Andrew G. Nelson, Inc. v. United States

PETITIONER:Andrew G. Nelson, Inc.
RESPONDENT:United States
LOCATION:United States District Court for the Northern District of Illinois, Eastern Division

DOCKET NO.: 16
DECIDED BY: Warren Court (1957-1958)
LOWER COURT:

CITATION: 355 US 554 (1958)
ARGUED: Dec 11, 1957
DECIDED: Mar 03, 1958

Facts of the case

Question

Audio Transcription for Oral Argument – December 11, 1957 in Andrew G. Nelson, Inc. v. United States

Earl Warren:

Number 16, Andrew G. Nelson, Appellant, versus United States of America.

Mr. Blanchard.

Paul E. Blanchard:

May it please, Your Honors.

These cases here on appeal from a decision of a three-judge court sitting in the Eastern Division of the Northern District of the State of Illinois, in which two of the participating judges refused to annul and set aside an order entered by the Interstate Commerce Commission in a preceding entitled Andrew G. Nelson, investigation of operations.

The order commanded the carrier to cease and desist from transporting by motor carriage certain commodities which I shall describe.

Our notice of appeal and your — and the jurisdictional statement was seasonably filed and this Court noted probable jurisdiction, November 13, 1956.

The order opening the proceedings before the Commission and issued before you a hearing was even set, recited that it contained a positive statement that the carrier and I quote, “Has been and now is transporting commodities outside the scope his permit.”

The order then proceeded to name 20 specific commodities.There is no question here but that we hold the commodities that are described in that order.

And in view of the fact that a — relevant term here is the term “stock in trade of drug stores”.

We should point out here, there is no question here but that every article named in that order was regularly found up on the shelves or the counters of the average drugstores throughout the areas served by this carrier.

This sin which we are said to have been — to have committed is not hauling the commodities but in not delivering — having delivered them to drugstores.

It is the contention of the Commission that our authority which we think we shall establish is to haul commodities indicated by the term “stock in drugstores” must be read as though they were appendant to that authority, the clause but only when moving on moot with sale in a drugstore as the intended ultimate objective.

Thus, our authority to haul the drugs is conceded —

William O. Douglas:

Yes.

Paul E. Blanchard:

— if they be moved and delivered to drugstores.

The basic question here is the authority of the Interstate Commerce Commission to read and do a — an authority to operate by implication only.

A clear restriction of the authority can — extended by an operation and when no restriction of any kind appears on the face of the authority.

The basic facts are not complicated.

On January 2nd of 1936, Andrew Nelson, an individual filed an application for a grandfather permit, seeking authority to continue in the business of contract carriage in which he had engaged with a prior 16 years.

He described that business in his permit as the contract carriage of store fixtures, miscellaneous commodities and household goods.

Nowhere in the application itself was there any reference made to drugstores.

During the following 11 months, after the case was given a docket number and assigned to Supervisor (Inaudible) of the Commission of Chicago Office.

The — the Commission made an intensive examination of the past operations of this carrier during and prior to the grandfather period.

During this several inspection trips that were made to his office, they were supplied and were continually before them were more than 30,000 serially numbered delivery tickets.Each ticket evidencing a specific transportation service performed on a specific date for a specific person.

Those 30,000 tickets covered every movement of freight which this carrier had made since he started in business 16 years before.

It is difficult to concede how the Commission could have had more detailed information of what the scope of the grandfather operations of this carrier were.

After considering all the evidence before it, the Commission made its finding of fact which was contained and the basis for a compliance order authorizing the carrier to continue operations upon compliance where the insurance and the rate schedule provisions of the Act.

The word is often used as compliance order but the only part of that order that has any bearing here is the finding of fact in establishing what the scope of the grandfather business was.

Thereafter, from it issued, which we shall see as a matter of law, was to — must reflect the authority inherent in the grandfather operation.

We believe the action of the Commission and the evidence to which we will refer will be more comprehensible.

Paul E. Blanchard:

If viewed before the background of two important statutory principles, the first of these is the principle that grandfather rights stand directly from Congress.

There is no administrative function of the Commission exercised whatsoever as to the scope of the permit authority to be granted.

That was your — that is proven by your decision in the Alton Railroad case in which — in which have you had referred to and commented upon, and quoted from several times since in which I think your language was that the grandfather clause guaranteed substantial parity between the authority to be given the carrier, the scope of the authority to be given and the scope of his grandfather operations.

The statute — the reading of Section 209 (a) of the statute establishes this very clearly.

Once the Commission performs the only administrative function assigned to it in case of a grandfather carrier.

Once the Commission determines what the scope for those grandfather operations were, the rights so found in here in the character as a matter of law, the Commission has nothing left to do but to command it to obey the command of Congress and to quote the statutes, “Issue such permit without further proceedings.”

The second point of law was established by this Court’s decision in the Seatrain case.

It was that under these acts, a permit cannot be retroactively amended or otherwise changed except as provided by Section 212 (a) of the Act.

You will recall the Commission decided the Seatrain case issued to permit and close the case.

A year or so later, he decided that he’d made a mistake and tried to reopen a hearing and issue a new and restricted permit.

You held that it was without the power of the Commission to take such action on any operating authority given under the Act.

In this case, the Commission has sought to avoid the violation of your decision in the Seatrain case by stating, “We have done nothing to this permit.

We have neither added nor subtracted from it.

We have simply determined what the rights secure your head from the beginning.

We have seen that the rights which the carrier had from the beginning were rights given by the statute to continue to haul what he had been hauling in 1935.

