’t pursue that but what I would say is, yes, the proviso excludes it.

Thank you.

Hugo L. Black:

Are you saying that — I’m sorry.

A competitive carrier has no right to ask his competitor to carry his goods and cannot be forced to do so except under the through routing sections of the statute?

Francis M. Shea:

I’m saying that a motor carrier can’t demand that — that — acting as a motor carrier —

Hugo L. Black:

That’s what I said, a motor carrier.

Francis M. Shea:

Yes.

But acting as a motor carrier, there is a line of cases of course which says that where he’s tendering his own goods where the motor carrier is tending his own goods or railroad is tending its own goods.

It’s tendering —

Hugo L. Black:

My question meant that the one carrier cannot tender to another carrier a good which he has been carrying and won’t carry it on.

Francis M. Shea:

As a carry?

Hugo L. Black:

As a carry except under the proviso for through routes and that’s voluntary and they didn’t have it.

Francis M. Shea:

So far as the motor carriers are concerned, it’s voluntary so far as between railroads and railroads and water carriers, it is not voluntary.

Earl Warren:

Well, let’s see now.

Mr. Duke.

Paul R. Duke:

Mr. Chief Justice, may it please the Court.

There is no question that the Commission has no power to compel through routes and joint rates between railroads and motor carriers.

Now, that’s something that I think some find shocking.

I know I did when I first discovered it because I thought the Commission could compel a railroad to do just about anything.

But I think that lies at the root of this case because I think what the Commission has done by Rules 2 and 3 is try to overcome this lack of power it had to compel through routes and joint rates and supply it through the device of these rules.

We submit that Rules 2 and 3 do result in through motor-rail routes and therefore in — are invalid as beyond the authority of the Commission.

Now what is a through route?

I think very basically and simply, a through route is an arrangement either expressed or implied between connecting carriers for the carriage, for the continuous carriage of goods over the lines of such carriers.

Paul R. Duke:

In other words, there’s no need for the shipper once he’s tendered it to the originating carrier to intervene again, he gets a through movement almost by the name, a continuous movement over the lines of two or more carriers.

Now, I would suggest that physically the transportation which Rules 2 and 3 would produce, meets every test of through motor-rail transportation.

The motor carrier would pick it up from the shipper under his tariff.

He would bring it to the railroad terminal, turn it over to the railroad, ask them to move it to their ramp, take it back and deliver it to the shipper.

Now, that is the traditional example of a through motor-rail-motor movement.

Now, when we raised this contention before the Commission, they had one answer to it.

They said even conceding these were through routes, they weren’t compulsory and they said that because the motor carrier didn’t have to use the service, well, that’s right.

But then they also said there was no duty on the railroads to publish any trailer-on-flatcar tariffs.

In other words, they were suggesting that we could completely abandon our trailer-on-flatcar business, our tremendous investment in it, if we didn’t want the motor carriers to use our tariffs and therefore, the continued maintenance of our tariffs and what I suggest are these through motor-rail routes was voluntary.

I suggest that’s wrong as a matter of law and ridiculous as a matter of common sense.

I suggest that it’s wrong as a matter of law because once we have all this equipment and facilities, under Section 1 (4) of the Act, a shipper upon a reasonable request can require us to produce the transportation and publish charges for it.

I would suggest that as a matter of common sense, it’s like saying that the man who gave up his wallet to the robber on the threat — your money or your life did so voluntarily because he had a choice.

Now on brief, the Government and the Commission and the motor carriers try a new attack.

They say, these aren’t through routes because there’s no holding out so even if compulsory, Rules 2 and 3 don’t violate the statute.

And for this effort, they cite one sentence from the opinion of this Court in Thompson versus United States which did say that the test of a through route is a holding out by the carriers.

But of course, what the Court was examining in Thompson was a voluntary through route.

The Commission had decided not to use its compulsory powers in Thompson but had found the existence of a voluntary through route.

Well, of course, if you’re looking to see whether a voluntary through route has been established, it’s quite appropriate to see if there’s been a holding out by the carriers.

I would also suggest to Your Honors that in this case, there is no holding out by the railroads and that’s our real objection, our real complaint.

The motor carriers hold it out for us.

They’re going to hold out without our consent, without our prior agreement, a motor-rail motor service.

Now, also in this case —

Earl Warren:

Well, suppose a — suppose a carrier takes — a motor carrier takes produce from a farm to a rail terminal and then the produce goes to another rail terminal and there, the same motor carrier takes it from there to the processing plant.

Is that a through rate?

Paul R. Duke:

You rate — you pose a very difficult question, Mr. Chief Justice because —

Earl Warren:

Because — not because I asked — the reason I ask you is because it’s difficult for me to see the difference between that and what we have here.

Paul R. Duke:

Well, you see, once you select produce Mr. Chief Justice, you’ve happen to pick a commodity that the motor carriers can handle without regulation under the agriculture exemption.

We are regulated in the handling of produce.

If you would take —

Earl Warren:

Now let’s — let’s —

Paul R. Duke:

Iron and steel ball bearings or something —

Earl Warren:

Let — let’s take something other than —

Paul R. Duke:

Alright.

Earl Warren:

— something other than produce.

I didn’t mean to put that in to it.

Paul R. Duke:

It is a particularly difficult question —

Earl Warren:

Yes.

Paul R. Duke:

— because — let’s take steel widgets.

Earl Warren:

Yes, and —

Paul R. Duke:

I would suggest that a railroad has no more right to ship over a motor carrier than a motor carrier has to ship over a railroad and I say that’s none.

I would say that if a railroad wants to get a motor carrier to handle part of its business, let’s take the iron steel widgets to a point outside the terminal area.

Now, we can handle them ourselves inside the terminal area because the Congress specifically gave us that power.

But outside the terminal area, we have to find a motor carrier who is willing to enter into a through route arrangement with us just like if he wants to have rail service as a part of his through movement, he’s going to find a railroad that’s willing to handle it with him.

