East Texas Motor Freight Lines, Inc. v. Frozen Food Express

PETITIONER:East Texas Motor Freight Lines, Inc.
RESPONDENT:Frozen Food Express
LOCATION:Pittsburgh Party Headquarters

DOCKET NO.: 162
DECIDED BY: Warren Court (1955-1956)
LOWER COURT:

CITATION: 351 US 49 (1956)
ARGUED: Mar 07, 1956
DECIDED: Apr 23, 1956

Facts of the case

Question

Audio Transcription for Oral Argument – March 07, 1956 in East Texas Motor Freight Lines, Inc. v. Frozen Food Express

Earl Warren:

Number 158 to 164, Frozen Food Express et al.versus United States and Interstate Commerce Commission.

Mr. Ginnane

Robert W. Ginnane:

May it please the Court.

These cases arise out of Section 203 (b) (6) of the Interstate Commerce Act.

That Section is in part II of the Interstate Commerce Act which provides a comprehensive system of economic and safety regulation for interstate motor carriers.

The Section, out of which these cases arises — arise, Section 203 (b) (6) exempts from all economic regulation that is as to certificates of public convenience and necessity rates and I quote, “Motor vehicles used in carrying property consisting of ordinary livestock, fish (including shell fish),” and the words involved in these cases, “agricultural (including horticultural) commodities, but (not including manufactured products thereof.)”

In all our seven numbered appeals before the court, they really amount to only two cases.

Numbers 158 to 161 are referred to by the parties as the determination case, and it involves the single question of whether the decision of the Interstate Commerce Commission in a proceeding entitled Determination of Exempted Agricultural Commodities is reviewable by the courts.

Numbers 162 to 164 are referred to by the parties as the complaint case, and it involves the single question of whether fresh and frozen dressed poultry are exempt agricultural commodities under Section 203 (b) (6).

I will make the sole argument for the appellants in numbers 159 and 160 in the determination case.

And Mr. Macdonald and I will divide the argument for appellants in the complaint case.

I should state that appellant, Railroads, have filed their own brief but are not participating in the oral argument.

They’re all in agreement on the first case?

Robert W. Ginnane:

Yes.

There is nobody representing the District Court?

Robert W. Ginnane:

Nobody on this side of the table.

Yes.

Robert W. Ginnane:

If I may discuss the determination case first, which involves the single question of whether the Commission’s decision in that case is a reviewable order.

Felix Frankfurter:

Where is it?

Robert W. Ginnane:

It begins in the record in number 158 at page 30.

It runs from page 30 to page 102.

Felix Frankfurter:

Where would you — is it possible for you to say what you mean the effective — effectuating part of that order or such — such expression as in your view are a review of the (Inaudible)

Robert W. Ginnane:

I think it’s concentrated in — in the findings, beginning at the bottom of page 88 and running almost to the bottom of page 89.

Felix Frankfurter:

(Inaudible)

Robert W. Ginnane:

In the paragraph beginning at the — at the bottom of page 88, the Commission sets forth its general principle or test for determining whether particular commodity is exempt or not exempt.

And then following full paragraph on page 89, it sets forth a — a long list of commodities which it has concluded are exempt as agricultural commodities.

Now, I should also add that in the course of the preceding discussion in its report, the Commission states at various places in its judgment specific commodities such as dressed poultry are not exempt commodities.

Felix Frankfurter:

Where is that?

Robert W. Ginnane:

At different portions of the preceding of —

Felix Frankfurter:

Is this thick long paragraph on page 89 you say enumerate what odds can be (Inaudible)

Robert W. Ginnane:

And then in other —

Felix Frankfurter:

Then assume the discussion, you say there is an exclusion of what is not mentioned.

Robert W. Ginnane:

That’s more specific than that.

During the — at various points in the discussion, the Commission expressly states its conclusion that named commodities are non-exempt.

Felix Frankfurter:

And there would be no trouble about it if they said, according which are in regard to tariff either by number or any other appropriate designation applicable to — abide to apply to poultry as (Inaudible) that appropriate tariff shall have to be obeyed or shall not be obeyed, is that it?

Robert W. Ginnane:

But they added nothing —

Felix Frankfurter:

No, no, what — what —

Robert W. Ginnane:

They added no such directly operated language.

Felix Frankfurter:

But you say it’s in that — that’s the effect of that?

Robert W. Ginnane:

Yes.

Felix Frankfurter:

Would there be any doubt if they had sympathized that (Inaudible)

Robert W. Ginnane:

I think it would — I think it would make the argument easier.

Felix Frankfurter:

Would there be any doubt about it?

Robert W. Ginnane:

No, but a little later, I shall like to point out that in its practical impact upon the transportation industry, they have — the people in the industry had no doubt as to — as to what the practical consequences were in terms of the need or lack of need for obtaining certificates of public convenience necessity or the need or lack of need for filing rates and tariffs.

Felix Frankfurter:

Well, that might not be enough to name the powerful or much respected chairman may at the conclusion of an argument, say, what I should think (Inaudible)

I don’t know, we can do this or that.

That should be an order (Inaudible)

Robert W. Ginnane:

No.

How do this order differ from that sort of a letter as the Commission might have written to the interstate saying — to the carriers saying this is the way we look at the matter, were there really any difference from that saying what it proposes to do?

Robert W. Ginnane:

Well, as I shall like to point out in more detail later on, we think that a distinguishing factor between what the Commission has done here and the huge mass of informal administrative determinations which everybody can seize are not and should not be reviewable.

Because what the Commission did here was done after a formal hearing, the — the result of a formal proceeding.

Felix Frankfurter:

There is nothing formal, formally — I mean, this could be your — shall not inform you of this formulae formulated at the end of this is one thing, anything on the record by the Commission except what we have here.

Robert W. Ginnane:

No, just the — this enumeration of commodities which the commission had held to be exempt or not exempt as the case may be.

Felix Frankfurter:

Where is the — where is the order on the page to which the hearing was held?

Is that in your record Mr. Ginnane?

Robert W. Ginnane:

Yes, sir.

It is about at page 29, yes, on page 29, page 29 of the record in number 158.

And the order terminating, it is the one at 101, is it the — that’s in the — discontinuing a proceeding?

Robert W. Ginnane:

That is correct sir.

That’s nine — 68, is that this case, the proceeding?

Robert W. Ginnane:

That’s correct sir.

You — your brief cites on what — according to 62?

Robert W. Ginnane:

That’s the brief filed on behalf of the United States and the Department of Justice.

The two briefs filed on behalf of the Interstate Commerce Commission are printed in — with the blue cover.

I like to go back —

Felix Frankfurter:

May I — may I —

Robert W. Ginnane:

Certainly sir.

Felix Frankfurter:

–just ask one more question.

Turning to 203 (b) (6) and I think in this part, it shows there, it says, true to include and so on which is the — which is controlling section of obligation to this — on this part deal with explicit duties as obligations and right.

Robert W. Ginnane:

Yes, this part by — this part is meant part II which is the whole system of regulation with respect to motor carriers, requirements for certificates, filing of rates and tariffs.

Felix Frankfurter:

And — and the order on which — on the basis of — of the basis of which is (Inaudible) adverted to 203 (b) (6) and that in turns incorporates by reference the whole scheme of regulation, is that right?

The — the hearing was had with reference to the meaning of these controlling words of 203 (b) (6)?

Robert W. Ginnane:

Correct sir.

Felix Frankfurter:

In 203 (b) (6) incorporated by reference as it were, the obligations and rights, the obligations and duties on the parts of the Act.

Robert W. Ginnane:

Well, Your Honor I think I’d put a — the 203 (b) (6) provides an exemption from all of — from all of the economic rights and duties under the Act.

Felix Frankfurter:

(Inaudible)

In all events, it directs itself two obligations, it provides the use of it.

Robert W. Ginnane:

It does indeed sir.

Felix Frankfurter:

All right.

Robert W. Ginnane:

Now, the background of the determination can be summarized very briefly.

What is now part II originated as the Motor Carrier Act of 1935.

And almost immediately after its enactment, there arose many questions as to what commodities were or were not exempted agricultural commodities.

The issue arose as to many commodities and arose in informal administrative determinations, informal commission decisions and it was a subject of repeated litigations.

The unhappy result was that,13 years later in 1948, there was a good deal of confusion and uncertainty as to the scope of this important exemption.

Now, in 1948 the Secretary of Agriculture and other persons had made fundamental objections to the Commission’s holding in the so-called Harwood case, that vegetables which had been washed, cleaned and packaged were not exempt as agricultural commodities.

Responding to those representations, the Commission reopened the Harwood case.

In addition, by the order which — which appears on page 29 of this record, the Commission directed the investigation and I quote “be made into and concerning the meaning of the words agricultural commodity and not including manufactured products thereof.”

At the same time, the Commission directed that a hearing be held and to publish notice of the hearing in the federal register.

In brief, after 13 years of confusion and litigation and interpretation on a case to case and commodity to commodity basis, the Commission sought to arrive at an informed and consistent interpretation applying Section 203 (b) (6) to agricultural commodities as a group.