Obviously, that’s impossible to — to interpret the grandfather permit without looking at one of two things or both.

You must look back in this case to 1938 and see what the Commission found as an administrative finding was the scope for the grandfather business.

And perhaps you may also look to 1935 to evidence establishing what the scope of the grandfather business was.

We have here a decision which holds that they have only established what rights we had from the beginning but openly stating that they have made that determination refusing to look at any fact that occurred prior to 1942, the date, the permit issue.

In other words, the convict — the Commission convicts itself of having interpreted here a grandfather right stating it’s deliberate ignorance and disregard of those facts which the statute makes controlling of a grandfather right.

We think that this decision of the Commission can be established as equally erroneous even if we disregard and then we’d have to treat it as an ordinary permit having no basis on grandfather rights.

To establish this, we will have to explain a little bit the general theory of restriction as it’s reflected in the Commission’s decision.

Early on in the administration of the Act, this manner of restriction, speaking now of restriction and permits yet to be issued came up — came before the Commission.

The first important case was the Keystone case, taking a name of one of the carrier applicants in which the Commission had before it some 80 odd applicants seeking to serve Atlantic and Pacific Tea stores.

Many of those applicants’ applications were based upon grandfather service of those stores.

The Commission’s decision in that case and particular to the special concurring opinion of that brilliant Commissioner, Joseph B. Eastman states clearly the concern which the Commission felt of the need for strictly limiting these grandfather carriers so that every possible restriction reflected by the evidence before them should be reflected in the right which they got.

They discovered that these carriers who were hauling this material for A&P, in the grandfather period had served nobody but the A&P stores.

So there emerged from that decision what is called yet today the Keystone restriction.

The Commission pointed out that if you take all the commodities in the A&P stores and simply authorized these carriers to haul all of those commodities, you would in effect give them a general authority to haul almost every type of merchandise that move for anybody.

Therefore and based upon the detection of these fact that the grandfather service had been limited to this type of customer, they granted the authority to haul all of those commodities but added language subsequently as follows, but only under contracts with those operating retail food stores.

Paul E. Blanchard:

That is a Keystone restriction.

That establishes the Commission’s policy restriction.

Now, we must tie that up with their declaration in the Atlantic Freight Lines case, in which they said in another case where restriction by implication was sought, whenever it has been our intention to place a limitation upon authorized operation, we have done so specifically and have not left our intent to be implied.

One of these Keystone cases involved a carrier named McAteer, Simon McAteer.

In a reconsideration of the whole case, his application became the titled case.

His first compliance order describing his grandfather rights was issued the same date as was ours, February 14th, 1935.

His case went to further hearings.

In the further hearings, the Commission described what McAteer’s grandfather business had been as the transportation of stock in trade of A&P stores.

This authority which issued the finding of fact was that he had been handing — handling goods such as are handled by A&P stores.

Thus, the Commission at that time, the very time for it was issuing regarded both those terms as synonymous and each is falling in the classification of description of a commodity by reference to place of sale.

Following this famous case, establishing — when this Court approved it in the Noble case, the right of the Commission to insert such a restriction, the Commission apparently then turned its eye towards the restrictions that had — that they permitted and issued before that time and to the possibility of restricting those permits to reflect the authority they had merely acquired.

To understand the program which followed, it’s necessary to understand briefly the mechanics of commodity description of contracting common carriers.

There were several devices used to — in commodity description to restrict the commodities to those in a certain class.

First, there was the device described by the Commission, a description by reference to place of sale.

Next, there was a description by reference to the industry served.

There was another one by reference to the type of commodity — type of vehicle required to transport the commodity.

As illustrative of the first, we have the Keystone case and this commodity such as are sold in a certain time of this — this type of establishment.

As the illustration of the second, we have the Dart case, packing house product supplies, primary supplies, supplies of a particular industry.

Then we have the — the description, petroleum products such as must be moved in tank trucks.

The first attempt to whittle down a commodity description in which place of sale was the basis, was made about 1945 or 1946, the case was decided in 1947.

When the Commission attacked the Chicago carrier who had authority to transport commodities such as are sold by wholesale food houses, I may not have that verbatim, but that was the substance of it.

The contention made by the Commission there was exactly the contention here.

This means commodity sold by wholesale food houses but only when moved to wholesale food houses.

The Commission — the Court found, refused to read that restriction and the permit when it were — it was not stated and said that since food houses hauls — customarily sold beer, the carrier to the haul beer any place he wished for anybody.

This was the last —

Felix Frankfurter:

Mr. Blanchard, may I ask you whether which one of two things is your contention, one, that this word in the grandfather — in the — in the certificate and permit are terms of art and that new — and new store fixtures, new household, goods in stock and trade of drugstores describes the category of commodities such as are used in drugstores (Voice Overlap) —

Paul E. Blanchard:

Such as are sold in drugstores.

Felix Frankfurter:

Which are sold?

Paul E. Blanchard:

Yes, sir.

Felix Frankfurter:

You — you say that a term of art which — which is so identified and —

Paul E. Blanchard:

A term of art, I don’t understand.

Felix Frankfurter:

Is that a technical, is that a thing that people in this business know as such?

Paul E. Blanchard:

People in this business are thoroughly familiar with the description of its authorized commodities in terms of the place where they are sold.

We have authorities to haul commodities sold in mail or order houses.

Felix Frankfurter:

I mean, that’s so settled that that’s the meaning, that’s a gloss that’s encrusted on those English words and that’s what they must mean and nothing else, is that it?