It cuts both ways.

And Mr. Justice White, I would suggest that once a railroad holds out or agrees to join in a through route with motor carriers, it couldn’t charge its subsidiary a dollar and any other motor carrier $2 because, 216 (c) puts on railroads the duty to establish nondiscriminatory, non-prejudicial divisions among those motor carriers that it does choose to join with.

Byron R. White:

You mean a — you mean a railroad if it’s going to do business, would accept any traffic from a truck line — from any truck line would have to do so for all?

Paul R. Duke:

No.

I don’t say that there’s an absolute, a compulsion to enter in because that would mean that once you entered into a —

Byron R. White:

Well, then what are you saying?

Paul R. Duke:

What I’m saying is that if you’ve entered — entered into it with two truck lines, you can’t have a division with one that’s a dollar and a division with another one that’s $2.

Byron R. White:

Why not?

Paul R. Duke:

Because the Commission has the right under 216 (c) and 216 (f) to proscribe the divisions of joint motor-rail rates and the parties to them —

Byron R. White:

Yes, but what obligation under the Act — what obligation is there in the Act that says that the divisions have to be the same.

Paul R. Duke:

216 (c).

Byron R. White:

Well, yes.

What does it say?

Paul R. Duke:

It says, in the case of such joint rates, meaning, voluntary motor-rail rates or charges, it shall be the duty of the carriers parties thereto to establish just and reasonable regulations and practices in connection therewith and just and reasonable and equitable divisions thereof as between the carriers participating therein which shall not unduly prefer or prejudice any of such participating carriers.

I would suggest to Your Honor that that would prevent any railroad from entering into divisions — different division arrangements as between the motor carriers with whom it does enter into.

Byron R. White:

Well, I thought that — you think that — that applies between — between two different divisions between the — between carriers — two different sets of joint rates.

Paul R. Duke:

Well —

Byron R. White:

I thought that was just within one joint rate.

Paul R. Duke:

It refers to preference and prejudice Your Honor which normally as a comparison as between one here and one over here.

Abe Fortas:

How big is a terminal area?

Is that the whole city?

Paul R. Duke:

Generally, Mr. Justice Fortas and it might go beyond.

It’s — it — the Commission has the power to determine upon the filing by railroad of its tariff what a reasonable terminal area is.

Abe Fortas:

Alright.

Well, now suppose a railroad provides door-to-door service within its own terminal areas, that is to say to the railhead by rail and then trucks to the extremity of its terminal service, would you consider that a holding out in the sense that it would have to service a trucker to order the pick up of the same types of merchandise at the railhead for delivery within the terminal area?

Paul R. Duke:

You mean he wants to bring it to us as the shipper and ship it to — over our line?

Abe Fortas:

Yes.

Paul R. Duke:

No.

I would say that that is not a holding out because I say the motor carrier has no right to ship because of the —

Abe Fortas:

Suppose — suppose a railroad used a piggyback which I understand is done, isn’t it?

That is to say railroad takes its own trucks and trailers and carries them on — on the rails to the railhead and then they — they trundle off and they go to the — somewhere outside of the railhead area but within the terminal area.

Now, when the railroad — on your theory, would the railroad be required to carry piggyback, a trucker, within that same area?

Paul R. Duke:

No sir.

Not unless it had chosen to enter into a joint —

Abe Fortas:

But why — why not?

I mean, here’s the other railroad that’s providing exactly that service.

The railroad holds itself out to do a piggyback trailer service from point A to the — a point within its terminal area beyond the railhead.

Now, a trucker comes along and he says, “Please piggyback for me at exactly the same place.”

Now why is it — the holding out principle plus your response to Mr. Justice White about holding on subsidiaries?

Paul R. Duke:

No.

I —

Abe Fortas:

Doesn’t it follow from putting on these two things together?

Paul R. Duke:

I would suggest —

Abe Fortas:

Refer —

Paul R. Duke:

I would suggest Mr. Justice Fortas — Fortas that the motor carrier has no right to ship over the railroad, but if the railroad chooses to enter into a through route arrangement within, then they will perform that service pursuant to their through route agreement.

I suspect what is troubling the —

Abe Fortas:

Well then yes, is this a modification of the holding out theory that you were —

Paul R. Duke:

I’m saying that —

Abe Fortas:

— advancing?

Paul R. Duke:

We — we hold our service out to any shipper who has a legitimate right to use it but —

Abe Fortas:

But not to — but not to a trucker.

Paul R. Duke:

But —

Abe Fortas:

I mean the issue here is who has a legitimate right —

Paul R. Duke:

Well —

Abe Fortas:

— to use it service within the areas.

Paul R. Duke:

But that a motor carrier because of his federally regulated status as a carrier, when he turns traffic over to a railroad, he has created a through motor-rail route.

Abe Fortas:

Well, I’m afraid that’s — I was afraid that’s what you’re saying.

You’re saying a holding out applies but it doesn’t apply to truckers.

Paul R. Duke:

That’s correct because the trucker has no right to ship.

I would suspect that the real — we think we have the best of the statutory and the technical legal arguments but I would suggest that at least what is most troublesome to most people who hear about this is “What’s the matter with you railroads, why don’t you want this business?

Why don’t you want motor carriers to come to you and turn trailers over to you under your tariff?”

Well, I would suggest that there are many, many practical reasons why railroads want to have the right to agree in advance to enter in the through route arrangements where they can negotiate all of the various provisions that are entailed in a through route service.

First of all, now the quite simple answer and that is the railroads are quite naturally weary of their motor carrier competitors bearing gifts but that’s no real practical answer.

The answer it seems to me is that motor carrier has no obligation to turn all of his business over to us or any specific portion of it.

Therefore, the business that he is liable to turn over to us is the business that there is the most difficulty in handling.