So, early in 1948, — late in 1948 and early in 1949, extensive hearings were held before a hearing examiner who received voluminous evidence from representatives, the Department of Agriculture, and many other interested parties.

Robert W. Ginnane:

And after an examiner’s report and oral argument before the full Commission, the Commission in 1951 issued its decision in this determination proceeding.

Now, the report consists first of a detailed analysis of the legislative history of the agricultural exemption and Commission resorts extensively to accept its sources of interpretative material in dictionaries, decisions with the Court, particularly this Court.

And the Commission’s report includes an — an extensive commodity by commodity discussion of the various processes and treatments which are applied in the different agricultural commodities.

Now, the order at the end of the determination proceeding did not direct named persons to do or not to do anything.

As set forth at page 101 of the record, it simply recites that full investigation of the matters and things involved has been made that the Commission on the date hereof has made and filed its report on oral argument herein containing it’s findings of fact and conclusions.

And it has ordered that the proceeding being adhered by is discontinued.

In 1954, Frozen Food Express –-

Earl Warren:

Before we get to that —

Robert W. Ginnane:

Certainly sir.

Earl Warren:

— may I ask this question, Mr. Ginnane, with — with the matter standing as it did when that order was — was made, what liabilities are Frozen Foods subjected to?

I suppose they don’t pay attention to this order and go ahead and — and carry these commodities, what — what kind of issues are they subject?

Robert W. Ginnane:

They’re subject to civil and criminal penalties.

Earl Warren:

All right, how — how would the criminal penalties be invoked against it, is it immediately subject to criminal penalties or — or must there first be some other proceeding before the board in the cease and desist order or something of that kind, can — can the Interstate Commerce Commission, on the basis of this order alone, bring criminal prosecution against the Frozen Foods?

Robert W. Ginnane:

I don’t think so, I think what the — what the Commission would do, at least what it has done in some cases, that has brought cease and desist proceedings as it did in the companion Frozen Food case and the violation of that cease and desist order would be the basis for a criminal proceeding.

It could arise in another fashion, the — the Commission could win the Court in a civil proceeding for an injunction —

Earl Warren:

Yes.

Robert W. Ginnane:

— to enjoin and contend the violation of the Act.

Could I ask you one question?

Robert W. Ginnane:

Certainly sir.

Does the Commission usually publish its regulations and rules in the federal register?

Robert W. Ginnane:

The Commission — when the Commission issues rules, it ordinarily will set them up in a form out of rules, they’ll usually be entitle rules or regulations relating to such and such subject like three pleasing rules which were before this Court in the American Trucking Association’s case and will publish them in the federal register as required by the Administrative Procedure Act.

Were these published?

Robert W. Ginnane:

In this — in this case, the Commission did not publish in the federal register rather it published the — its report in the determination case with its orders in the — in the printed volume of its orders, it seemed that — at least this regards the mechanics, the processing of the result of the proceeding, I would have to say that it treated it as an order rather than as rules in the conventional sense.

Sherman Minton:

So when the cease and desist proceeding began to at which you referred to as the companion case — case here, how do they treat this order then, as an order or did they go ahead and then investigate further whether it could apply or not apply.

Robert W. Ginnane:

The Commission received additional evidence in — in this companion cease and desist proceeding.

Although the evidence largely paralleled or duplicated the Commission with the evidence which had been presented to the Commission in the — in the determination case.

Felix Frankfurter:

When you say they repeated —

Robert W. Ginnane:

Well, actually in that case, it was the — it was the stipulation by the parties.

Felix Frankfurter:

Pardon me — of the parties?

Robert W. Ginnane:

Yes.

Felix Frankfurter:

But that’s very common even with reference to the same tariffs in a case of another shipper or another complainant or another railroad although they’re in a governing order as it were, to receive new (Inaudible) that’s very common, isn’t it?

Robert W. Ginnane:

Yes, certainly it is.

So this litigation over the determination case began in 1954 on Frozen Foods Express which is a motor carrier and the Secretary of Agriculture filed complaints in the District Court in Texas.

Frozen Foods Express contented in its complaint that the Commission had erred in classifying about 30 commodities as non-exempt.

That complaint of the Secretary of Agriculture alleged that the Commissioner had erred in classifying eight specified commodities as non exempt.

The United States, through the Department of Agriculture, supported — the United States through the Department of Justice supported the position of the Department of Agriculture.

And various rail and motor carriers intervened in support of the Commission’s order.

Now, the District Court, as Your Honors know, did not go into the merits and to the correctness of the Commission’s decision in the determination case at all.It may in just one holding that the Commission’s decision in the determination case was not a reviewable order.

And in — and in coming to that conclusion, the District Court relied primarily upon this Court’s decision in the Los Angeles and Salt Lake Railroad case in 273 U.S., in which this Court held that in order of the Commission of placing a value, a valuation upon railroad property was not subject to review.

And the District Court seem to rely heavily upon the classical language from the Los Angeles case that the so-called order here complained of is one which does not command the carrier to do or to refrain from doing anything.

Now, our position here is that the Commission’s determination in this case is distinguishable and its practical impact from the valuation order which was involved in the Los Angeles case, and thus distinguished, we think, it is reviewable under more recent developments in the law of review since the Los Angeles case.

Now, comparing the practical impact of the two types of agency action, the valuation order in the Los Angeles case, as this Court pointed out, could have had no practical impact until there was a raid or some other kind of proceeding before the Commission.

And this Court noted specifically that, in the Los Angeles case, it is — it is at least possible that no proceeding will ever be instituted either before the Commission or at court in which the matter is now complained of will be involved or in which the errors alleged will be of legal significance.

And similarly, the evaluation order involved in that case did not leave any carrier even threatened with criminal penalties.

By contrast in the determination case, the commissioner’s decision told motor carriers that they would be subject to criminal and civil enforcement proceedings if they carried commodities which the Commission classified as non-exempt without obtaining appropriate certificates or permits of public convenience and necessity.

The total motor carriers designed to carry such certificates that they must go to the expense in the inconvenience, and I regret to say, considerable period of time involved in obtaining appropriate certificates.

Felix Frankfurter:

Do you say in total that you dragged the whole part II behind the — the Court, isn’t that it?

Robert W. Ginnane:

Much of part II is involved depending upon —

Felix Frankfurter:

You mean you told him because that’s the implication of the implementations of part II.

Robert W. Ginnane:

That’s right sir — that’s right sir.

Felix Frankfurter:

This case isn’t this — this thing is your argument, it might properly not.

This is very important, is it, Mr. Ginnane, because I hope it’s under your (Inaudible) two more sentences would avoid this litigation.

Or another thing, just one or two more words is telling us that your argument is implicit.

Robert W. Ginnane:

And the — is it —

Felix Frankfurter:

That’s all — is that what it’s all about, is it?

Robert W. Ginnane:

I think it could have been done.

Felix Frankfurter:

A few more care, a few more (Inaudible)

Robert W. Ginnane:

But — but we don’t contend that the absence of a —

Felix Frankfurter:

(Inaudible)

Robert W. Ginnane:

— of a few formal sentences should not determine the issue of reviewability.

Felix Frankfurter:

I don’t follow you.

Is that (Voice Overlap) —

Robert W. Ginnane:

That the practical impact is the same upon the person subject to regulation —

Felix Frankfurter:

I’m just suggesting because this is very important, is it?

Robert W. Ginnane:

With the passage of time through the years, it’s become quite important to the transport —

Felix Frankfurter:

You mean the transport effect fixed the paragraph that — with no doubt had become within — like this and all the pages had followed.

I know we are all under pressure and we take for granted the dignity and you felt like you don’t have to sell it on but one of the functions of lawyers spell out this on the table (Inaudible)

Robert W. Ginnane:

And in — in support of what Your Honor says, I think –I think of the American Broadcasting case last term, a slight difference in language, apparently had the result but no one ever raised a question of reviewability.

And we think the volume of actual litigation that has occurred since 1935 underlines sharply the practical impact of — of the Commission’s determination of this — of the scope of the agricultural commodity exemption.

It’s not a question of whether somebody may want to carry these commodities; hundreds of people are already carrying with or without certificates.

The commodities involved in –in the Commission’s determination of exempted agricultural commodity.

And depending upon where a particular commodity is classified as exempt or not exempt that has competitive consequences for those people.

If a commodity is classified as nonexempt, that tells the people who are carrying it that they are some — that if — if they don’t have certificates, they’ve got to obtain them or get out of the business.

If a commodity is classified as exempt, it tells — it tells the carriers who handle that commodity that they are subject to unlimited, unrestrained competition, both as to entry into the business and as to rates.

(Inaudible)

Robert W. Ginnane:

Oh no, some — some carriers disagree.

(Inaudible)

Robert W. Ginnane:

There had been a — there had been a number of cease and desist proceedings both before and since the determination.

It’s been a subject to litigation and controversy from the day the Act became effective, it still is.

Now, it seems to us that such recent decisions of this Court, as Columbia Broadcasting System v.United States and Joint Anti-Fascist Refugee Committee versus McGrath stand for the proposition that is the substance of administrative action.

And not the — not the precise label that’s placed upon it that determines whether it’s reviewable.