Paul E. Blanchard:

I’m not sure I understand, Your Honor.

Felix Frankfurter:

It must — the meaning that you give — give to this phrase, is that a meaning that must be given to those words by anybody who knows how they are used in this — in such a situation?

Paul E. Blanchard:

Yes, Your Honor, unless there is a specific restriction stated in so many words appearing in the authority.

Felix Frankfurter:

And you say that’s as though Congress had so defined it, is that what you’re saying?

Paul E. Blanchard:

Yes, sir, by the — in grandfather permits only.

In grandfather permits, the Commission had no authority to in any way control the scope of the authority given.

Felix Frankfurter:

I understand that but we first have to determine what the scope is before we can decide what it’s controlled in.

Paul E. Blanchard:

That was done by the —

Felix Frankfurter:

And what I’m trying to find out is whether the scope is so defined by these terms that the Commission had no choice but to give it your meaning, that’s what you’re saying, is it?

Paul E. Blanchard:

That’s what I’m saying, as a matter of law.

Felix Frankfurter:

As a matter of law.

Paul E. Blanchard:

As a matter of law.

Felix Frankfurter:

Have choice at all.

These words couldn’t mean anything else.

(Voice Overlap) —

Paul E. Blanchard:

And we point to the fact — we point to the fact that in the McAteer case where the authorities were both within the classification of good — of reference to goods by reference to place where they’re sold.

The Commission used those terms “stock in trade” and “goods such as are sold”.

(Voice Overlap) —

Felix Frankfurter:

Are you saying — well, are you saying wherever there’s a permit that makes some reference to a place.

It must mean the things that are sold there, is that what you mean?

Paul E. Blanchard:

Only when it’s a place of sale that’s recognized classification of commodity description.

Felix Frankfurter:

That’s a technical — well, I call it technical description.

Paul E. Blanchard:

That just — just as our descriptions by reference to the industry served —

Felix Frankfurter:

All right.

Paul E. Blanchard:

— supplies for (Inaudible) —

Felix Frankfurter:

That you can prove that at least to me by some other cases which had some other terms.

Paul E. Blanchard:

No.

I — I’m not of — in the case I just cited, the Ratner case, because the description was commodities such as are sold by wholesale food business houses.

The Court held that you could not read into that restriction — the restriction but only when hauled to wholesale food business houses.

Felix Frankfurter:

Because that’s a very different phrase than this such as are sold by wholesale house means such as are sold by a wholesale house.

Paul E. Blanchard:

And the Commission —

Felix Frankfurter:

But we haven’t got such a phrase here.

Paul E. Blanchard:

The Commission held as I pointed out as the McAteer case that stock in trade of and goods such as are sold by were synonymous terms.

They used them interchangeably in the McAteer decision.

Felix Frankfurter:

All right.

Paul E. Blanchard:

Now, I will not have the time to go into the — as I say that the Ratner case was the last effort by the Commission made to read into a permit describing the authorized commodities in terms of place of sale until this case came forward.

There were — there was a Converse — in the Dart cases in which the — this commodity was described in terms of the industry served.

In the Converse case, it was machinery, materials, and supplies, and equipment used in a drilling and operation in making some oil wells.

In the Dart case, it was contracted with a bit of (Inaudible).

In the Dart case, it was packing house supplies, supplies used by a packing house.

In the Con — Converse case, it was contractor’s materials and supplies.

Those cases — an interpretation was made which were sustained by the Court.

We need not discuss them but because the type of commodity description there was a well-recognized different type of commodity description we have here.

But continuing this campaign of restriction, we come to the cases of Bird and — Bird Tracking Company versus United States and Salvino versus United States, who were the two most — which are the two most recent cases presented.

The facts in those two cases and the facts here are so similar and the issues and the powers sought to be exercised are so similar that I can describe — give you a description of them and that would tell you what the situation was in every case.

In all three cases, a grandfather right was involved.

In all three cases, there was a generic commodity description used.

In the Salvino case, it was factory supplies.

In the Bird case, it was groceries.

In this case, it’s stock in trade of drug stores.

In each case, long after the permit issued, the Commission construed it — conceived a new idea.

In the Salvino case, the idea was that factory supplies and factory materials should be separately defined and set up new and separate definitions setting over into the material description, articles that had formally been on the factory description.

In the Bird description, they restrict to the former definition of groceries by — interpreted to mean only such groceries that are edible.

In this case, they attempted to read into the complaint by restriction, by implication.

A theory which never appeared or was never known until 1950 or some eight years after our permit issued.

Paul E. Blanchard:

In each case, the carrier came forward and each case the Commission ordered them to stop hauling anything except what was included in this new description.

In each case, the carrier came forward and said, “But I haul this during my grandfather period.

I have a right to haul it under a statutory right.

In each case, the Commission said, “We’re not interested in that.”

In fact, their declaration to the Bird case was, “In our opinion, the petition should be denied in toto regardless of the scope of the operations of petitioner’s predecessor in 1935.”

Now then, I think when a Commission and under — it enters a program where they are free to express such defiance, such disregard of statutory rights, it is time for this Court to put it — a restraining hand upon the Commission and call their attention to the fact that the scope of grandfather rights is something over which they had an open draw.

We cannot assume that Congress so carefully withheld from the issuing Commission the power to control the scope of these grandfather permits then intended that the Commission five years later should have complete power to whittle and chisel at it as they — as their administrative necessities drawn.

Earl Warren:

Mr. Fisher.

Roger D. Fisher:

Mr. Chief Justice, may it please the Court.