Now, Mr. Ginnane suggested that the motor carriers are reasonable men and they would make arrangements in advance.

Well, I would suggest that the advancement of the railroads piggyback service is not necessarily the principle or a prime aim of the highway carriers in this country.

But secondly, there is the practical problem that much freight in this country is one-directional, and one of the principle cost items which raises transportation prices is the problem of empty return that you have to move back to the origin locations where much of the traffic originates empty equipment.

Well, the fact is, if a motor carrier can ship via us, he can turn over to us this surplus or one-way business that he has for which he can’t set up a balance movement.

And therefore, we’ll have to confront ourselves not only with our own empty return but with his also.

This would tend to raise railroad costs and also consequently raise railroad prices, all to the benefit of our competitor who would be continuing to publish rates for an all-highway service.

I will —

Earl Warren:

How did this piggyback service originate?

Who originated it?

Who thought it up in advanced it?

Paul R. Duke:

The railroads Mr. Chief Justice Warren.

The first evidence of it was actually boat-on-flatcar service.

Paul R. Duke:

It began back in 1843 where a railroad was moving canal boats on flatcars.

It kind of died out in the late 50s and then in the 1880s, the Long Island Railroad started hauling so-called farmer wagons on flatcars with the team right on the same train in a specially built boxcar.

So, I would say the modern resur — or the modern development of it began in 1926 but the real resurgence came in 1954.

After the Commission had laid down all these principles and movement of highway trailers by rail, and the railroads thought, “Okay, now, we have the ground rules, let’s go out and start with this thing.”

And among those ground rules were that motor carrier or that railroads handled trailers for shippers under tariffs and they handled trailers for motor carriers under through route arrangements voluntarily entered into.

I would suggest another principal reason why the motor carriers want to have — I mean, the railroads want to have a motor carrier as their partners and not as their shippers, is that we get the right to agree in advance how we are going to provide the service.

The motor carrier can’t just suddenly show up at one of our terminals on a snowy Friday afternoon and say, “Here are our hundred trailers, move them.”

Hugo L. Black:

Is that what they require you to move?

Paul R. Duke:

Well, they could Mr. Justice —

Hugo L. Black:

Is that what they require the railroads to move?

Paul R. Duke:

We would —

Hugo L. Black:

I mean truckers bring it.

Paul R. Duke:

We would —

Hugo L. Black:

What is the freight that’s delivered?

Paul R. Duke:

It’s a trailer loaded with freight which has been tendered to the motor carrier for movement under his tariffs.

Hugo L. Black:

Under his — in his car?

Paul R. Duke:

Well —

Hugo L. Black:

In his trailer car?

Paul R. Duke:

It would — it could be his trailer but there’s no —

Hugo L. Black:

When they deliver it to you, they deliver — they deliver automobiles or do they deliver automobiles inside?

Paul R. Duke:

No.

Automobiles are out of this case Mr. Justice Black.

Hugo L. Black:

Well, what is it — what is that?

Paul R. Duke:

It would be — it would be various articles of freight.

Hugo L. Black:

Well, do they —

Paul R. Duke:

Television sets —

Hugo L. Black:

Do they deliver those various articles of freight or do they deliver them in a car?

Paul R. Duke:

They would deliver them either in a trailer or require us to provide a trailer and go pick them up because both are all inclusive tariffs or open tariffs.

There’s been some suggestion that only our ramp to ramp tariffs are open tariffs.

All our tariffs are open tariffs.

Hugo L. Black:

Did it cost the railroad anymore to handle this —

Paul R. Duke:

We would —

Hugo L. Black:

— whether if it was delivered by a shipper?

Paul R. Duke:

We would suggest that with the motor carrier’s imbalance, the imbalance of freight in United States, in other words, more moving in one direction than in another that he could successfully transfer his empty return to us which would increase our cost and consequently our prices.

I would just suggest that when we can enter into an arrangement or an agreement with the motor carrier, we can meet with him and say, “Look, we don’t want this.

You’re authorized to serve Trenton, New Jersey.

We don’t want you to turn it over to us at Trenton.

You’re also authorized to interchange traffic at Kearny, New Jersey up near New York.

We have the big terminal up here.

We have the cranes.

“Give it to us at Kearny, don’t dump it on us in Trenton”.

And if he would refuse to a reasonable request like that, we wouldn’t have a contract that we could have entered into.

D. Robert Thomas:

Is there —

Paul R. Duke:

That —

D. Robert Thomas:

— any distinction between the piggyback and the car loading, boat carload?

Paul R. Duke:

In the tariffs Mr. Justice Clark?

D. Robert Thomas:

I mean forwarder.

Does he tender to you a full car?

Paul R. Duke:

He uses both.

He uses both piggyback where he would tender two trailers to us and he also —

D. Robert Thomas:

You wouldn’t know what’s in the car if it’s the car load?

Paul R. Duke:

We would know — on the bill of lading, we would know that it was freight all kinds most generally which was just a generic description and then he would also provide us with a manifest sometime later listing all of the individual shipments.

D. Robert Thomas:

Well, isn’t that a — is he a shipper?

Paul R. Duke:

Oh yes, because he did well.

Mr. Thomas I’m sure is going to cover that but he can be both a carrier and a shipper because the Congress said he could.

They gave him the specific right to ship which is something the motor carriers don’t have.

Thank you very much, Mr. Chief Justice.

Earl Warren:

Very well.

Mr. Thomas.

D. Robert Thomas:

Mr. Chief Justice and may it please the Court.

D. Robert Thomas:

I do represent these freight forwarder appellees in this case.

My clients are the ones who are entirely recognized as having a right to ship and so recognized in the statute.

These new rules provide for an invasion of that mode of operation and that’s the primary basis of the concern of my clients here.

One of the grounds of the decision below was that the rules do violate one of its parts and sections of Part IV of the Act which regulates freight forwarding and moreover, they violate the direct intentions of Congress to keep motor carriers and railroads too, and water carriers out of the freight forwarding business.