And it seemed to us that those decisions also hold that under some circumstances, persons may obtain review of agency action which isn’t immediately addressed to them at all, which should not, in terms, require such persons to do or not to do anything.

That’s the practical impact of the order which determines reviewability.

Now, we think the Act, the Interstate Commerce Act, clearly empowers the Commission to issue formal interpretations of — of such phrases as agricultural commodities not including manufactured products thereof.

Because Section 204 specifically provides that the Commission shall administer, execute and enforce all provisions of this part and empowers it to make all necessary orders and connection therewith and to prescribe rules, regulations and procedure for such administration.

In Federal Communications Commission, the American Broadcasting Company in 347 U.S., this Court held that on almost identical grant of rule making power, almost verbatim, empowered the Federal Communications Commission to issue what were labeled as interpretative rules in purporting to interpret a criminal — lottery provision of the Criminal Code.

And it was stated in these interpretative regulations of FCC, I think that that — that that Commission would use them as a guide in — in the exercise of its license — licensing powers and particularly in the exercise of its power to review, to renew or not to review broadcast licenses.

And in that case, the — the interpretative regulations, labeled as such, issued by the Communications Commission after a hearing, were reviewed by a three-judge District Court and by this Court.

In the suit upon injunction, or without any actual attempt at enforcement of the regulations, either criminally or in actual licensing proceedings, and in event, the case stands for the proposition we believe that the Interstate Commerce Commission, under a similar statutory provision, has been authorized by Congress to issue interpretations of the Act.

Now, we don’t think it should be decisive whether the Commission’s decision in the — in the interpretation case is labeled as a rule or as an order.

Robert W. Ginnane:

But the significant thing is the practical impact upon the person subject to regulation.

At the same time, I’d like to repeat that it is an important thing that a line be drawn between the mass of informal administrative interpretations and reviewable decisions or interpretations.

We think that a — a line which fits here is the line drawn by Section 5 (d) of the Administrative Procedure Act which empowers administrative agencies under certain conditions to issue declaratory orders.

We submit that the Commission’s decision in the determination case.

Earl Warren:

We’ll reccess now.

Mr. Ginnane, you may proceed

Robert W. Ginnane:

May it please the Court.

At the recess, and I had just started to call the Court’s attention to the analogy which we believe supports reviewability of the determination of declaratory orders under Section 5 (d) of the Administrative Procedure Act.

Section 5 (d), which is quoted in our brief at pages 28 and 29, provides that in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing, the agency is authorized in its sound discretion with like affect as in the case of other orders to issue a declaratory order to terminate a controversy or remove uncertainty.

William O. Douglas:

What — what page is it?

Robert W. Ginnane:

Page 28 of our brief.

Hugo L. Black:

Of your brief?

Robert W. Ginnane:

Yes, sir, page 28 of the Commission’s main brief.

It starts at the bottom of the page 28 and continues in the top of page 29.

Now, the Commission has the power and the duty to interpret and — and apply the agricultural commodity exemption in two types of cases of adjudication within the meaning of the Procedure Act in which a hearing is required the, first, cease and desist proceedings, and secondly, in determining applications for certificates of public convenience and necessity.

So, it seems to us that the scope and application of the agricultural commodity exception, which the Commission has authorized by statue to determine after a hearing in two types of cases, is an issue which the Commission is empowered by Section 5 (d) of the Procedure Act to determine in a declaratory order.

Even assuming what Section 5 (d) does not make to clear, but assuming that a declaratory order may be issued only after a hearing, well then in this case, the Commission held a hearing, an evidentiary hearing before it issued — before it made its decision in determination case.

And the clear purpose of the determination, after 13 years of uncertainty, it clearly was to terminate controversies and to remove uncertainties.

The legislative history of Section 5 (d) of the Procedure Act is quite sparse.

It indicates only that was generally modeled upon the Declaratory Judgment Act and the report of the House Judiciary Committee does states specifically that such orders wouldn’t be subject to judicial review as in the case of other orders.

That’s about the only legislatively history of the Procedure Act throws on Section 5 (d).

And we submit that —

(Inaudible) your own act in Section 204 some authority to regulate that?

Robert W. Ginnane:

Yes that is — that is a general grant of power to the Commission to issue orders and rules in the administration of the motor carrier provisions.

Now, that’s a general power, it doesn’t specifically deal with the subject of declaratory orders, whereas Section 5 (d), which is applicable to Interstate Commerce Commission as it is to other agencies, does deal specifically with the subject of declaratory order.

Is that the order?

What did you do in American Trucking, in that case?

Robert W. Ginnane:

Those were — that was a rule-making proceeding labelled as such and — and what emerged in that proceeding was in the form of rules and labor rules.

And that’s the difference between the rules there and what you’ve done here.

Robert W. Ginnane:

Yes.

Robert W. Ginnane:

Here the Commission at no point said that it was issuing rules and I have to state frankly that what — what the Commission did here was not in the format in which it usually would put rules of general applicability.

Now, we do submit here that the fact that the Commission did not label what it did as a declaratory order is not conclusive, that if, in fact, it amounted to a declaratory order, and we think it did, then it should be reviewable just as much as though the Commission had said this is a declaratory order issued under Section 5 (d).

Now, the court below put a good deal of wing on the fact that the order which the — which the Commission issued at the close of the determination proceeding was one discontinuing the proceeding.

But as we point out in our brief, in the few cases in which the Commission has issued what it labeled as declaratory orders under Section 5 (d) of the Administrative Procedure Act, it has used exactly the same technique at the end of the procedure.

It has issued a report in which it issued the interpretation which had been requested applying some provision of the statute to a particular set of facts, that appears in the Commission’s report.

And then in such declaratory order cases, the Commission issues an order as it did here, saying, we have considered the matter, we have arrived at our conclusion and we the only ordering words are words which state that the proceeding is hereby discontinued.

Harold Burton:

Is there any difference in the notice to parties so that the parties you called upon to attend one of those hearings for declaratory order or what was done here?

Robert W. Ginnane:

In the two particular declaratory order cases I have in mind, they were requested by single individuals.

Only one individual was involved in each of them.

Harold Burton:

And here, it was just a notice to the public, was it, or —

Robert W. Ginnane:

Here, it was a notice to the public, because of its impact, possible impact upon — well, conservatively many hundreds of carriers, and I don’t — I — I would not know how many thousands of producers and shippers of agricultural commodities.

A general pubic notice would be the only possible way of providing an opportunity for everyone of a legitimate interest to participate in a proceeding.

It was — here, it was a notice published in the federal registry.

So in brief, our — our argument on the reviewability of the determination is that if interpretative rules issued after a hearing as in the American Broadcasting case, or if an interpretation embodied in the form of a declaratory order is reviewable, as we think it is, then what the Commission did here measured by its practical impact upon the — upon the person subject to regulation is — is also reviewed.

How would they interpret the — was not in existence, the company was not in existence at the time of this order, going into business and know whether the Commission had (a), made these rulings or (b), whether they were ordered discontinuance under (Inaudible)

How will he know about that?

And he wants to behave in good faith and knows he know it whether this is a regulation that is — at the time, simply or otherwise.

Robert W. Ginnane:

Well, I think — I think a — a reading of the determination as a whole would indicate to him as that the order discontinuing the proceeding was just a mechanical order which closed out the Commission’s docket leaving it to interpretation of the statue sternly.

Or at least, it’s been hustled to a court (Inaudible)

Robert W. Ginnane:

Well, the Court had —

It isn’t reviewable, it isn’t enforceable, I suppose.

Robert W. Ginnane:

But — but the — the court below was not left as — as I read its decision.

It was not left with the thought that the Commission hadn’t — had — had gone through this long and expensive proceeding just for fun or that having — or that it was abandoning the — the conclusion to which I’ve arrived at.

(Inaudible)

Robert W. Ginnane:

It did with — the Commission with — the Commission —

(Inaudible)

Robert W. Ginnane:

It — it tells the motor carrier industry how the Commission will apply the exemption and the exercise of its licensing functions and in the exercise of its — of its enforcement powers.

(Inaudible)

Robert W. Ginnane:

They can — they can attack it but in some situations, he will do it at his own risks.

Now, I think before the intermission, I — I may have misled the Court to some extent.

Robert W. Ginnane:

I believe I told the Court that a criminal proceeding would rely only for violation of a cease and desist order.

If I did state that, it was incorrect.

A — a criminal enforcement proceeding rely for violation of the Act.

So — so, you don’t have to have a cease and desist order as the basis for a criminal proceeding.

You know, after the —

Robert W. Ginnane:

And there has been — there has been several prosecutions of carriers for carrying commodities which the Commission considered to be exempt and which the — to which the carriers had gone ahead and then had taken his chances by way of raising defense in the criminal proceeding.

Now, the determination serves the purpose of warning, everybody in the industry what the Commission’s position will be, both in its licensing functions and in its enforcement policy.

Or if the — the criminal prosecution does allow that —

Robert W. Ginnane:

Under section 222 (d).

Had to be a — and you — you introduce this as an interpretation of the Act and that this violate (Inaudible)

Robert W. Ginnane:

And of course, he could raise by way of defense that the Commission’s interpretation of the Act was erroneous.

