Panama Canal Company v. Grace Line, Inc.

PETITIONER:Panama Canal Company
RESPONDENT:Grace Line, Inc.
LOCATION:Wolverine Tube, Inc.

DOCKET NO.: 251
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 356 US 309 (1958)
ARGUED: Apr 02, 1958 / Apr 03, 1958
DECIDED: Apr 28, 1958

Facts of the case

Question

  • Oral Argument – April 03, 1958
  • Audio Transcription for Oral Argument – April 03, 1958 in Panama Canal Company v. Grace Line, Inc.

    Audio Transcription for Oral Argument – April 02, 1958 in Panama Canal Company v. Grace Line, Inc.

    Earl Warren:

    Number 251 and 252, Panama Canal Company, Petitioner, versus Grace Line, Incorporated, and Grace Line, Incorporated, Isbrandtsen Company, Luckenbach Steamship Company, et al., versus Panama Canal Company.

    Mr. Solicitor General.

    J. Lee Rankin:

    Mr. Chief Justice, may it please the Court.

    This action involves the question of the fixing of tolls on the Panama Canal, a property of the United States.

    The broad issue involved is whether or not the ultimate control on the fixing of the tolls for the Canal shall be with the petitioner and finally the president, as provided by the statute, or if the Comptroller General as in this case developed should find that certain procedures of accounting that are followed by the petitioner are not satisfactory to him and persons who are financially interested can appeal to the courts to compel the petitioner to adopt those accounting practices in arriving at the tolls.

    Over considerable period of years, in fact from the time the Canal was constructed up to 1950, the statute provided that the President was authorized to prescribe tolls from time to time for the Canal.

    This action was considered final.

    There was no procedure for judicial review and no one claimed that there was.

    Under this procedure up until 1950, the President set the tolls at various times.

    President Taft, President Roosevelt and the last instant was a attempt on the part of President Truman to increase the tolls from 90 cents, but they were fixed by President Roosevelt in 1937 to a dollar in 1948.

    How is that mechanic there operate without going into details?

    Did the — did the President appoints commission to look into it or what?

    J. Lee Rankin:

    No.

    He —

    I wish he didn’t do it himself.

    J. Lee Rankin:

    He usually followed the advice of the people working with the Canal and its operations and the Panama Canal Railroad Company and the — the army people who were operating the Canal in regard to that.

    And when he proposed to increase this additional 10 cents, there was a considerable protest on part of the shipping in — industry.

    And the — the statute provided the issue to give six months notice of any such proposed increase.

    So the Congress responded to that protest by the industry and suggested that the President — excuse me — review the question in the procedures and the operations of the Canal and come forth with recommendations as to any changes that he might desire or think proper, so for a period of about three years, the Congress considered whether there’s number of hearings in which the railroads participated and the ship — ship owners and the — the army and the Bureau of the Budget.

    The Bureau of the Budget recommended that all of the activities of the Canal be consolidated in one corporation that the corporation being the Panama Railroad Company with the name be changed to Panama Canal Company and have the — both the supporting business activities as well as the Canal operations themselves all handled by this one corporation.

    William J. Brennan, Jr.:

    Mr. Solicitor, what are the supporting activities that don’t give me a lot of details that — what are the —

    J. Lee Rankin:

    Well, they operate hotels, steamship lines, a railroad, commissaries, dry docks, terminals, all the different things that this Court held in ex rel. Rogers versus Graves were apart of the operation of the Canal.

    William J. Brennan, Jr.:

    That doesn’t include industries of any kind or commercial activities does, other than commissaries that —

    J. Lee Rankin:

    Well, I think a considerable part of those, the commissaries and the utilities and other things would be considered ordinary commercial activities, but they’re necessary (Voice Overlap) —

    William J. Brennan, Jr.:

    Department stores in that sort of thing?

    J. Lee Rankin:

    Well, it isn’t quite department stores but they are large commissaries and the gross income runs around $27 million, $28 million a year in some years.

    And it’s a very substantial operation running into many millions of dollars in these business activities, but they all support.

    It’s the contention of the Government, the operation of this Canal.

    And they wouldn’t be provided by — by the Government at all if it wasn’t necessary and has been proven so over the years.

    William J. Brennan, Jr.:

    But now, the Canal Zone is rather narrow —

    J. Lee Rankin:

    That’s right.