Now, I do want to explain furthermore to what the forwarder does.

A question came up just a moment ago about that.

The forwarder company operates by making shipments over these regulated common carriers.

This operation of making shipments is the distinctive characteristic of freight forwarder operation.

The statute permits the freight forwarder to have his own motor vehicles inside and operate them inside a terminal area such as New York City or Washington but not to operate any of the line or haul transportation in between the terminals.

What the forwarder does is to assemble the shipments inside one of the terminal areas and he can do that with his trucks under the provision of the statute and then he takes them and forms a carload shipment out of those.

He puts these small shipments together and he consolidates them as the general word, and he makes a carload shipment and then he tenders that shipment to a common carrier and it’s almost always a railroad for the distances.

He tenders that to a common carrier under the common carrier’s tariff rates.

Hugo L. Black:

The carload?

D. Robert Thomas:

Yes, carload rates.

Now the carload rates of course — the carload rate for a single carload is less than the total amount of the rates for each of these individual shipments and the forwarder pays his own expenses and he makes his profit by that spread between the rates.

His own rates, the forwarders’ own rates must be just and reasonable to the shipper of the small goods.

They are regulated by the Interstate Commerce Commission and they must be just and reasonable.

Abe Fortas:

Could the railroad itself do that same job within the terminal area accumulated cargo?

D. Robert Thomas:

The railroad can do and by — and the motor carrier, Your Honor, and the water carrier can all do the same job in this respect.

Each of them can operate with the pick up and delivery service in the terminal area and they do.

There are certain limitations in different places but that’s typical.

Each one of them does it.

But when the railroad collects those small shipments that it has, it takes them and handles them in its own rail service.

When the motor carrier collects them, it’s authorized to handle them in the Part II type of service and when the water carrier collects them, it takes them by water and down to the destination, and then it comes to delivery.

The distinction and the difference between the freight forwarder mode and the thing that Congress has called and recognized in Part IV, has stated in Part IV, to be what it calls the inherent nature of freight forwarding.

The inherent nature of freight forwarding is not this matter of the collection of the shipments at each hand because all carriers do that.

The distinctive nature of freight forwarding and within the essence of the trouble that these rules get into is that the nature of freight forwarding is to take those shipments that it collects, combine them and then ship them on an operating carrier, but we are not an operating carrier.

We ship over an operating carrier and freight forwarders are the only mode of operation of a transportation agency of which there is a statutory provision for that method of operation.

That statute is in Part IV, provides that freight forwarders may utilize the services of a railroad or of a motor carrier or a water carrier “for the whole or any part of the transportation of such shipments”, and that is not in anyone of the rest of the sections.

And moreover, it’s entirely clear if we looked to the congressional history of what Congress intended that Congress expressly when it enacted Part IV, expressly decided and deliberately stated that it did not want these carriers by railroad or carriers by motor carrier or carriers by water carrier to be engaging in freight forwarding which is the matter of the shipping between the terminals.

D. Robert Thomas:

I see it’s 12, so I —

Earl Warren:

The red light would come on.

D. Robert Thomas:

I see.

Earl Warren:

Mr. Thomas, you may continue your argument.

D. Robert Thomas:

Mr. Chief Justice, may it please the Court.

I was mentioning before the recess that Congress had deliberately examined and made its own conclusion as to whether these other carriers should be permitted to engage in the freight forwarding mode.

The Freight Forwarder Act was adopted in 1942 and in the legislative history preceding that, the principal report which was reflected in the final form of the Bill was a report made by the House of Representatives Committee.

That deliberate — that Committee deliberately took up this question about the relationship of the freight forwarder mode with the other carriers.

And the Committee started off its report by calling attention to the fact or saying that forwarders perform a unique type of transportation service.

And then on the first page also, it mentioned that forwarders, they utilize the services of rail, motor and water carriers and ship by whatever means is the best way to do the shipping and that’s what makes their form of operation unique.

Hugo L. Black:

Would you mind telling me in verse succinctly how this order affects you as a freight forwarder?

D. Robert Thomas:

Yes, Mr. Justice.

As freight forwarders, this affects us in — in — in one or two or three different kinds of very sharp ways.

One is it permits the motor carriers and the water carrier but particularly the motor carriers they are our primary competitors.

It permits them to offer the shippers throughout the country the type of operation that the freight forwarders have been operating under the method of shipping by rail.

The rules themselves —

Hugo L. Black:

You mean it properly gives them advantage of being forwarders when they’re not?

D. Robert Thomas:

It does exactly that, Your Honor.

It makes them — every one of these water carriers, it makes them a freight forwarder.

They can choose under the rules as the Commission sets them up, it gives the motor carriers who up to now have been operating — required to operate under the Act and intended by Congress to operate as motor carriers in the ways the Part II describes or water carriers in this similar kind of way.

It gives each one of them the option to add on to that another mode of operation which is the freight forwarder mode.

In other words —

Hugo L. Black:

They go out and gather it up, collect it together and then ship them in cargo lines?

D. Robert Thomas:

Exactly.

Now, all of them can gather and all of them do and all of them have historically gathered these small shipments but then comes the way in which they get it from this concentration point over to the destination concentration point and that’s what we have the distinction in the different modes of operation.

The forwarders do what their name implies really.

They forward the shipment by shipping it over other carriers.

Abe Fortas:

Well, isn’t there —

D. Robert Thomas:

But that has not been the method of operation of the other carriers, motor carriers or railroads.

They do not ship and they are not intended by Congress to be forwarders and to act as forwarders and to — and to ship.

D. Robert Thomas:

As a matter of fact, that’s what the Congress, in drawing up the Act, came to that expressed conclusion.