But — but of — of course, by that route he has taken, he has to take the risk of — of criminal punishment.

And he did proceed?

Robert W. Ginnane:

We — we have in several cases.

There have been at least three successful criminal prosecutions with respect to just poultry alone, taking just one commodity.

Now, I’d like to turn, if I may, to the companion case, the complaint case, which arose in somewhat different fashion.

It arose when East Texas Motor Freight Lines and two other motor carriers complained to the Commission that frozen food products was transporting fresh and frozen — fresh and frozen meats and fresh and frozen dressed poultry without an appropriate certificate of public convenience and necessity.

Therefore, the Commission held a hearing and they should have report an order which it held that those commodities were not exempt commodities and it directed Frozen Foods by order to cease and desist from carrying them without obtaining an appropriate certificate of public convenience and necessity.

Felix Frankfurter:

I have taken the tariff to be the tariff — there are different tariffs to this class of goods, for fresh and for (Inaudible) the rates —

Robert W. Ginnane:

The rates would — the rates would vary as to commodity and indeed they would vary between commodities.

The rates by and large are those filed by the carrier.

Felix Frankfurter:

I understand that but I just want to know specific whether the rates are different considerably in the case that (Inaudible)

Robert W. Ginnane:

I do — I do not know the answer, I’m sorry.

There —

Hugo L. Black:

May I ask you one question —

Robert W. Ginnane:

Certainly sir.

Hugo L. Black:

— before you leave the other subject, which — which part is or depending the judgment of the District Court insofar as the jurisdictional questions is raised?

Robert W. Ginnane:

In the determination case?

None of the parties are defending that.

Felix Frankfurter:

The Government doesn’t speak to this point, do they?

Robert W. Ginnane:

They do not speak to this point.

I should say that the District Court raised that jurisdictional question sua sponte without it having been raised by any of the parties.

So thereafter, Frozen Food and the Secretary of Agriculture —

Felix Frankfurter:

(Inaudible)

Robert W. Ginnane:

Certainly —

Felix Frankfurter:

(Inaudible)

Robert W. Ginnane:

I don’t question that at all sir.

Felix Frankfurter:

(Inaudible)

Robert W. Ginnane:

Thereafter in the complaint case, Frozen Food and the Secretary of Agriculture brought suit challenging the Commission’s conclusion.

The Commission had placed, well I should say, the District Court sustained the Commission’s conclusion as to fresh and frozen meats and no appeal was taken from that aspect of the decision.

The Commission — the District Court reversed the Commission as to fresh and frozen dressed poultry and that is here — and that portion of the decision is here on appeal.

Now, the Commission’s decision, its report in this complaint case as to fresh and frozen dressed poultry, was based upon — in part upon its earlier decision with respect to poultry in the determination case and in part upon evidence received in this companion, the complaint case.

In its report in the determination case, the Commission reviewed the legislative history of Section 203 (b).

Now, that exception provision originated in the House Committee and it’s in its original format provided an exemption for motor vehicles used exclusively in carrying livestock or unprocessed agricultural products.

Now, in the floor of the house, a question arose as to whether an exemption for unprocessed agricultural commodities would include such items as milk and cream.

In response to that discussion, the chairman of the Sub-committee in charge with the Bill offered an amendment to delete the words unprocessed agricultural products and to substitute present words, agricultural commodities not including agricultural products thereof, not including manufactured products thereof.

And the chairman, in introducing that new language, which is the present language of the exemption, indicated that it would cover pasteurized milk, ginned cotton and cotton seed.

Now, from this brief, legislative history on the floor of the house, the Commission concluded that it was — it was apparent that Congress intended the exemption to extend to commodities of the natural state and to a limited extent of those further treated or processed.

That is the Commission sought to give full effect to that legislative history by recognizing that Congress did not intend that every type of processing or every type of treatment would be enough to take an agricultural commodity out of the exemption.

But it felt that that legislative history was sufficiently sparse that it had to look to other indicia of meaning.

So, the Commission turned to dictionary definitions and particularly to judicial decisions and they gave particular way to a decision of this Court in the (Inaudible) case that manufacturing involves giving to materials new forms qualities, properties or combinations.

Felix Frankfurter:

It is a term for the (Inaudible)

Robert W. Ginnane:

All the parties concede that it’s not enough just to look at the statute here that the — the various meanings — the possible meanings of agriculture, manufacturing, particularly, in borderline cases are such that we’re obligated to look for other indicia of meaning because that limited debate on the floor is all we have —

Felix Frankfurter:

(Inaudible) shed light on it, you say that the statute is ambiguous so therefore we have to do the rest that we can.

Robert W. Ginnane:

Starting with the legislative history about the result.

Is the word livestock in the statute?

Robert W. Ginnane:

Yes that’s — that’s mentioned separately and in addition to agricultural commodities.

Agriculture commodities and livestock.

Robert W. Ginnane:

Livestock and agriculture commodities.

Either word, livestock?

Robert W. Ginnane:

Yes.

Not ordinary livestock.

Robert W. Ginnane:

Ordinary livestock, an ordinary livestock is defined in another portion of the Act in such a way as that it — it does not include poultry, includes horses, goats, cattle and so on.

Stanley Reed:

And so poultry is — is not specifically mentioned here?

Robert W. Ginnane:

That — that is correct sir.

Stanley Reed:

Either — either its livestock or as agricultural commodity?

Robert W. Ginnane:

It’s not mentioned specifically anywhere.

Stanley Reed:

And you do have to include that in agricultural commodity?

Robert W. Ginnane:

That is correct sir.

Now, we — we rely upon the analogy that after — after butchering and slaughtering, the products of butchering and slaughtering of livestock or meat and we said — we say that the network —

(Voice Overlap)

as I understand meat, it’s not an agricultural commodity.

Robert W. Ginnane:

That — that is the — that is the Commission’s positions which was sustained by the court below in this case.

Stanley Reed:

(Inaudible)

Robert W. Ginnane:

The Commission contends that dressed poultry and it relies partly on the analogy to dressed meat, that dressed poultry is not an exempt agricultural commodity.

The court below held that it was.

Felix Frankfurter:

Mr. Ginnane, you’ve already qualified for me at least, your remark that the Commission can get nothing or that one gets nothing out of the statute, because the colloquy as it develops between you and Mr. Justice Reed show that one does get something.

Robert W. Ginnane:

I stand corrected sir.

Felix Frankfurter:

If a statute, if he didn’t use the word agricultural commodities and livestock then I’m certainly entitled to call some entry that livestock was not included in agriculture commodity (Inaudible) inference to include this livestock in agricultural commodity.

Robert W. Ginnane:

I think that’s right.

Felix Frankfurter:

Well, that’s (Voice Overlap) —

Robert W. Ginnane:

At the very least it was in there and —

Felix Frankfurter:

(Inaudible)

an important starting point by then.

Robert W. Ginnane:

At the very least, it was under — in the abundance of caution?

Earl Warren:

But is livestock, livestock when it’s butchered and frozen?

Robert W. Ginnane:

Ours is — ours is dressed poultry, that’s what’s involved here.

Earl Warren:

No, but I was asking if — if when they use livestock and agricultural products to commodities, I was wondering if that did have much significance because it is butchered the beef, the frozen livestock.

Robert W. Ginnane:

No.

It’s our — it’s our contention which —

Earl Warren:

Why wouldn’t that come under the same category then as — as chickens that were — that were slaughtered and dismembered and frozen the same as beef.

Robert W. Ginnane:

The Commission used that an — an analogy in — in both the determination case in dealing with poultry and — and in its report in this complaint case.

Earl Warren:

But the court — court held differently.

Robert W. Ginnane:

The court below held that meat, the product of slaughtering, is a — is a manufactured commodity.

It went along with the Commission with respect to meat, the court disagreed with the Commission and held that the Commission was in error in holding that dressed poultry was — was not exempt.

And may I turn the rest of the time over to Mr. Macdonald.

Earl Warren:

Yes.

Felix Frankfurter:

Before you sit down, I just want to ask, as to the light of this — in view — in light of the case, if arguendo, livestock is not included in agricultural commodity, dead chickens are no more agricultural than live chicken, is it?

Robert W. Ginnane:

Except that we have a definition of ordinary livestock which specifies certain types of animals, the horses —

Felix Frankfurter:

Yes.

Robert W. Ginnane:

— horses, cattle, swine and so on.

Felix Frankfurter:

(Voice Overlap)

you’re talking about poultry.

In light of —

Robert W. Ginnane:

Which are —

Felix Frankfurter:

(Inaudible) can’t be more — can’t be less agricultural than (Inaudible) I should say, I don’t know.

That is not my field.

Robert W. Ginnane:

The Commission — the Commission in both the determination case and in the complaint case relied upon the analogy.

It drew the point that dressed meat was not an exempt commodity and that dressed poultry which is competitive with the — in the butcher shop and so on and which goes to a somewhat similar processing should not be regarded as exempt either.

Earl Warren:

Mr. Macdonald.

David G. Macdonald:

May it please the Court.

As I’ve yielded most of my time to Mr. Ginnane, I’m going to have to limit myself to one or two points which I feel may be helpful to the Court in approaching the problem of construction of the section which is involved in the complaint case.