Mr Blanchard stated, this is an enforcement proceeding brought by Interstate Commerce Commission resulting in a cease and desist order.

The appellant corporation holds an ICC contract carrier permit by truck.

This is not a common carrier but a contract carrier.

Those carriers were allowed to discriminate between customers as to price infusing the haul and are closely confined as what — with whom they can deal and what they can haul.

The permit recently issued in 1942 authorizes the appellant corporation to carry three categories which are listed, store fixtures, household good, and stock in trade of drug store.

This permit was issued then to Nelson in 1942.

In 1951, they requested ICC to transfer — they approved a transfer to a corporation bearing into Nelson’s name.

In 1953, the present owners of the corporation bought the stock of the corporation, acquired the corporation and the permit which apparently was the only asset they acquired from the record.

It took no trucks or other equipment.

Starting in 1953, they proceed to engage in large great variety of hauling.

They recently engaged in hauling 100-pound sacks of dried glue to a manufacturer of gummed products.

Drums of lard weighing over 400 pounds each, cases of beer and wine, automobile battery, and 100-pound bags of dried milk, a large number of other commodities, all in truck load lots.

There is no suggestion by the permit holder corporation that this could be considered store fixtures or household goods.

None of this — the theory is, they are stock in trade of drug stores.

None of these goods ever had any connection with the drugstore.

They were not shipped to a drugstore, by a drugstore at no time would ever intended to become stock in trade of any drugstore at any kind.

Appellant argues that nonetheless it may carry such items under its permit.

Has the permit properly construed authorizes the hauling of all these items as stock in trade of drug stores.

The theory is that since some drugstores sell milk, they can carry milk, that 100-pound sack of dried milk is still a stock in trade of a drugstore.

In some drugstores or since many drugstores sell glue, they can haul 100-pound sacks of dried glue to the gummed products manufacturing company.

The Commission after a hearing decided that was not what the permit meant.

Roger D. Fisher:

The Commission has said that appellant may transport commodities which are part of the stock in trade of any drugstore and commodities which the time of their movement are intended to become part of the stock in trade of any drugstore.

And is there (Inaudible) Nelson given by a drugstore to be carried or (Inaudible) by a non-drugstore to be carried to a drugstore (Inaudible)

Roger D. Fisher:

That’s right.

Or if the good themselves were to become the stock in trade of what a drugstore sold.

They could be — carry any commodity, no matter how usual it is for a drugstore to carry, if in fact it’s part of a stock in trade of — of a particular drugstore, that’s what the permit intended.

Appellant here has two major contentions, I believe.

The first is that the permit, as issued in 1942, authorized the hauling of the commodities he is now hauling and he then argues that the Commission has attempted to take away rights he once had.

The second contention is that whatever the permit says, the corporation today has the right to haul whatever its predecessor’s interest was hauling in 1935.

He then alleges that it was error for the Commission to refuse to consider evidence of what was actually hauled in 1935.

I believe those are the two principal contentions, first, the construction of the permit and second, whether notwithstanding the permit the Commission should’ve considered what he was actually hauling and allowed him to continue to haul it.

Now, the question is what did the permit — first question is, what did the permit mean in 1942 when it was first issued — issued?

We do not claim the right to cut down grandfather permits.

We do not claim that we can violate a rule of construction and bring about the kind of change we could not bring about by an amendment of a permit.

Now first, the Commission construed this permit on its face and they found that it was not ambiguous.

The Commission’s construction appears in the record at 24, is basically what I said, commodities that are intended to go to a drug — as far as the stock in trade of drug store, commodities that are part of stock in trade of a drugstore or intended to become so.

We think that’s the plain meaning of the language, stock in trade of drug stores is — if you’re limited to hauling stock in trade of drug stores, you’re never to hauling goods that are in fact stock in trade of a drugstore.

There is no — we do not accept the view they’re — they technical or special meaning to this phrase that the McAteer case which Mr. Blanchard had said held the two were the same, his argument stems from the fact that in the course of a long opinion, both phrases were used, could such as sold grocery stores and stock in trade of grocery stores.

They were not used as parallels.

In the opinion, there’s certain no holding that they were the same.

Appellant corporation’s argument here basically is, believe it’s clear, that this construction is clearly erroneous because the method of limitation was unknown in 1942.

His argument is that the Commission construction of the permit is not entitled to the respect that Commission’s construction of their own permit usually would have that it must be upheld unless clearly erroneous because in 1942 whenever the Commission mentioned a commodity it meant you could carry good such as that commodity that the — what he calls the intended use restriction of what’s — which in the jargon at the Interstate Commerce Commission has become more and more used at the intended use restriction was unknown.

This is a later device dreamed up later.

He says that prior to 1949 which is when he gives the intended use test beginning, if a trucker was authorized to haul commodities such as lard, he could haul for anybody at anywhere without regard to its intended use.

And since Andrew Nelson was authorized to haul stock in trade of drug stores, his argument goes, this must necessarily be construed to mean he can haul any commodity similar to that which might be or customarily would be carried in a drugstore.

The — the error in his argument is — I think in the argument advanced here I think is clearly demonstrated by reference to the very permit here in question and to the cases cited by appellant.

Appellant’s brief, page 24, refers to the classification of motor carriers or property in two motor carrier cases, 703, either shows that no — intents to show that the only way of describing commodity was by generic or class terms about a type of equipment to be operated and naming them specifically.

The permit here for the item immediately preceding stock in trade of drug stores is household goods, a much more common form of permit.

There are many more household good carriers that are much more common.