The word it expressed in the Committee Report was that it came to a conclusion that there should be a policy and I’m quoting, “Of not permitting” this is in quotes, “Of not permitting them –” that is the railroads and the motor carriers and the freight — and the water carriers “– to engage directly in the freight forwarding business.”

Abe Fortas:

But isn’t there a substantial —

D. Robert Thomas:

And the reason why they — so they came —

Abe Fortas:

Isn’t there a substantial difference in freight rates between carload lots and freight rate that would be applicable to this piggyback service?

D. Robert Thomas:

The freight — there is a difference in freight rates, Your Honor, yes.

What the — the — both of those are services held up by the railroads.

They hold up the boxcar service and the forwarders use the boxcar for the service for much of the service.

They have in the past, historically, as a railroad puts in piggyback service and holds that out, the forwarders are able to use that lower rate basis to what applies to the piggyback service.

They either — the forwarder either puts the goods in the boxcar or consigns that to the destination where it puts the goods in trailers.

It takes you — they took trailers to make up the carload shipment and consigns that to the destination.

So that the forwarder will do is use both boxcar service and the TOFC service.

Abe Fortas:

How does the rate applicable to the trailers work in piggyback?

That is to say that — you say it takes two trailers to constitute a carload, is that right?

D. Robert Thomas:

Typically, yes.

Abe Fortas:

But if a single trucking company should put two trailers on a flatcar, would it get a carload lot?

D. Robert Thomas:

Yes it would, Your Honor.

Abe Fortas:

Right?

D. Robert Thomas:

That’s considered to be a carload lot.

And that is the tendering and the rate typically applies.

There are some exceptions, but the typical basis is the tendering of two trailers on a single carload and then of course ties in with the economy a little bit but there is room for them on the typical flatcar.

And on the typical basis, the two trailers or two containers without wheels constitute the one carload lot.

Hugo L. Black:

To what extent, if any, does your position carry you along with or against Mr. Ginnane?

D. Robert Thomas:

I am against Mr. Ginnane in this because Mr. Ginnane argues as I do that this thing, as a matter of fact, emphasized that these rules would make shippers and forwarders — he didn’t say forwarders, but he said these rules would make shippers out of the motor carriers that they would be acting as shippers, Your Honor.

The other day, last Thursday, he emphasized that strongly.

They’d be acting as shippers or patrons of the railroads and that’s the way they would operate if these rules went into effect but when they become shippers and this is where I’d part company with Mr. Ginnane, when they act as shippers, they are no longer acting in the way in which they are authorized by the Congress to act in the mode of operation for motor carriers.

When they become shippers Your Honor, they are then —

Hugo L. Black:

So then you say they should not be allowed to ship?

D. Robert Thomas:

Exactly and that’s what Congress intended.

They should not be allowed to ship.

D. Robert Thomas:

They are allowed —

Hugo L. Black:

Even though otherwise it would be discriminating against as we’ve observed?

D. Robert Thomas:

Your Honor, they — as a — it is in a matter of discrimination, I think on that and the discrimination runs in a different kind of direction.

It is a wholly different form that Congress for example prohibited.

There is a section in the Freight Forwarding Act that actually prohibits these people from becoming — from being — pardon.

Hugo L. Black:

Which people?

D. Robert Thomas:

The motor carriers and the railroads and water carriers from being permitted by the Commission to operate or to have — to have as freight forwarders.

The Commission made no reference to that in its report.

It’s a result of this policy, that provision of Section 410 (c) and that’s at the back of our brief — is in the Act that forbids the granting of any freight forwarding permit to these water carriers and railroads and those are the only persons that Congress has forbidden the Commission to grant a freight forwarding permit to.

And yet, as Mr. Ginnane said, operating under these rules, these people that is the motor carriers, the water carriers, and the railroad — they’re talking again the rules about motor carriers and water carriers, would be acting as shippers and as patrons, it would be allowed to by the Commission and permitted to by the Commission.

And when they are allowed to do that by he Commission and permitted to do it, they were then being permitted by the Commission to do exactly what Congress have said the Commission shall not grant them with the authority to do it and that is to make their operations in the freight forwarding way.

They carry on freight forwarding.

Hugo L. Black:

To what extent if any do you go along with the truckers?

D. Robert Thomas:

We do not go along with the — with the — or the truckers.

The truckers —

Hugo L. Black:

In any way whatever?

D. Robert Thomas:

No.

The only way we go along with the truckers is that I think the truckers also go along with Mr. Ginnane in saying that — that these rules would make shippers out of the motor carriers and they said, that’s alright with them.

As a matter of fact —

Hugo L. Black:

To what extent, if any, do you go far with the railroads?

D. Robert Thomas:

Most of the way, Your Honor, but not entirely all because to us, we read the Commission’s report and the provisions here as providing for a right of shipping and not a matter — making a matter of a through route.

That gives these rules would give the right to ship.

The Commission treated them that way in its report and by giving them the right to ship that puts it over in the situation where it — the territory, the Congress forbad to them, the freight forwarder —

Byron R. White:

Well, Mr. Thomas, wouldn’t — wouldn’t the same impact result to your group of people, the forwarders if the railroads just as a general matter agreed to joint rates or through routes with motor carriers?

I mean, wouldn’t — wholly aside from the technical, legal difference perhaps between as joint — a consensual arrangement like that and a compulsory when the impact on you would be precisely the same.

D. Robert Thomas:

No Your Honor, I don’t believe it would.

And for this reason, if these rules go into effect like this as they are intended to be and the area of shipping on the tariff rates is then thrown open to the motor carriers who are very strong competitors of the railroads as well as of the — of the freight forwarders, the impact on us is up to be either in whole or in part exactly are the kind of thing that Mr. Ginnane in his brief has referred to.