I am representing in this proceeding the various motor carriers who initiated the action by filing a — a complaint before the Commission alleging that Frozen Food Express was violating the certificate and the rate provisions of the Act by transporting these commodities without having a certificate and without having rates on file.

Felix Frankfurter:

Is there (Inaudible)

David G. Macdonald:

The difference between fresh poultry and frozen poultry is very slight in actual rates.

The difference between the rates on poultry, when transported under Commission regulation and the rates on poultry when transported as an exempt commodity, are appreciable.

In another words, the whole scope of this — of this proceeding, so far as regulated transportation is concerned, is that the principle which the Department of Agriculture has urged below and which the Secretary and the United States now urged this Court visit the policy implicit in the exemption provision should be considered paramount to the policy of Congress in providing a complete system of regulation.

It’s the same issue that was before this Court in a leasing case a few years ago, that’s 344 U.S.When the Secretary of Agriculture urged that the Commission’s regulation of leasing practices should be declared improper because there was secondary effect on the availability of trucks to farmers.

We believe that the farmers entitled to the largest possible interpretation of this section, but it should stop short of being extended to the benefit of commercial practice.

The Secretary of Agriculture in — in the brief of United States at page 7 suggested it was the intention of Congress to extend this exemption provision to the — the processors, the commercial handlers of these raw farm products after they convert them into food products because there might be some increase in price to the farmer if there is some lessening of the cost along with distribution chain.

David G. Macdonald:

And that is the issue before the Court today.

Which of these two conflicting policies should be considered to be the controlling intention or where shall the Court draw the line between them in looking at this language of this section and trying to find what the intention of Congress was.

Felix Frankfurter:

Is — is that what the issue before the Court, I hope it isn’t Mr. Macdonald because you said it — well, rather to me, a difficult, sort of (Inaudible) that economic is a social problem that I hope we won’t have to decide on.

David G. Macdonald:

Well, I don’t ask the Court to go beyond the rules of — of the interpretation and construction that the Court has made clear and I think 47 Columbia Law Review is one of the best guides that I found in my research as to the principles.

I simply say, the starting with the language of this provision, which resulted from amendments from the floor, and therefore don’t show any clear cohesive interpretation which don’t include any definition of section which will be found for example in the price control acts in which there is a similar provision that is necessary to resort to extrinsic aids.

Without laboring the point, we have pointed out that those extrinsic aids include both the legislative history prior to the Act in which the intention of Congress or its purpose in providing regulation is made clear and also its purpose in extending to farmers, the aid in getting their products to market of not having to use the ordinary commercial means of transportation can be reconciled through an understanding of the fundamental basis on which they approach this legislation.

Secondly, there is a great deal of help to be found in what we call contemporaries usage of these terms.

There is no issue in the case of what dressed poultry is not a farm product when it is dressed and when it is frozen.

These two different commodities are recognized by the parties as being primarily the production of commercial packets.

So, in looking at the literal definitions which have been urged on the Commission and on the court below and now in this Court, for interpretation of this language and particularly the — the decisions of this Court as to the meaning of manufacturing, we have a situation where a tax statute in Richmond, Virginia, for example, can say that — that meat cutting is not manufacturing and yet we can look at a federal statute and we can look at a classification manual in the federal government’s usage and find that meat cutting is manufacturing.

So, again, I say we have not a clear question, not anything that can be solved by resort to dictionary definitions.

In our brief and in the transcript, we set forth the evidence which was offered to the Commission in the complaint case which was not before the Commission except in part in the determination case, showing that since 1929, in the NRA codes and in classification indicia which the Government departments’ organized for statistical purposes, meat cutting and the meat — the processing industry and the poultry processing industry have been classified as manufacturing enterprises.

Now, I am not here to state that the congressman who offered that amendment from the floor knew that.

I am saying, however, there was a contemporaneous usage which squares with the idea that when they changed the word “processed” to manufactured, they were not intending to extend that agricultural exemption to the meat packing industry.

Felix Frankfurter:

Because they — is that before the Court because I’m looking at these briefs or in the record, is that before the Court, evidence or other materials here, which shows to what extent there was a severance of the two aspects of the enterprise, to what extent of the raising (Inaudible)

David G. Macdonald:

I believe so —

Felix Frankfurter:

To what extent, in other words, the farmers have the ability.

David G. Macdonald:

I believe so.

I think that the actual percentage is somewhere around 4%.

That was the information on meat —

Felix Frankfurter:

4% of the —

David G. Macdonald:

— that is processed by — by the farmer.

Actually —

Felix Frankfurter:

All — all of these he does himself.

David G. Macdonald:

Actually it’s not the farmer, it’s the Long Island Duck Association, other cooperative organizations but by the grower.

Felix Frankfurter:

What about poultry?

David G. Macdonald:

That is a — as to poultry and — and meat, I think it’s about the same.

Felix Frankfurter:

Both are the same and arrested by independent process?

David G. Macdonald:

The greatest poultry — part of the poultry industry is what is now known as the broiler industry centered in the Delmarva Peninsula across the Chesapeake Bay and in Georgia and other sections where the birds are raised in large broiler houses and go in a truck operated by the — usually by the packer, two packing plant and the birds come out as broilers and fryers and so on.

Felix Frankfurter:

It must have happened to (Inaudible)

David G. Macdonald:

The reason that the — this case as before the court starts with the Kroblin case which is the only basis for the court’s decision below and the poultry should be classified as exempt.

The Kroblin was brought in Iowa where there is a different kind of chicken production.

There, the chickens would go to market for meat purposes are the (Inaudible) and the surplus females from the farm flocks which are maintained for egg raising purposes.

So that we had a farm there which was perhaps not complete universal in its understanding of the problem.

Finally, I wish to make this one final point, if I may.

We’ve had a big question as — as to what Congress has done since this problem arose and one side contends and the Kroblin decision rests almost entirely on the proposition that Congress felt that the Commission’s decision was to hold that poultry was exempt and that the Congress has ratified that by refusing to make a change in the Act.

Actually, such — such help as we can get on the doctrine, a ratification by Congress is I think very important because as shown in our brief, the Congress was advised in 1950, 1952 twice, that the Commission was holding poultry to be a regulated commodity, not within the scope of the exemption.

The Secretary of Agriculture is represented as Congress specifically to change the Act so as to make poultry exempt and Congress did amend the Act to add the phrase and horticultural, the parenthetical phrase that appears right after agriculture, that was the amendment 1952 or 1953 after this was — was made known to them in public hearings by then which the Commission’s spokesman as a witness, Secretary of Agriculture had a spokesman who was a witness, and I, unfortunately, was also a witness because I found myself misquoted in the Kroblin decision and the result of it was Congress ratified the decision of the Commission by refusing to change the Act and leaving poultry under regulation.

Felix Frankfurter:

With all due respect Mr. Macdonald, I think we both respected life (Inaudible)

David G. Macdonald:

I recognized that that is true, but in recalling certain language of the Court by Mr. Justice Frankfurter, I remember that the reason why that Congress didn’t usually know what had happened, well in this instance, the Congress did know what had happened.

For these reasons, and I regret that that we can’t go more into them orally, but I think they are fully expressed in the brief on all sides, we feel that the Court should reverse with respect to the dressed poultry, and if it does so, it will have an opportunity or even if it doesn’t to clarify a problem which has resulted in about six lower court decisions going off on different grounds and if the determination case is reversed, it will also be the vehicle whereby the general scope of these exemption provision in light of the purpose of the Act as a whole, may be made available for understanding on a broader basis and it has been true in the past.

Thank you.

Mr. Phinney

Carl L. Phinney:

Thank you sir.

May it please the Court.

I represent Frozen Food Express and brought these two Bills of complaint and the case of 158 and the other case wherein the Court enjoined the Interstate Commerce Commission from interfering with our transportation of dressed poultry.

In both of these cases, the Department of Agriculture intervened and we have attempted in the determination case and also in the other case to express our views on the matter and so for first as relating to the determination case, my situation is a little different from that of the Interstate Commerce Commission.

I want this Court to hold that it is an appealable order and then I want a court to hold that the Commission had no authority to enter it.

We had this situation, the United States of America through the Solicitor General confessed error in both of these cases and insofar as it related to the items of slaughtered meat animals and fresh meats, dressed and cut off poultry, fresh or frozen, feathers, raw shell peanuts and raw shell nuts and other items I believe a total of nine in number.

The matter of the exemption provision, it is in the interpretation or in the definition section of the Motor Carrier Act Part II.

It takes away from the Commission that nothing in this party except the provisions of 204 relative to the qualification and maximum hours of service of the employees and safety of operation shall be construed to include.

Now, these are things that the — the Congress took away from the Interstate Commerce Commission insofar as the certificate section, insofar as the permit or the rate section is concerned and said they shall be exempt.

One of them is — motor vehicles controlled and operated by any farmer when used in the transportation of his agricultural commodities and products thereof or in the transportation of supplies to his farm that is in addition to the exemption that is — that is contained in a subparagraph 6 which reads, motor vehicles used in carrying property consisting of ordinary livestock, fish, including shellfish, are agricultural commodities parenthetically not including manufactured products thereof.