    William J. Brennan, Jr.:

    — and this is — only those things of course done within the boundary.

    J. Lee Rankin:

    That’s right.

    And for the service of the —

    William J. Brennan, Jr.:

    But doesn’t include everything that’s done in the way of the commercial activities on the —

    J. Lee Rankin:

    Well —

    William J. Brennan, Jr.:

    — within the area.

    J. Lee Rankin:

    I understand there are competing activities that are civilian or the Panamanians in the area, but that — these are provided by the belief of the governmental authorities that they’re necessary to carry on the operation of the Canal and they have been ever since 1914 when the Canal was open.

    So that this new statute was developed where the recommendation of the Bureau of the Budget that the President should have greater assistance in trying to arrive what was a sound and fair rate or toll for the Canal.

    They had to have more expert advice and it was provided that the petitioner should have in exactly the same language as the President formally have, the authority to provide tolls from time to time.

    It’s also expressly provided that those — whatever the petitioner determined would be subject to review by the President and that his action would be final and conclusive.

    And many statutes that provide with President’s action or someone acting in administrative capacity should be final, but this was final and conclusive.

    It also provided that the tolls, being in effect, should continue until such time, as the petitioner and the President determined that there should be a change.

    There was a — a considerable claim by the shipping industry that the — there were large defense activities involved in the whole conduct of the Canal and its operations.

    And therefore, that — that should be taken into account by the Congress in trying to arrive with the tolls.

    So in connection with this new formula that was developed at that time, the Congress provided certain provisions that therefore had been included in the tolls should be excluded to take care of this claim about defense activities and other things.

    One of them was the conduct of government vessels in transit through the Canal and up to that time, those vessels were — which had ran into very seizable amounts during the war and during the Korean incident and other periods and during a period approximately three years from 1951 to 1954 ran to $13 million.

    Those tolls at the discretion of the President should be either charged or they should be treated as though they were charged and the ship owners who are commercial vessels accredited on the formula as though the Government was paid.

    It was also a reduction in the interest rate from 3%, the rate that was charged up to that time, to 2 and 3 tenth percent or the going rate was the provision and there was a —

    Felix Frankfurter:

    Industry for what, on what?

    J. Lee Rankin:

    On the investment of the Government.

    William J. Brennan, Jr.:

    You mean the —

    J. Lee Rankin:

    That’s right.

    Felix Frankfurter:

    — Canal?

    J. Lee Rankin:

    That’s right.

    And all of it — all these various activities and there was also a credit in regard to the interest on the period of construction that up to that time in computing what the Government had invested in the Canal, they took the interest on the period of construction which was a considerable period of time that was engrossed in that construction period.

    And that had always been computed as a part of the investment of the Governor.

    Now, they gave him a credit and took out in that computation what the Government had invested in this property.

    The entire amount of the interest that would be upon that investment during that construction period, give them a benefit of that and that end into a — over million dollars.

    It also was contemplated that there would be a charge to the business activities, business operation.

    J. Lee Rankin:

    The — a portion of the cost of the conduct of the Canal Zone Government.

    William J. Brennan, Jr.:

    Now, what did that include Mr. Solicitor?

    I mean, schools or things like that?

    J. Lee Rankin:

    Yes.

    And the government generally, schools were a considerable portion of it.

    And it ran at the time of the hearings at $7 million.

    It’s over that now.

    William J. Brennan, Jr.:

    That is the total cost or the school cost?

    J. Lee Rankin:

    That total cost.

    It was a curious thing that all through the hearings, the evidence do show that the business operations.

    averaged not more than a million dollars of profit at anytime.

    Sometimes it rate — range up and down, but it average a million dollars and yet if it was going to be charged with half of the cost of the operation of the Canal Zone Government, it would have to produce three and a half million and no one seemed to figure out how that would get there, how they would get that much profits to apply to this purpose.

    And that is apparently one of our problems in this situation.

    qAfter the — the Act also provided for this property, all of it, to be transferred over to this new — this corporation, men in existence, but whose name was to be changed and was to have complete control on operation of these properties.

    Then the Comptroller General under the corporation control act proceeded to audit the corporation and it came out in 1954 with an audit report which it made the Congress, in which it criticized the methods of the petitioner in allocating its various costs.