He has said that the railroads could comply with these rules by cancelling the tariff rates or piggyback shipping and that would be a full compliance with these rules and if — if that happened, our people, our freight forwarders would be entirely out of piggybacking because we cannot do anything except ship on tariff rates, and yet the motor carriers can make these joint rates under Section 216 (c), they can — they can make joint rates and joint through route arrangements with the railroads and the motor carriers would then be competing by providing piggyback service for their (Voice Overlap) —

Byron R. White:

Well, that’s what I mean.

That’s what I mean if they —

D. Robert Thomas:

— and we would — we would be cut out.

Byron R. White:

Well, if they do provide joint through routes, they — to the extent that they do, this has a serious impact on you.

D. Robert Thomas:

It has a very serious impact on us because it would be — it has less impact on us Your Honor.

It also has the similar impact on the private shipper who ships his own goods over the railroad.

Byron R. White:

But you agree — you agree that regardless of the impact on you that the joint — the joint rate arrangement, the consensual arrangement between the motor carrier and the railroad is permissible.

D. Robert Thomas:

The joint rate arrangement is permissible.

The only way as a matter of fact, Your Honor —

Byron R. White:

But that — but it still has quite in effect on you.

D. Robert Thomas:

Oh!

Yes, yes in any way — indeed, yes — we’re — they’re competing with us and the motor carrier has the — has a right now and if he does compete very, very successful, he is big and where our freight forwarders are small.

He gets the traffic because he has the authority to carry the traffic over the road in his own trucks or to make these joint arrangements with the railroads under Section 216 (c).

He can make either one of them.

But what he does not have now and the only thing that we have, the forwarders have is the right to ship as a shipper over the railroad, not if you — if you were to add, if the Commission adds as it proposes to do, to add the one advantage, the only way of operation that the freight forwarder is allowed to operate, add that on to what the motor carrier already has, you make a tremendous multi service group out of the motor carriers and exactly contrary to what Congress itself had said it did not intend to do.

It did not have the policy, establish the policy of not permitting these other carriers to get into the freight forwarding field, and then wrote into the Act the provision which forbids the Commission from granting a freight forwarding permit —

Byron R. White:

Well, why don’t —

D. Robert Thomas:

— to any of the carriers.

Byron R. White:

Why don’t you object to the — I would think you would also have some fear of the railroads, making their own arrangements with just a few carriers namely the ones we assume that have some corporate connections and those — and those carriers in effect acting — those motor carriers in effect acting as freight forwarders.

D. Robert Thomas:

Well, Your Honor, to the extent that they are moving under — that traffic is moving under a joint through rate arrangement, they are not acting as — as freight forwarders.

Byron R. White:

There’s just nothing you can do about it.

D. Robert Thomas:

Nothing we can do about it.

But right now —

Byron R. White:

Although the impact is the same.

D. Robert Thomas:

Right now, as always, the motor carrier can collect shipments in New York, put them in his own trucks —

Byron R. White:

But the impact on you is the same.

D. Robert Thomas:

— and pick them on the road.

No Your Honor, the impact is quite different because —

Byron R. White:

Well, I mean, economically to the extent that they enter into joint through rates that it cuts into your business.

D. Robert Thomas:

Well, it cuts into our business but it leaves open to us as long as it’s a matter of the — of a through rate arrangement between the carrier and water carrier and the railroad.

It leaves open the invitation to the railroads to establish and maintain these — what Justice Fortas referred to as the low piggyback rates.

Now, they are low, they are lower than the rest.

D. Robert Thomas:

But if — if — if the railroads are faced with the situation and we’re the ones that use those rates, if the railroads are faced with the situation where they’re told that if you put in a low piggyback rate, that what you’re going to do is through that process, you’re going to just make it possible for your competitors, the motor carriers to come in and put this traffic on and add these other disadvantages, then we are going to suffer as users of those tariff rates because either the rates are going to go up or the entire tariff piggyback basis is going to be cancelled or in the parts of the country where piggyback does not exist and it does not exist all over the country, in the parts of the country where the piggyback tariffs have not yet put in by railroads, those railroads would just simply, I’m afraid, sit back and be deterred from putting in the piggyback service that would be helpful to us and to our patrons.

Hugo L. Black:

Your time is up but I was —

D. Robert Thomas:

I’m sorry.

Hugo L. Black:

— if I could just ask you this one short question.

D. Robert Thomas:

Pardon?

Hugo L. Black:

From your view point, who are the beneficiaries of the Commission’s order?

D. Robert Thomas:

From my viewpoint, I think it is certainly not the public Mr. Justice Black because the —

Hugo L. Black:

Who is?

D. Robert Thomas:

I think it has to be the motor carriers — the motor carriers and the water carriers on a basis of the fact that it’s reflected in one of the comments made by Vice Chairman Webb who dissented from the Commission’s report.

He said that what this would do would be a matter of capturing by the motor carrier in this industry which is a huge industry, capturing the traffic which is — on which the freight forwarders now handle and they — that traffic is a drop in the bucket compared to the motor carrier traffic but it will be —

Hugo L. Black:

Wouldn’t it keep a lot of them off the road?

D. Robert Thomas:

I beg your pardon, Your Honor.

Hugo L. Black:

Wouldn’t it keep a lot of them off the highways?

D. Robert Thomas:

No more — no sir.

No more in that respect than what we are doing ourselves.

That is the freight forwarders hold out and the railroads hold out —

Hugo L. Black:

Well, what I’m talking —

D. Robert Thomas:

— on these tariffs.

Hugo L. Black:

— about is that it was arranged so that it will go with the railroad and wouldn’t go over the highways.

D. Robert Thomas:

Well, we as forwarders are not putting our traffic —

Hugo L. Black:

I’m talking about motor carriers.

D. Robert Thomas:

To the — to the — yes.

Hugo L. Black:

When I asked you if it wouldn’t take a lot of them off the highway.

D. Robert Thomas:

To the extent that they have a traffic that is now moving over the highways and that they would put on the —

Hugo L. Black:

Railroad.

D. Robert Thomas:

— on the railroads, it would.