Now, in addition, Congress put this further safety or — or exemption on it if such motor vehicles are not used in carrying any other property or passengers for compensation.

Now, it — it is our position that — that is a — a phrase that is not susceptible of anything except an ordinary interpretation and that is an agriculture commodity.

And that in the question of the determination case, it was not the intention of Congress so far as this part of the Act was concerned, to want to aid the farmers because they put another provision and that to helped the farmers anyway.

But I advice my clients that under the law, if we felt that we had the — the right to transport in the 48 States in the District of Columbia any agricultural commodity, so long as it did not constitute a manufactured product thereof.

Now, these cases are so intertwined, I hope the court will forgive me if I go from one to the other, but I want to — in — in connection with the determination case, I want to read what the court or the Interstate Commerce Commission said as found on page 11 of our brief in 158 insofar as the complaint case was concerned.

The Interstate Commerce Commission said on its — in the record 35, the facts before us in this preceding are more complete as they relate to this particular issue than those before us in the exemption case.

But they contain nothing to warrant any different conclusion.

Carl L. Phinney:

On the contrary, they confirm the conclusions that I reached.

Then they also said, until a final decision contrary to the findings in the exemption case is reached by the courts, we adhere to the conclusion that the transportation of fresh and frozen meats and fresh and frozen dressed poultry are subject to the certificate and permit requirements of the Act.

Felix Frankfurter:

May I trouble you this, at least tell me what — based on (Inaudible) what is it, qualifying the court, until what?

You just read it.

Carl L. Phinney:

Yes, sir.

Until a final decision contrary to the findings in the exemption case is reached by the courts.

We adhere to the conclusion so forth.

Now, let me pass from that just a moment to the opinion that was expressed by Judge Connelly and the-three judge federal court in the Southern District of Texas contained on page 55 of the record in 162.

Talking about the Los Angeles Railroad company case whether or not this is an appealable order, the so-called order here complained of is one which does not command the carrier to do or to refrain from doing anything which does not grant or withhold any authority, privilege or license, which does not intend, extend or bridge any power or facility and which does not subject to carry it to any liability civil or criminal.

Now, let me lay that test down to the case we have under consideration here, because if this determination case stands so to speak as the Sword of Damocles over the heads of anybody who seek to transport these commodities without the certificate provisions of the Interstate Commerce Act.

What happened to us when sought to transport these commodities, we were subjected immediately to a complaint before the Interstate Commerce Commission and as a result of the order of the Interstate Commerce Commission, we were given a cease and desist order to where we could no longer transport those commodities.

Now, certainly, whether you call it an order or a finding or what not, the effect of the determination case on the transportation industry today and on those who seek to hold these commodities without regulation or certificates or tariffs has the same portion effect as any kind of an order whether you ended it as so ordered and so forth or whether or not it is contained in the same language and cast in the same language that it is now.

And we respectfully submit to the court that so long as the determination order is left as it is, either saying that the Commission did not have the authority to enter the order and regulating these commodities or saying that they did have the authority and that the carriers who seek to transport these commodities will have to abide by them, we then must go constantly into the courts and seek an interpretation or a determination of each of the commodities that we think constitute agricultural commodities.

That, of course, is a bad situation insofar as my client is concerned because we were experiencing a terrific loss of business to these people who were operating without regulation.

And it was — we had certificates as the record shows to operate transporting — in 17 States items ordinarily constituting frozen foods which move under refrigeration.

But little by little, here, somebody started carrying these commodities in those and they took them away from us to where as I have previously mentioned to this court and I advise my client that upon an examination of the order and upon an examination of the law that we felt that we had the authority without going to the Interstate Commerce Commission of transporting those commodities which we had the cease and desist order issued against us.

The same thing is true, I think, throughout the record in the determination case, there — there seems to be a confusion between processing and manufacturing.

Now, take a peanut, the Commission has held in the determination case that a peanut within the hull or of corn within the hull is an agricultural commodity and can be transported but once you mash that shell and take the nut out of the hull that it becomes manufactured.

The other items as I have enumerated that the United States to the Solicitor General agreed with our position on the matter reach practically the same general propositions where they go upon a question of whether or not it was processed or whether or not it was manufactured.

The — this Court, in a good many opinions, and I — I want to direct your attention, if you please, to one or two of them, have treated on this question of manufacture, one of the leading case is being the Anheuser-Busch Association versus the United States in 207 U.S.556.

The Court said in that case that manufacturer implies a change, but every change is not a manufacture and yet every change in an article is the result of treatment, labor and manipulation.

Felix Frankfurter:

Was that happening?

Carl L. Phinney:

Yes, sir.

But something more is necessary, there must be transformation, a new and different article must emerge having a distinctive name character and use.

Then it goes ahead and explains how this machine is used to take the bugs and the dirt and things from the cork and that it is used in order, I believe, that beer may taste or be without the taste of cork and be sanitary and held that was a — a processing rather than a manufacture that it — as they did in the Hartranft versus Wiegmann, 121 U.S.609, where layers of shell were removed and the inner part of a shell was polished with a mantel put on it.

They said it still constituted a shell and had not been manufactured and was a process and was therefore would not come within the tariff provisions that require that the item be manufactured.

I — I want to leave this thought with the Court, I am not going to trespass on your time longer.

I think this matter has been very thoroughly drawn over that we have had may lawsuits in various jurisdictions concerning this question.

And certainly, if the determination case is left hanging, suspending as it is now, we will never know until we go in to the court and seek an injunction against the Commission whether or not we have the authority to transport it or we do not.

Likewise, the — the same thing would be true of all of the other parties throughout the United States that seek to transport these agricultural commodities.

Carl L. Phinney:

We think certainly that under the history of this legislation where Congress refused an amendment that would permit the Interstate Commerce Commission to pass upon whether or not they were agricultural commodities, that they intended that the agricultural commodities so long as they did not constitute manufactured products thereof would be exempt and that we were entitled so long as we met the other requirements of the law if we are entitled to transport those commodities into and out of 48 States in the District of Columbia without the necessity of seeking any character of the certificate or permit.

Harold Burton:

May I ask you if the same —

Carl L. Phinney:

Yes, sir.

Harold Burton:

— question of statutory interpretation is involved in both.

Carl L. Phinney:

Yes, sir.

Harold Burton:

Precisely the same?

Carl L. Phinney:

Yes, sir.

The —

Harold Burton:

You get nothing more decided if you get — so far as the statutory interpretations if you get that determined.

Carl L. Phinney:

If — there –may I — Your Honor, may I put it this way.

There can be a determination made of poultry — dressed poultry being an agricultural product without passing upon the other items but so long as the determination case stands, that simply removes one portion of it from the — in decision so to speak that they exist now throughout the United States where the other items would have to be litigated again to determine.

Harold Burton:

Oh you mean that one of them decides poultry and one meat, you — you won’t get both question decided in one case.

Carl L. Phinney:

No sir.

I think that the determination case can be decided in the poultry case, if I follow Your Honor, I think the — of course, the questioning —

Hugo L. Black:

Well, you have two complaints here —

Carl L. Phinney:

Yes, sir.

Hugo L. Black:

One has been dismissed for lack of jurisdiction —

Carl L. Phinney:

Yes, sir.

That’s the —

Hugo L. Black:

The other has been acted on.

Carl L. Phinney:

Yes, sir.

Hugo L. Black:

What is the difference and if that’s it, is there any difference at all in the merits that would have be to be decided —

Carl L. Phinney:

No sir.

Hugo L. Black:

— in the two cases?

Carl L. Phinney:

No sir.

Felix Frankfurter:

Provided you reach the merits?

Carl L. Phinney:

Sir?

Hugo L. Black:

Provided you reach the merits?

Carl L. Phinney:

Provided it reached them, Yes, sir.

Hugo L. Black:

Just precisely the same.

Carl L. Phinney:

Yes, sir, that’s correct.

And we — we therefore urge that in a –in a decision of these cases, I am not going to go into detail about what our allegations were and what the proof was but if we can get to the issues, I — I am hopeful that we can get a determination of both of these complaints in this case.

Are there any other questions?

Thank you sir.

Earl Warren:

Mr. Phinney do you agree with Mr. Ginnane that you are now subject to similar penalties without more?

Carl L. Phinney:

Yes, sir.

I think we are subject to criminal penalties.

I think we are subject to injunctions by Federal District Court and as well as the filing of complaints as they did to us in the second case.

Earl Warren:

The reason I asked that was that I — I read your complaint not this afternoon, but earlier and I — I didn’t think you mentioned criminal penalties.

I think you said you were subject to injunction but I didn’t recall if you said you were also subject to criminal —

Carl L. Phinney:

Well, we — we certainly agreed with — with his position that if — if the Interstate Commerce Commission has the authority to enter the determination case and to determine what constitutes agricultural commodities, we are subject to criminal prosecution just as much as if we were holding some item that was not an agricultural commodity.

Earl Warren:

Without any other intervening procedure?

Carl L. Phinney:

Yes, sir.

I think they can file a complaint and not — and it has been done to my knowledge, they have filed a complaints and informations in federal court on — on identity of those same things.