This was one of the types of commodities listed in the classification of motor carrier property in 1937, five years before this permit was issued.

Carriers of household goods, I’m now reading from page 709 of two motor carrier cases, household good carriers include carriers both common and contract, engaged the transportation of property commonly used in a household when a part of such household equipment or supply.

Roger D. Fisher:

They could carry a commodity, not any commodity to anybody, they carry this commodity when a part of such household equipment or supply, and they also carry furniture, fixtures, equipment, and the property usual in an office, museum, institution, hospital or similar establishment when a part of the stock, equipment or supplies such office, museum or the similar establishment.

The household goods carriers, their method of classification developed in 1937.

When you say household goods, you didn’t mean good such as are in a household, you meant goods when they were part of the household.

Stock in trade of drug stores, the very phrase here, the household good carrier under this general authority was allowed to carry property usual in an office, museum, institution, hospital or other similar establishment when a part of the stock, equipment or supply.

The —

Earl Warren:

When they said —

Felix Frankfurter:

(Voice Overlap) —

Earl Warren:

Well, Mr. Fisher, when they said new, unused household goods in the original certification, would the household goods have to go to a house?

Roger D. Fisher:

No.But they would be — when a part of a — they would be this description I just read to you, household goods would be goods when a part of household equipment and/or other similar establishment or stock and so forth, it would have to be a part.

The case — issue was raised two years later —

Earl Warren:

No.

What I (Voice Overlap) —

Roger D. Fisher:

— as to whether —

Earl Warren:

What I mean —

Roger D. Fisher:

Excuse me.

Earl Warren:

What I mean is this.

This is new unused store fixtures.

Now would those store fixtures have to go to a store or could they go to a wholesale house or retail house and — and still be in order under this certificate.

Will you say new unused household goods?

Would they have to go into a house or could they go to a wholesale establishment or in a — or a retail store?

Roger D. Fisher:

Store fixtures certainly could be moving toward a — a wholesale house but the fixture itself must be intended for use in a store, a store fixture.

A piece of plate glass, they display a table for plate glass is to be used as a laboratory equipment, they manufacture for laboratory purposes, they could not haul it saying, similar goods are used in a store.

It would have to be a store fixture.

Household goods —

Earl Warren:

You mean — you mean then that — that if — if the people they shipped it to happen to sell store fixtures to a house and have to sell household fixtures to a store, they’ve been in violation of this permit?

Roger D. Fisher:

No.

The — the goods must be going — that issue was raised here in stock in trade of drug stores.

If a man is dealing with drug supplies going to a drug warehouse where most of the goods are sold to drugstores, if these particular items happen to go to a grocery store which can’t carry drugs, we would not say that was not stock in trade of drug stores.

It is — in time of its movement, it is intended to be in the category of goods moving toward a drugstore or sale.

I think that the household goods is a — is a good analogy because household goods is a common form of permit.

Roger D. Fisher:

It was going to in detail.

The question was raised whether new furniture which had not become a part of the household yet, I’m moving from Washington and Chicago.

I’ve got some things.

I buy some things that I will set a new house, as they ship all — all my new things taken together.

The furniture I now buy has never been to my house, it’s not a part of the — of the — my household goods.

The case — the — the method was — the question was considered by the — in 1939 by the Commerce Commission in 17 motor carriers’ cases.

This is not cited in my brief, I regret to say, 17 motor carriers’ cases, 473.

Commission concluded in short, articles which have become incorporated into those used in the household either by a physical incorporation or by acquisition by the household or with the intent of such incorporation should be deemed to be household goods.

This again is prior to the issuance of the permit showing that the intended use limitation that was well established, the concept of goods you can haul them by their status was clearly recognized.

This is looking at the permit on its face.

If you look at the permit in the light of the record which is before this Court —

Earl Warren:

May I ask you in that case, was — was the question there whether a man had violated his certificate or was that for the purpose of determining what he could transport before —

Roger D. Fisher:

This was —

Earl Warren:

— the issuance of a certificate?

Roger D. Fisher:

This was a general proceeding called practices of motor common carriers of household goods.

If — as upon investigation they clarified and modified the rules which are contained in two motor carriers’ cases which I first read you is the general proceeding dealing with the matter.

Now, the application which Mr. Nelson submitted and the accompanying attachments are in the record, the applications of 247 and the attachments are 257 and 259 and thereafter in the record.

The applications I might say on page 249 indicated that his operations which he was to completely describe his operations on July 1, 1935.

Operations involved transportation over various routes, etcetera, of store fixtures and miscellaneous merchandise and household goods of employees for Walgreen Company in connection with the opening, closing and, remodeling of stores.

This was his entire operation as an application described it.

Attached to his permit were copies of his state permits he had obtained from some of neighboring states to Illinois.

The — one of these is the Indiana Commission at which the operative language is on 257.

It’s furthered ordered by the Public Service Commission that operations under this permit be restricted to hauling for the — for Walgreen and Company under the contract submitted to the Commission.

This is an attachment to his application is what he wanted.

He wanted to indicate that he had some business.His business under already permits was limited to hauling for Walgreen and Company.

The same is true in Wisconsin, 259, he’s authorized transport store fixtures for Walgreen drugstores, was later amended on 260 of the record to include transportation of household goods and employees of Walgreen drugstores and a merchandise stores, said Walgreen drugstores between various municipalities and so forth.

1936, in the grandfather proceeding he — he signed a statement which appears in 263 and 264.

It’s indicated that the entire cargo insurance on the three units engaged Instate Commerce was carried by the Walgreen Company.