That — but the proposal from making these through routes arrangements on a compulsory basis is one which is up before Congress at present by the Commission.

The Commission has —

Hugo L. Black:

But that might —

D. Robert Thomas:

— vested authority.

Hugo L. Black:

— that might be in the public interest as a matter of fact.

D. Robert Thomas:

It might be in Congress — and matter of fact, that’s one of the basis of the reason that being urged on Congress and it has been urged on Congress for at least three out of the last five years to change the law in that respect and Congress has declined to do it every year because Congress has watched out for these deep ceded relationships among the different forms of carriage, different forms of transportation agencies.

Earl Warren:

May I ask if the activities of the forwarder are confined to the terminal areas on — on both ends of the railroad?

D. Robert Thomas:

That’s right, Your Honor.

Their activities in the sense of — all they can do, they — all they do in between is ship.

Earl Warren:

Yes.

You can’t go outside of the terminal area to get — to gather together your —

D. Robert Thomas:

Well, not to go out but your own — if I’m a forwarder, I can’t send my own trucks outside the terminal area to get it.

I might arrange for — if there’s somebody 50 miles away that has a shipment that I can consolidate in New York City and the shipment would be the one that would come down from Connecticut say, I can have a motor carrier, pick that ship up and bring it down to New York City for me but I couldn’t send my own truck out there.

I’m not authorized to do that.

Earl Warren:

You can’t go outside of the —

D. Robert Thomas:

No.

Earl Warren:

— area?

D. Robert Thomas:

No.

Earl Warren:

I see.

D. Robert Thomas:

We can’t.

And the motor carriers would be doing just precisely what we — we — what we do if these rules went through.

Earl Warren:

Very well.

Mr. Ginnane.

Robert W. Ginnane:

May it please the Court.

The question was asked this morning, why the railroads —

William J. Brennan, Jr.:

Why what?

Robert W. Ginnane:

A question was asked this morning as to why the railroads are unwilling to accept the tender of traffic from a motor carrier at rates which presumably are compensatory.

The same rates which they offer TOFC service to the shipping company.

You got only one answer and there’s only one answer really in the railroads briefs and that is that it would create shipping problems.

It’s a myth.

They conjure up the prospect of the railroad having dump on it at 4 o’clock in a Friday afternoon, a 100 load of trailers by a motor carrier.

In today’s transportation operations that sort of thing doesn’t happen.

If a big shipper wants motor carriers — wants piggyback service on any sort of a scale which is 100 trailers a week.

He must sit down with the railroad weeks in advance and they schedule this traffic so that the railroad will have that equipment in position regularly at a certain time everyday.

Robert W. Ginnane:

And similarly, any motor carrier that wants to utilize at any significant scale the piggyback service of a railroad, has got to sit down and participate in the same process of planning and coordination.

To give you a simpler example, if at 3 o’clock this afternoon I called up Mayflower Van Lines and said, “Now I want to move tomorrow morning at 9 o’clock.”

Frankly, I’d be lucky if I’ve got service within three or four days.

These people have to schedule their operations otherwise they’re wasting equipment.

They don’t have it in position.

And the railroads operating problems would be just the same in dealing with a motor carrier as it would be in dealing with a big shipper.

There is a significant difference between the position of the railroad appellants in this Court.

The Western and Southeastern except Southern, the Western, Southeastern and Eastern railroads, while they contend that under the Act, a railroad — a motor carrier can perform only motor carrier operations in a motor vehicle over the highway.

There — they concede a big qualification of that.

They say, except if we concur than they — than they can operate — operate, they can utilize piggyback service.

And they say, all except southern and the freight forwarders that the motor carrier can participate in piggybacking in two ways, one under Plan V and one under Plan I.

Now, Southern and the freight forwarders in taking the same position carry to the — carry it further, they would knockout motor carrier participation in Plan I and indeed, southern and the freight forwarders have a separate lawsuit to accomplish that pending down on the three-judge court in Dallas, Texas.

Now you’re told, Congress has provided for joint service between the rail and motor carriers in classical through route and joint rate arrangements and that this will take care of all — of — of all in need in this area.

I would like to call the Court’s attention that in 1965, out of piggyback movement of trailers of one — over 1,400,000, only 4% took place under Plan V in classical through route joint rate arrangements where the business has done primarily under the All-Rail Plan, Plan II which was related Plan II and a half, 42% of the trailers moved under Plans II and II and a half; Next, under Plan III, the open tariff not available to motor carriers, 26%.

The only significant motor carrier participation and utilization of piggyback services was under Plan I which accounted for 23% and as I say Southern and the freight forwarders are trying to knockout Plan I which would mean that the motor carriers in terms of the history to date would participate in about 4% of trailer on flatcar service.

Byron R. White:

Mr. Ginnane, isn’t the — hasn’t — isn’t the Commission — hasn’t it changed his mind considerably about the acceptability of one carrier operating service by another mode?

Hasn’t this –It has indeed.

Isn’t this quite a change in the —

Robert W. Ginnane:

It is indeed and the appellees make much of it that in 1939 and again in 1959 in the movement of trailers by rail, the Commission said, to act as a common carrier by motor vehicle and as a shipper by rail as to the same service is repugnant to the Act.

Byron R. White:

Has this Court ever touched on that?

Robert W. Ginnane:

No sir.

Neither in 1939, in 1954 or 1956 has the Commission explained the theory — that theory or repugnancy.

As a matter of fact, it didn’t even explain why in 1936 it had held the contrary and that is what it is now holding.

Back in 1936, the Commission said, we have here a published rail tariff and a motor carrier would have the same right to make shipments there under as any member of a body forwarder.

The Commission has indeed changed its position.

It’s going back to its 1936 position as a result of its most comprehensive investigation of trailer and flatcar services.

An investigation made at the time when it is now a reality, at the rate of 1,400,000 trailers a year, whereas in a prior investigation in 1940, piggybacking was just a dream.