Earl Warren:

Yes.

Carl L. Phinney:

Yes, sir.

Earl Warren:

Thank you.

Carl L. Phinney:

Thank you so much, Yes, sir.

Tom C. Clark:

Mr. Phinney, I just wonder if —

Carl L. Phinney:

Yes, sir.

Tom C. Clark:

— suppose the Court was to enter a conclusion —

Carl L. Phinney:

Yes, sir.

Tom C. Clark:

We finally say that this determination of the order was subject to be isn’t the view, it went back down to the previous court, (Inaudible) they only passed on the poultry items, wouldn’t they pass on all the items covered by the determination order?

Carl L. Phinney:

Justice Clark, we have raised all of the items in the determination case, we — we are taking the position that we can transport all agricultural commodities and I — I presume if the court would write on that — on that feature of it that it — it would cover all of the agricultural commodities.

Tom C. Clark:

Upon the merits then, my determination case in view — in view of that case, covered all the items while your complaint (Inaudible)

Carl L. Phinney:

Yes, sir.

I introduced before the court in the three-judge federal court, I introduced the entire record that was made it, I think 15,000 pages in this determination case.

And of course, we had no indication that this thing were going off on the theory that it was not an appealable order, but I felt in bringing the two complaints that the only way we could get to it was to attack the determination order as well as to make an appeal from the — that part of the cease and desist order that it had been able to complain the case.

Thank you so much.

Thank you Mr. Phinney.

Carl L. Phinney:

Mr. Macdonald, you gave us a citation to some law review article, would you mind repeating that please?

David G. Macdonald:

The thing I was referring to is an article on how to reinspect this (Inaudible) I don’t remember the exact page but —

Felix Frankfurter:

Is that general practice or my general remarks on that —

David G. Macdonald:

I believe that’s correct.

Felix Frankfurter:

Oh.

That’s what I think.

[Laughter]

Earl Warren:

Mr. Weston.

Charles H. Weston:

If it please the Court.

I represent the United States and the Secretary of Agriculture.

It has already been stated that they take no position on the reviewability of the order in the determination proceeding.

It has also been stated that in the appeals taken from the order in the complaint proceeding, they support the judgment of the District Court holding that dressed poultry is with — that in the exemption given by Section 203 (b) (6) of the Act and that therefore, frozen food may transport this kind of poultry without having a prior authorization from the Commission.

We believe, first, that the words of statute point in this direction.

The exemption of agriculture commodities, not including manufactured products thereof, necessarily means that an agricultural commodity stays within the exemption until it has been converted into a manufactured product.

The only disputed question is whether dressed poultry has been converted into a manufactured product.

The housewife who goes into a store to buy a chicken gets something that is called a chicken that has the form of a chicken and it has the same food content of that chicken when alive.

I suspect that she would be considerably startled and told that she was buying a manufactured product.

Fresh chicken is not a manufactured product in ordinary parlance, nor is it under definitions given by this Court.

It is defined manufacture, as meaning making a new and different particle having a distinctive name character or use.

Earl Warren:

Well, is there any distinction in your opinion between dressed chicken and dressed beef?

Charles H. Weston:

Yes, I think there is a difference because of the source of the statutory exemption, one is derived from the livestock exemption and the other from the agricultural commodity exemption.

Earl Warren:

Why do they have to be derived from a different source?

If — if poultry can come under agriculture, why can’t — why can’t beef?

Charles H. Weston:

Because the livestock exemption by adopting the definition, it’s using the word ordinary livestock it adopted the definition of those words in Paragraph 1 –, Section 1, Paragraph 22 of the Act which specifically refers to live animals.

And it could not embrace those — the products of slaughter.

Now, it also could (Voice Overlap)

Earl Warren:

Is there any reason why fresh meat would have to come under that livestock exemption, why couldn’t it come under agriculture —

Charles H. Weston:

Well, —

Earl Warren:

— just the same as poultry?

Charles H. Weston:

I think that it could.

Charles H. Weston:

That issue is not before the court, that was the position of Frozen Foods in the court below.

The court moved against within that and no party has appealed from that decision.

Earl Warren:

Well, I was just asking if in your opinion, was any distinction between — difference between that?

Charles H. Weston:

That was — well, I do think there is this difference that they do derive from different statutory provisions and there is a possible implication that Congress having specifically provided for livestock meant to include it under those words, everything relating to livestock, poultry being outside that and livestock exemption could not — possibly be so — so covered.

Felix Frankfurter:

(Inaudible) the Secretary of Agriculture is a party — is a party —

Charles H. Weston:

Yes.

Felix Frankfurter:

And the Secretary of Agriculture did not appeal from the legal —

Charles H. Weston:

That’s right.

Mr. Weston, frozen vegetables like frozen spinach, you say, is there any exemption on that?

Charles H. Weston:

The Commission has held it is not exempt and also that is not involved in the case now before the court.

Now, counsel for —

Stanley Reed:

Livestock was combined specifically by animals, is it not?

Charles H. Weston:

Yes.

I could — I could give you the —

(Inaudible)

Charles H. Weston:

The specific language which has been adopted by in effect by reference is shall include all cattle, swine, sheep, goats, horses and mules except such as a cheaply variable for breeding race and show purposes or other special purposes.

Congress — the original exemption provided for livestock, Congress wrote in the words ordinary — the word “ordinary” in front of livestock so as to make applicable this definition that was already in the Act.

Stanley Reed:

That leaves us uncertain as to chicken rather than —

Charles H. Weston:

Well, everybody has agreed that live chicken is an agricultural commodity.

It’s just a question whether when it becomes dressed it is excluded by virtue of being regarded as manufactured.

Stanley Reed:

Address the — it is regarded as manufactured.

Charles H. Weston:

Well, they don’t even reach that point at least in the Commission’s approach to the question that since the livestock exemption dealt only with live animals, the products of slaughter could not be within that exemption.

I agree that an argument can certainly be made that the — these are within the general agricultural commodity exemption.

Now, —

Felix Frankfurter:

Do you think (Inaudible) to the argument that’s not — is there anything but you agree that when you get down to the considerations of economic pressure, the (Inaudible) of the economic pressure in instance is the (Inaudible) remark or rather the — that the Commission was, that this a context appealed regulating or controlling the process but because of the — thereby not regulating — regulating and because thereby, an indirect vendor becomes as a farmer, anything in that?

Do you see it that way?

Charles H. Weston:

Well, I certainly think that this exemption was given explicitly in order to make available to the agricultural community the advantage of flexible and I may say that poultry raising like many other aspects of agriculture is seasonal and competitive motor transportation.

Obviously, the cost of getting products to the ultimate consuming market affects the price which the grower producer can obtain.

And the legislative history shows beyond any question that the extension goes beyond the point of first processing, the Commission itself has so ruled, that is — that it has ruled that that does not fix the point and that could only be on the theory that the cost to getting all the way to consuming markets affects the farming community.

Felix Frankfurter:

I follow you and find possibility to therefore comes — is why the Secretary of Agriculture doesn’t assert this interest on behalf of dressed meat for the farmers and does it for dressed poultry?

Charles H. Weston:

Well it’s — it’s always a question of how far you go.

Felix Frankfurter:

I totally agree, but what I am saying is that (Inaudible) doesn’t like to follow the argument.

Charles H. Weston:

Let me — let me make it perfectly clear that he did take that position in the District Court.

Now, Frozen —

Felix Frankfurter:

(Inaudible) isn’t very closely affirmed.

Charles H. Weston:

Frozen Food, for its own reason, did not choose to appeal from that aspect.

Felix Frankfurter:

Does that economically (Inaudible) would it?

Charles H. Weston:

No, I think there is a good deal of difference.

A sheep, cow is cut into an infinite variety of meats, byproducts, the ordinary point of processing is the large stockyards, transportation beyond that point is not as anywhere nearly as closely related to the price that the grower or producer gets as getting poultry into the consuming market.

It doesn’t matter in that case whether the processing is on the farm or the point along the way.

Felix Frankfurter:

I should think if that’s (Inaudible)

It’s a very important consideration of the Interstate Commerce Commission better to decide that than to — I, as an ignorant city-bred, non-agricultural judge, those of the argument.

Charles H. Weston:

These are arguments merely to show the basis on which Congress acted in providing these exemptions, in other words, that it did intend to preserve for the agricultural community certain advantages.

Felix Frankfurter:

You say Congress’ actually point is, I suppose to be clear, that this is ambiguous and light had to be shed on it without the Interstate Commerce Commission as the primary, initial duty, I should say, the primary duty of construing ambiguous statute.

If I’m a — I’m a whole, the construction is not obvious to all in resolving the act of duty, they’ve got to do it instead of we.

Charles H. Weston:

I think that when you really look at legislative history, the question is not ambiguous as far as dressed poultry is concerned.

Let me repeat, the way this section originated, the House Interstate and Foreign Commerce Committee reported the Senate Bill for the proposed amendment to observe the transportation of unprocessed agricultural commodities.

When this came on for debate, various members expressed doubt as to whether this would include pasteurized milk and ginned cotton, obviously processed.