On 264, he stated, “that he, as an interstate contract carrier of property for the Walgreen Company and for it alone.”

Next number 8, 264, “that he hauls to and from Walgreen Retail Stores, etcetera.

Roger D. Fisher:

The said transportation has to do with the opening, the remodeling, and/or the closing of Walgreen Retail Stores.

The commodities are so transported, the commodities so transported are usually store fixtures and equipment and merchandise for the opening stock.”

William J. Brennan, Jr.:

Well, tell me Mr. Fisher, you’re not suggesting that because of that — the certificate is limited to carriage of (Inaudible) going into drugstores would have to be carriage going to Walgreen drugstores.

Roger D. Fisher:

The recommendation of the examiner was that it be so limited but in the view of the language of the Act that he should pretty get other contracts within the scope of his permit.

It was categorized as drugstores and there was no contention here that such a classification would be unreasonable or arbitrary that hauling stock for drugstores is not a broad enough classification.

William J. Brennan, Jr.:

Well, so he may go to any drugstore even under your —

Roger D. Fisher:

That’s right.

But I say if you’re looking — what the trade of stock and trade of drugstores means in the light of the statements, he may.

It is fairly clear that he was only hauling things that not good like — not goods such as those hauling drugstores.

William J. Brennan, Jr.:

But tell me this, suppose — suppose he were to carry a truckload of hair tonic, as far as he knows just in the — the drugstores but I gather it’s also sold within the A&P supermarkets (Inaudible).

Roger D. Fisher:

I’m sure that if he limits himself to goods which so far as he know were going to be sold to the drugstores, this proceeding would never would’ve —

William J. Brennan, Jr.:

Suppose he — suppose the destination was a wholesaler or a jobber?

Roger D. Fisher:

That’s permitted.

There is no limitation unlike the Keystone restriction.

William J. Brennan, Jr.:

Well, how would he know —

Roger D. Fisher:

There is no —

William J. Brennan, Jr.:

— what the wholesaler or jobber was going to do with it.

Roger D. Fisher:

What do you mean, you can — with 100 pound bags of dried glue, they’re pretty darn clear that the wholesaler is not going to send this around.

William J. Brennan, Jr.:

Now to take my illustration —

Roger D. Fisher:

Hair tonic, I would think if there’s a reasonable basis for believing that the goods were destined for sale or to become the stock of a drugstore or even I would think that a drug — I would think that a drug department of a grocery store might well fall within the — the category it was (Inaudible).

William J. Brennan, Jr.:

Hair tonic?

Well, if —

Roger D. Fisher:

If there was a substantial unit dealing in a — in a department store.

William J. Brennan, Jr.:

Well, take — take toys then instead of hair tonic, drugs stores also sold toys today, don’t they?

Roger D. Fisher:

I have to understand the goods are going to be — or to become a stock in trade.

He was only hauling his grandfather operations which he told the Commission were limited to hauling goods which were the opening stock of drugstores.

Now, the grandfather —

William J. Brennan, Jr.:

I know, I recall, what he said the certificate is not that limited.

Roger D. Fisher:

The permit says he can haul for any drugstore not just Walgreen.

The permit is limited —

William J. Brennan, Jr.:

That is to say any drugstore, the opening stock of any drugstore.

Roger D. Fisher:

No.

It says stock in trade of.

William J. Brennan, Jr.:

That doesn’t matter whether it’s an open stock or not.

Roger D. Fisher:

That’s right.

William J. Brennan, Jr.:

Well then, get back to my toys illustration, what happened to the —

Roger D. Fisher:

What’s the —

William J. Brennan, Jr.:

— (Inaudible) at the — a wholesaler?

Roger D. Fisher:

I would say he was —

William J. Brennan, Jr.:

The toys.

Roger D. Fisher:

— under his limited permit as a contract carrier allowed to discriminate among different shippers to charge different prices within the scope of his authority, he should find out whether these goods are intended to become stock in trade of a drugstore.

William J. Brennan, Jr.:

I mean, we know, that’s what I’m — my — my difficulty, I don’t know how he could haul that.

Roger D. Fisher:

There are — there are hundreds of permits as Mr. Blanchard had suggested, a contractor supplies whole set of items limited to this — a well settled method in which supplies must be dealt for a contractor, they must be ending up, they must be coming to a contract and (Voice Overlap) —

Earl Warren:

As to —

Roger D. Fisher:

(Voice Overlap) hammers or thongs, you might not know but generally speaking in the word, you know whether the goods are going where the wholesale or with whom the wholesale would sell.

Earl Warren:

Mr. Fisher, suppose — suppose this carrier was transporting these commodities that — they are listed on page 7 of the petitioner’s brief — appellant’s brief, to a general merchandise store that did have — did have a drug department but that it happened to this particular store sold its beer and wines in another department, supposed they sold this dried milk in the department other than the drug department, suppose it sold it’s batteries in the hardware department and the cabinets and so forth in another — another part —

Roger D. Fisher:

I — I would say it was not a drugstore.

That was not stock in trade of a drugstore.

Earl Warren:

But if he delivered it to — to a drugstore with the actual — where they didn’t departmentalize their store.

It would be all right for the — if the store departmentalizes, it wouldn’t be all right.

Roger D. Fisher:

No.

I would like to let the Commerce Commission first take a look at a particular case as to whether it was a drugstore or not in defining what is a drugstore.

It’s conceded here and stipulated that these stores are not — none of the stores here would be called a drugstore.

