Federal Maritime Board v. Isbrandtsen Company, Inc.

PETITIONER: Federal Maritime Board
RESPONDENT: Isbrandtsen Company, Inc.
LOCATION: Philadelphia Board of Public Education

DOCKET NO.: 73
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 356 US 481 (1958)
ARGUED: Dec 11, 1957
DECIDED: May 19, 1958

Facts of the case

Question

Media for Federal Maritime Board v. Isbrandtsen Company, Inc.

Audio Transcription for Oral Argument - December 11, 1957 (Part 1) in Federal Maritime Board v. Isbrandtsen Company, Inc.

Audio Transcription for Oral Argument - December 11, 1957 (Part 2) in Federal Maritime Board v. Isbrandtsen Company, Inc.

Earl Warren:

You may proceed Mr. Elman.

Philip Elman:

If the Court please.

By way of further answer to Mr. Justice Frankfurter's question as to the legality of a dual rate formula used by a single carrier, let me refer to the first case arising before the Shipping Board as to dual rate.

In 1922, the Eden Mining Company case which is cited and quoted and discussed starting at page 51 of the government's brief.

That case arose and was decided by the Board not under Section 14, since Section 14 was not involved.

That's a collective retaliation section but under Section 16 and 17.

And the Board found that a dual rate formula, when used by a single carrier, is illegal.

And the Board said that it is evident that the purpose of Congress in enacting these provisions of the statute was to impose upon common carriers within the purview thereof, the duty of charging uniform rates to all shippers we've seen in a similar transportation service.

The Board went on to refer the leading I.C.C. case, the Western Union Telegraphic Company case, 181 U.S., reading from the bottom of the page, but that principle of equality does forbid any difference in charge which is not based on difference in service and even when based upon difference of service must have some reasonable relation to the amount of difference.

Now, we have undertaken to meet the argument on the other side that there's been a consistent administrative construction of the Board here.

The dual rate system is perfectly all right by showing as Judge Frank pointed out in his opinion for the three-judge District Court in the North Atlantic case.

But the Board -- the Board which really of course represents four successive agencies.

First, the Shipping Board then the Secretary of Commerce then the Maritime Commission and now the Federal Maritime Board.

Their decisions of every -- have gone every which way on this and it wasn't really until 1933, 17 years after the Shipping Act, you have the first case upholding a dual rate system when used by carriers.

Earl Warren:

What year was that did you say?

Philip Elman:

1933.

That's the Rowley case which is discussed in our brief immediately after the Eden case.

That's the secondary case.

That -- that is 1933, 17 years after the Act, far from a contemporaneous interpretation, inconsistent with the Eden case which I've mentioned.

Now, I have -- I said at the outset that we -- we regard the order of the Board here which is under a -- which is what's on the review as being infected with areas of the law.

We think that the Board applied an erroneous standard.

The Board here conceded that the dual rate system was discriminatory, that it was monopolistic, conceded that it was -- its purpose was anti-competitive to eliminate an independent -- from business or to join a con -- conference.

The Board nevertheless said, those -- that discrimination, that monopolistic feature is outweighed by the fact that it produces rate stability.

It eliminates competition among carriers as to rates and stability of rate is a good thing and it's a justification.

Now, we find on our reading of the statute and our reading of the committee report that while Congress was concerned with rate stability and was anxious to maintain rate stability.

It didn't make an absolute dogma of rate stability.

It permitted the Board in considering whether to approve conference agreements under Section 15, to consider whether such an agreement would be desirable, would produce stability.

But that was an agreement among the carriers themselves as to what each one of them was charged.

And -- and Congress has said “Yes, the Board has the power to permit this car -- conference carriers to form an association among themselves so they can fix their own rate, they can eliminate rate competition among each other.

You can have stability to that extent.”