There was so little bit of going on that we don’t even have statistics, nobody kept statistics.

I submit to you that this case really represents the railroad’s traditional position that a coordinated transportation system which is an objective of the National Transportation Policy can be achieved only on their terms.

It’s no accident that there a very few rail-motor joint rates in existence in this country and that very few piggyback trailers move under rail-motor carrier joint rates.

Robert W. Ginnane:

In 1941, the railroad industry entered into a consent decree outlying concerted refusal to enter into through routes and joint rates with motor carriers.

Later in United States against Pennsylvania in 323 U.S., this Court had to sustain the Commission’s order requiring the railroads to interchange cars with sea trade thereby making that new technological service feasible.

This case involves more than a lot of questions of technical, highly technical statutory interpretation.

It means enabling and encouraging motor carriers to divert their trailers from crowded highways to the excess capacity of the railroad system.

And at that time, when the nation is confronted with railroad proposals for a restructuring of the rail system, large — largely on the ground at intermodal competition, mostly motor carrier competition will continue to provide the competitive leaven in the loaf that therefore railroad should be allowed to achieve the admitted economies of restructuring.

We submit that this is no time to interpret the Act in such a way as to enable motor carriers to determine — the railroads to determine the extent of motor carrier utilization of piggyback services.

What was the legislation that was referred to by the counsel Mr. Shea (Inaudible)?

Robert W. Ginnane:

As I understand, the legislation leading to the enactment of Part IV of the Interstate Commerce Act which provides for the regulation of the freight forwarders.

Suppose — we know that legislation bears the issue of through to whether the present act gives you the authority to issue?

Robert W. Ginnane:

Well, we don’t think so.

Now, if they’re talking about recently proposed legislation sponsored some of them by the Commission, the Commission has recommended to Congress that it would be given authority to require railroads and motor carriers to participate in through routes and joint rates and also that it would be given authority to require motor carriers to participate in through routes and joint rates with each other.

The questions are somewhat different —

Byron R. White:

Just like — just like they can do with the railroads?

Robert W. Ginnane:

Yes sir.

Byron R. White:

What about the suggestion that if the railroads — that a railroad — if it enters into a joint rate with — or through route with one motor carrier, it must do so with another on the same term.

If that were the law, there wouldn’t be much problem here, would there?

Robert W. Ginnane:

I understood the counsel for the Western Railroads to state that under Section 216 (c), if a railroad enters into joint rates with two or more motor carriers that the Commission can require equal divisions that each of the motor carriers get the same division on the same service.

Now, we submit that Section 216 clearly does not give such a power to the Commission.

Byron R. White:

Well, in line —

Robert W. Ginnane:

It only empowers the Commission to pass upon the division of the joint rate —

Byron R. White:

Between those —

Robert W. Ginnane:

— between the carriers that participate in the particular joint rate.

Byron R. White:

So you in the example I gave, do you think that the Act would permit — 216 would permit a — the railroads entering into an arrangement with one carrier at — at motor carrier a dollar and another motor carrier at $2?

Robert W. Ginnane:

Yes sir.

Byron R. White:

But that your position is that there — that there’s another section that prevents it.

Robert W. Ginnane:

I’m not sure there is but I am clear that 216 (c) does not give us the power to do anything about it, after all, the — the divisions of a joint rate or ordinarily, primarily on a matter of agreement between the carriers.

Byron R. White:

But you’re saying though that if the railroads have an open tariff arrangement for the public that Section — Sections 2 and 3 require that to be available to the truckers as well.

Robert W. Ginnane:

That is, correct sir.

That they must treat the motor carriers tendering freight for shipment on the trailer as a patron of the railroad.

Hugo L. Black:

May I ask what is the difference in the effect of the Commission’s order and the effect of establishing a through rate?

Robert W. Ginnane:

The most important difference is this.

When the motor carrier takes advantage of an open tariff say under Plan III —

Hugo L. Black:

Takes what?

Robert W. Ginnane:

Tenders freight under an open — a railroad open tariff such as Plan III, in that case, the rate is fixed solely by the railroad by its unilateral act.

All — all we say is that the motor carrier has the same right to use that rate as other shippers do — as freight forwarders do.

In a joint rate arrangement, they agree, the railroad and the motor carrier jointly agree as to what the rate shall be whereas under the open tariff, the railroad fixes its own rate.

William J. Brennan, Jr.:

Your brief says that the — under the Act, there is no authority for a motor carrier and the rail carrier enter into joint through rates.

Robert W. Ginnane:

They are authorized to enter into joint rates under 216 (c).

The Commission is not authorized to compel them to enter into joint rates.

William J. Brennan, Jr.:

There’s no differentiation under the Act between them and the water carriers and other rail carriers respecting the establishment of joint rates?

Robert W. Ginnane:

Well, yes, there is.

The Commission is empowered to require railroads to participate in joint rates and it can require railroad and the motor carrier to participate in a joint rate but we cannot require a motor carrier to participate in a joint rate with anybody.

William J. Brennan, Jr.:

So that —

Robert W. Ginnane:

They may do so voluntarily.

William J. Brennan, Jr.:

It’s entirely voluntary.

The Commission can’t — can’t require it?

Robert W. Ginnane:

It’s in — with respect to railroads and motor carriers?

William J. Brennan, Jr.:

Yes.

Robert W. Ginnane:

It’s voluntary on the part of each.

William J. Brennan, Jr.:

Yes.

Robert W. Ginnane:

We can’t require either of them to enter into a joint rate with the other.

William J. Brennan, Jr.:

That’s a distinction between a joint rate involving a motor carrier and a joint rate involving other carriers?

Robert W. Ginnane:

Say a joint rate of — involving two railroads —

William J. Brennan, Jr.:

Yes.

Robert W. Ginnane:

Yes sir.

Thank you.