That was — that’s an agreement.

We don’t have the test that whether a merchandise store with the broadening definition of drugstore.

We don’t have that.

The — the question which the order is here, he said that when the Commerce Commission to decide that stock in trade of drug stores means goods which will become the stock in trade of drug store.

That’s stock in trade of drug stores means, they’re authorized to haul stocks in trade of a drugstore.

He says that it’s clearly erroneous and cannot be sustained.

I think, it’s an error of law for the Commission to say that since there was a well-settled rule at that time that goods were not defined in that way.

Roger D. Fisher:

He is wrong as to his proposition of the well-settled rule of goods were defined in that way.

I believe that the Commerce Commission is entitled to construe their permit and that there is no violation of standards not arbitrary or capricious.

I think if anyone said I’m — I have some stock in trade of a drug store, I can haul stock in trade of drug store, you would have — and certainly is reasonable to say, it must be stock in trade of a drugstore.

It’s not arbitrary and capricious.

It’s not so unreasonable and so irrational.

The Commission cannot construe this permit.

In the light of the printed records submitted to the Commission saying that all he was hauling, all he was hauling was stock in trade of drug store.

Now, my set of question never came up.

There was no indication in the record that there was ever any hauling until the corporation changed hands.

It was bought in 1953 by the present owners who then hoping to construe this permit as they are now going to do engaged in operations which the original owner had never engaged in at all.

Felix Frankfurter:

Mr. Fisher, what was the Commission’s — the plea to do if this trucker became a trucker for distributing Life or Time or one of the — some of the national magazines or the magazine itself?

Roger D. Fisher:

I — would he be free to do if he violated the — the permit?

Felix Frankfurter:

Well, I’m asking you, would it be violated, this fellow and I find it proper, they’re both Life or Time or Reader’s Digest —

Roger D. Fisher:

I would think —

Felix Frankfurter:

— to say, “Why don’t you be our trucker exclusively”, and he does nothing but cart — truck for the Reader’s Digest?

Roger D. Fisher:

I would think that Reader’s Digest is being distributed in large number of places other than drugstores.

I assume that was not contemplated with a drugstore.

It seems to me —

Felix Frankfurter:

Drugstores have — I wouldn’t have tell you —

Roger D. Fisher:

All sorts of things —

Felix Frankfurter:

What little (Voice Overlap) —

Roger D. Fisher:

They do and that — that in —

Felix Frankfurter:

(Voice Overlap) — all that volume of stock in drugstore.

Roger D. Fisher:

That is the thrust of his case.

He is taking a permit issued to Andrew G. Nelson in 1942.

It’s authorized him to transport which were he was then hauling for a drugstore, trying to construe this permit in light of the changing role of drugstore to say we can haul anything for anybody because look at the drugstore haul.

We can haul 100 pound bags of dry glue, we can haul 400 pound drums of lard to industrial concerns.

Why?

Because glue is sold in a drugstore.

Because lard is sold in a drugstore.

Roger D. Fisher:

Now, I’d like just to turn (Voice Overlap) —

William J. Brennan, Jr.:

Well, I gather — I gather Mr. Fisher (Voice Overlap) —

Earl Warren:

You’d also say that if it went to a particular store and the drug department is on one side at the aisle and the cigar store on the other side and the store owner sold the — the editions of Reader’s Digest in the cigar store and the cigar department instead of the drug department that if he violating his certificate —

Roger D. Fisher:

No.

You misunderstood — you misunderstand me —

Earl Warren:

Well, what —

Roger D. Fisher:

— Your Honor.

He can transport stock, goods that are handled in a drugstore.

He can — he can just transport goods that are going to end up, as being handled in a drugstore.

Now the question of whether a particular store is a drugstore, whether you could take the drug department of a large department store which has a whole floor and say, I was hauling this for the drugstore aspect of that and therefore even though according to law if it’s not a drugstore, it’s within my permit.

I would like the Commerce Commission to see whether that can fall in a drugstore, where they can divide, whether it’s reasonable.

That — that would be one thing for them to decide.

But to say when he is hauling to a manufacturer of gummed products, he’s hauling 100 pound bags of dried glue and to say if that must necessarily as a matter of law with all deference to the Commerce Commission be upset as arbitrary and capricious, I think it’s — there’s no merit in the position being urged here.

Do you know — do you know how many of the commissioners who are sitting at the time of the issuance of the 42 permit, set up this investigation, this 54 proceeding if any?

Roger D. Fisher:

I do not know.

Now, there are two — I’d like to touch briefly on the two questions.

First, he said there was error to refuse to consider evidence as to pre-1935 hauling.

I must say take some courage to come here having objected, extraneously objected below to considering any evidence.

I refer to page 114, 115, and 116 of the record.

The Commission under the Seatrain case and I’m reading appellant’s counsel statement below for the Commission hearing officer, Commission under the Seatrain case is without authority to consider them to existing prior to the issuance of the permit.

Over on page 115, my objection goes to consideration of any fact existing prior to the date of issuance of the permit this carrier in 1942.

Over on 116, the Supreme Court decision, the Seatrain case and others stopped the Court — Commission from going back and considering anything that happened back at the permit.

Again, I do without — I — as I do without waiting my contention that nobody has the right to go back to the permit.

The Commission sustained its position.

The ICCs officer putting on the case took the opposing position at that time.

The Commission sustained a position which appellant urged below.

He now said that was, this horrible error requires sending it back.

They gave me what I wanted.

The — first place on the merit, there’s nothing in this record so that 1935 he was doing anything except hauling for Walgreen drugs.