And the — there was offered on behalf of the Committee an amendment to the committee men to strike the words — word unprocessed and add the words not including manufactured products thereof and was specifically stated that with this broaden change, the amendment would apply to transportation of pasteurized milk and ginned cotton.

So, first, —

That is that they would remain agricultural products?

Charles H. Weston:

Yes, they would not be excluded by the word “manufactured.”

Possibly.

Charles H. Weston:

Yes, so that the exemption applies to processed commodities if the processing does not exceed that involved in pasteurizing milk or ginning cotton.

I think we can look at what the processes which milk has undergone and still on the basis of that Commission’s ruling in the determination case be not manufactured and be still within the exemption.

It held that this was true as to milk which had been pasteurized, homogenized, standardized and with vitamin concentrates added.

The Commission’s report shows what these processes involved.Pasteurization is heating the milk to a sufficiently high temperature and for sufficient period of time to kill the germs in it.

Homogenization is a process to reduce the fat, the size of the fat globules in the milk.

Standardization is adding skimmed milk so as to reduce the milk’s percentage of butter fat content to the minimum standard required by state law and adding vitamins adds components similar to those already in the milk.

I find it difficult to reconcile the Commission’s conclusion that these extensive operations which it found were almost always carried on in dairies rather than on the farm, did not result in manufactured product, but the killing, the feathering and cleaning of chicken makes it a manufactured product.

Charles H. Weston:

Now, it has been argued that this Act should be construed as a whole and that its overall purpose was to curd the evil of over competition in the motor carrier industry.We do not dispute either of these propositions but in viewing the Act as a whole, it is necessary to bear in mind that Congress placed expressed limitations on the transportation which was made subject to the Commission’s regulatory authority.

The purpose which underlies these limitations must be as much respected as the purpose underlying the grant of general authority.

There is not much doubt as to the general mood in this position of Congress when it enacted Section 203 (b) (6).

It not only changed the committee bill, so as to include under it processed agricultural commodities, it adapted two other broadening amendments to the section.

It also, as General Phinney mentioned, provided a separate exemption for farmers operating their vehicles to carry agricultural commodities or to carry supplies to their farms.

And they say that it — as the section was originally proposed, the Commission could have in effect set it aside if it found they’d tended to defeat the transportation policy of Congress as declared in the Act.

This was changed.

Congress said that it did not want to leave this matter to the discretion of the Commission, that it intended it to be mandatory.

The Commission has consistently given this section a restrictive interpretation.

In eight out of ten cases in the federal courts under the section, its interpretation has been found unduly restrictive and erroneous, and four of the eight cases, the matter went to the Court of Appeals and I mentioned that in each of these cases, the District Court, as well as the Court of Appeals, downed against the Commission.

Under the word “fish”, it said that if a fish had its head cut off, it was no longer within the exemption, nothing more than head cutoff.

And we have heard that shelling of peanut makes it manufactured.In the Kroblin case, the Court of Appeals for the Eight Circuit held that dressed poultry is within the agricultural exemption.

It said that the position of the Commission was simply that as a matter of giving the motor carrier regulation as wide as scope is possible, a chicken should be regarded as converted into a manufactured product when its head is cut off.

The court said that neither the language, nor the spirit of the exemption warrant that any such artificial concept.

Now, some reliance is placed on the established rule that agency interpretation of a statute is to be given special consideration.

This does not mean that the courts blindly accept administrative construction without regard to the factors which do or do not give it weight.

And the Skidmore case 323 U.S., the Court said that the weight of agency interpretation depends upon the evidence there — evidence in its consideration, the validity of its reasoning and its consistency with earlier and later pronouncements.

Now, I submit that by this test, the Commission’s ruling is that dressed poultry is entitled to very little weight.

Our brief points out that the Commission has reached its conclusion as to dressed poultry on three entirely different grounds that it subsequently itself decided that the first two of these grounds were erroneous.

Now, its third ground, given in the determination case and repeated in the present complaint case, was that since the words ordinary livestock embraced only the live cattle, it logically follows that the words agricultural commodities embrace only live poultry.

But the boundary of the exemption as to agricultural commodities is fixed by what becomes manufactured, not by continued life, any harvested crop is no longer living whether it’s cotton, wheat, tobacco or poultry.

The Commission’s ruling is — ignores the source of the exemption and it represents a mere speculative inference as to what it would have been logically for Congress to have provide it.

I submit that this is very treacherous ground for statutory interpretation.

It seems to me, if we are to consider that question, that there is sufficient differences between the Manifold products and byproducts resulting from slaughter of cattle, sheep, and swine with reference to transporting these products from the point of slaughter and exemption of transportation of poultry which has been prepared for market merely by being killed, feathered and cleaned.

Hugo L. Black:

What are the differences?

I wonder that there’s — are there as many — are the poultry places where they kill it typical — then widely distributed, or more widely distributing in the packing plant that prepared meat (Inaudible)

Charles H. Weston:

I couldn’t answer that question because I don’t —

Hugo L. Black:

Are there more — are there more of them located in the — close to the place where they raise the chicken.

Charles H. Weston:

I would think so.

I haven’t —

Hugo L. Black:

You haven’t, you haven’t — you don’t know that.

Charles H. Weston:

I don’t know that fact.

Hugo L. Black:

I was little surprised of the statement that — that have many percentage, is it not, or 4% only —

Charles H. Weston:

Well —

Hugo L. Black:

— that the farmers or the poultry people themselves have anything to do with killing and slaughtering and selling to the market.

Charles H. Weston:

That’s certainly is not in the record.

It — there may be —

Hugo L. Black:

Well, it might — it’s not in the record and it must be correct.

I am sure that he had some —

Charles H. Weston:

I — I would not question that — I — but I —

Hugo L. Black:

What was the — what was the basic object of providing this exemption?

What — what reasons are there that would make it more or less applicable to one of these two than the other?

Charles H. Weston:

You are now talking as between —

Hugo L. Black:

Poultry and —

Charles H. Weston:

— meats — meats and poultry.

Hugo L. Black:

Fowl chickens and other fowls, and packed in the curbed parts of (Inaudible)

Charles H. Weston:

I am not arguing that the exemption does not cover meats.

Hugo L. Black:

I understand that.

I’m not thinking of that.

I was —

Charles H. Weston:

I was just raising the question.

I was — (Voice Overlap)

Hugo L. Black:

Because I did some — didn’t the object was to make it helpful to the farmer to process and that there might be something to the fact that having open comparative shipment of chicken and chicken products even when they are killed would give the farmers more or less advantage than it would do have competitive transportation of the products that were meat packed.

Charles H. Weston:

I — I think that it’s certainly — it — we know almost to the matter of judicial notice that slaughtering plants are, in the first place, the public ones that are subject to — are regulated by the Secretary of Agriculture.

The number is, it said, it’s what you might call a large business.

Hugo L. Black:

Are there any differences in sizes of them —

Charles H. Weston:

I think it said —

Hugo L. Black:

Distribution of it.

Charles H. Weston:

I think that that unquestionably is so —

Felix Frankfurter:

Hence, the big ones but there are also small ones scattered all in the —

Charles H. Weston:

Well, as I say, I do not know the figures on that and none of the briefs to my knowledge have given any figures on that.

Earl Warren:

The District Court have any information that we don’t have?

Charles H. Weston:

No.

Earl Warren:

That gave the one conclusion in regard to chickens and another one as to meat, do they have any information we don’t have?

Charles H. Weston:

No.

Hugo L. Black:

Is any other thing in the record that shows why they use the word agricultural product instead of naming the — continuing to name the particular where the exemptions were to be granted or not grated?

Charles H. Weston:

Well, I think it started with agricultural products —

Hugo L. Black:

Not as the livestock —

Charles H. Weston:

Well no.

It’s — it started with livestock and unprocessed agricultural products.

Hugo L. Black:

I thought it was livestock and beef (Inaudible)

Charles H. Weston:

Oh, then — no, wait — should go on.

Hugo L. Black:

And then are agricultural commodities including (Inaudible) not including manufactured products thereof.

Charles H. Weston:

It started by the House Committee just had the words livestock and unprocessed agricultural products.On the floor of the house, they took out the word unprocessed and added the words not including manufactured products thereof.They also added the provision about fish.

Felix Frankfurter:

Mr. Weston, you’re saying you are not arguing here that the frozen meat is different from poultry, you are not arguing that but the fact is that there’s a judgment here which makes this distinction.

Patently, the court counsel sua sponte to take an appeal and reverse or therefore we are confronted with the facts because of judgment which says frozen meat is one, frozen poultry another, is that right?

Carl L. Phinney:

Yes, and only —

Felix Frankfurter:

(Voice Overlap)

situation to anybody who — unless they do something rational and for here —

Carl L. Phinney:

If you follow both the reasoning of the Commission and the District Court that the livestock exemption fixes the limits as far, as meats are concerned, if that is as far as meats derived from those animals which come under the livestock exemption.

If you reject that view, then you have the same situation, I think, as to meats and dressed poultry.

The only question on which this Court can rule, however, is that I would suppose the issue that has been brought before it.

Felix Frankfurter:

By the fact.

Carl L. Phinney:

If there are no other question, we submit the case.