The testimony of Andrew G. Nelson that he got out, a lot of these businesses after prohibition, he was hauling sugar during prohibition.

Roger D. Fisher:

And he go out of the marble business on the record 137 and then record 155, the Commissioner asked — the examining office asked him, if he could’ve shown during the one year preceding 1935, he could have shown any receipts for other transportation in Interstate Commerce.

He was engaged in local commerce around Chicago, local hauling in warehouses.

And Interstate Commerce, any receipts other than those of Walgreen, he said, he did not know.

Now, finally appellant argues that regardless of the permit it may now haul whatever Andrew Nelson he did in 1935.

His position is that the permit makes no difference.

That he can — he can haul at any time, accept the permit, ignore it, haul whatever he likes and then defend against the compliance order on the ground the permit was not broad enough.

There are several objections to this argument.First, before the Commission, he stated, he never raised this point.

He said the only issue is record 204.

The only issue in this case is what certain language in the permit means.

None of the exceptions the examiner’s report mentioned this operation.

Secondly, the statutory language makes it clear that appellant has no right to engage in transportation outside the permit.

The — the statue printed on — the very section he relies on 209, printed page 33.

No person shall engage in the business of a contract carrier by motor vehicle unless there is enforced with respect to such carrier a permit issued by the Commission authorizing such person to engage in such business.

Now, the requirement, Commission issue a permit for grandfather cases is, the Commission shall issue such permit without further proceeding if application for such permit is made to the Commission.

As provided in paragraph B, this section, been 120 days.

My time is up.

But may I just make one sentence in reference to the —

Earl Warren:

You may.

Roger D. Fisher:

— the Callanan case as decided, this Court that where a permit has changed hands, it has not been challenge when issued, not been challenged when it changed hands, and this permit did, that the person who gets the permit is stuck with the permit as it was when it transferred.

It cannot go back.

And the appellant’s remedy if he has one, if there had been any violation, appellant may petition the Interstate Commerce Commission to reopen the grandfather proceeding and consider whether a mistake was made.

The Commission has been willing to do so as late as 1954 where good grounds were shown.

Without — I’m not saying there are good grounds that that is his remedy.

Thank you.

Paul E. Blanchard:

May it please the Court.

Earl Warren:

Mr. Blanchard.

Paul E. Blanchard:

We cannot believe that a Congress which went to such lengths to keep the issuing Commission in this case from any semblance of control over the scope of the authority of a grandfather permit, a Congress which commanded that Commission to find what this man has been doing then issue the — the permit without further proceedings.

Whatever intent that a Congress — that a Commission 20 years later could do to this permit, what this Commission is trying to do.

We think when Congress reserved the grandfather rights to a carrier that merely meant those rights to be something permanent.

They delegated to the Commission the authority of finding out what those rights were.

Paul E. Blanchard:

The Commission here found what they were.

The whole theory of my adversary’s argument is that this carrier’s authority stems from a permit issued by the Commission.

It does not.

Our authority stems from what rights given by Congress to haul what we were hauling.

As did the lower court said in the Seatrain case which you affirmed, the language of the permit cannot restrict the right which the carrier has under the grandfather clause.

Charles E. Whittaker:

May I ask Mr. Blanchard, was it necessary to obtain the permit?

Wasn’t it necessary to obtain the permit?

Paul E. Blanchard:

Yes, because the first sentence in 209 requires it.

Charles E. Whittaker:

Now then, (Inaudible) for obtaining the permit is (Inaudible) the scope of the right, isn’t it?

Paul E. Blanchard:

Yes.

Charles E. Whittaker:

And if error was made in (Inaudible), wouldn’t the remedy be (Inaudible).

In other words, can you (Inaudible), the scope of the permit to causation?

Paul E. Blanchard:

I think as we have interpreted this permit for over 20 years, it doesn’t need any — any modification.

It covers the right to do and must be interpreted as a matter of law to authorize us to do what we had been doing.

Charles E. Whittaker:

Are you — did you say that clause, the language of authority it place in the permit can do all you’ve been doing, or do you say that regardless of the language of the permit, you nevertheless under the statute has the right to do all what you’ve been doing?

Paul E. Blanchard:

That’s the point.

No matter what the permit said —

Charles E. Whittaker:

Then you’re (Voice Overlap) —

Paul E. Blanchard:

— if it’s possible — if it’s possible to interpret that permit as — conveying to us the right which the statute gave us, it is just as much the duty of the — of this Commission to so interpret it as it was of the issuing commission to issuing the permit having that scope, the same scope of authority as the scope of the operation.

The whole argument of the defendants — of the Commission here — I’m sorry.

I would like to —

Earl Warren:

No.

You — your red light isn’t on.

Paul E. Blanchard:

Oh, I beg your pardon.

Earl Warren:

Only the red light when it comes up.

Paul E. Blanchard:

I would like to explain the statement of Mr. Nelson’s, what I’ve found which the counsel has so heavily relied in.

I’m sure you’re impressed at the outset with the Commission’s refusal to consider any facts before 1942, even the finding of the Commission made in 1938, even the facts which is a matter of law establish the scope of the grandfather operation therefore the scope of the fact.

Having declared their — their refusal that consider anything before 1942, nine times in their brief we find a reference of this statement.

The record shows clearly the statement was prepared by the Commission’s employee, the — the applicant objected to it.

It was explained that under the law this is all you need to show and it’s fully explained at pages 90, 153 to 154 of the record.

Paul E. Blanchard:

Thank you.