    It criticized its methods in not — of taking this half over the cost of the Canal Zone Government and charging it to the various business activities and also, its distribution of the General overhead.

    And it said, if that — if there were hearings at that time, the Canal rates or the toll rates would have to be materially reduced, in fact some 26%.

    Now, the effect of redistributing those costs was to throw the business activities in a serious deficit all the way through because they just didn’t make that much money.

    But the Comptroller General recommended the Congress regardless, of the fact that this is the way the tolls should be computed in accordance with this formula in the statute, that Congress should immediately change the statute because it wasn’t fair and the statute should provide for the whole cost of the Canal to be paid by the — by the vessels that transited the Canal.

    And that was the recommendation of the Comptroller General.

    Now, all through the hearings, there were two things that were very plain.

    Congress wanted to make very certain, that the American taxpayer didn’t have to pay one cent toward the operation of the Canal.

    And it was also contemplated that there would be an increase in the toll rates and that — that increase would probably run some 5 cents per ton of 90 cents to 95 cents of the increase would be and it would run increase the revenue from tolls to $1,400,000 a year.

    Felix Frankfurter:

    During — during all that period, am I right in assuming that there’s — there was equality of toll treatment as to all the flags that we’re going through?

    J. Lee Rankin:

    That is true.

    There was a — the Court may be interested — there was a considerable controversy in 1912 and the statute provided that coast wise vessels should be — should have transfer to the Canal without charge.

    And it was — Great Britain objected to that and it was brought by President Roosevelt and President Wilson to the Congress and he said, “Regardless of whether we were right or wrong, that we should honor their claim and eliminate that provision and pay for our coast wise transit.”

    (Inaudible)

    J. Lee Rankin:

    Yes.

    It was.

    It was.

    J. Lee Rankin:

    Yes.

    And at that time, a little later that was eliminated, to finish that subject and Congress took it out after a considerable debate during which time they claim that they had a right to have that provision anyway, but they took it out.

    Felix Frankfurter:

    Now, can you take that issue out of this case in a word right now?

    Is that involved in this case?

    J. Lee Rankin:

    Just and equitable under the Hay-Pauncefote?

    Felix Frankfurter:

    No, no, no.

    Is — is — any question of discrimination involved in — in the issue before us?

    J. Lee Rankin:

    No.

    I — there is no question of discrimination.

    There is a question, was just and equitable under that treaty.

    Felix Frankfurter:

    Of course that’s a different —

    J. Lee Rankin:

    Yes, sir.

    Felix Frankfurter:

    That — the thing that came to ahead by the repeal of the earliest statute in 1912 is not involved here?

    J. Lee Rankin:

    And I have been advised by the State Department that Great Britain has never raised a question about the rates, the total rates in Panama Canal since that time.

    Felix Frankfurter:

    I — I noticed but have not read the brief filed on behalf of Great Britain and I was going to ask you whether that matter is diplomatically before the country or nearly as a brief before this Court.

    J. Lee Rankin:

    Well, it’s a brief before this Court.

    We think that it is inconsistent with Great Britain’s position and before the —

    Felix Frankfurter:

    I mean is there — isn’t that — are you free to say whether any representation has been made by Great Britain on the question diplomatically?

    J. Lee Rankin:

    I have understood from the State Department, that there was no representation.

    (Inaudible)

    J. Lee Rankin:

    I know of no toll fee passage at this time except for the steamships operated by the Canal itself.

    That goes maybe, but otherwise, the government vessels are not paying tolls, but the charges are setup as though the Government paid them so that it has the same effect as though they got the credit.

    Now it was in 1915, the question did come up as to whether or not our Government had right — right to transit its war vessels and government-owned vessels through the Canal without having to pay any tolls at all under the Hay-Pauncefote Treaty and we set out in our reply brief at length, an opinion of Attorney General Gregory to the President at that time, in which he said that we have that right under the treaty, that is was in conformity with the British standards as to what we were entitled to charge, which was first, that there should be no discrimination under this treaty.

    And secondly, that we were entitled to recover full interest on the investment and we were also entitled to recover every cost in connection with the operation and maintenance of it.

    That was the communications that are set out in connection with that opinion or set out in the appendix to our reply brief.

    Felix Frankfurter:

    Can I take one more minute to ask you whether in your view, the point of view of the Government, we are at all called upon (Inaudible) whether we are called upon to construe the Hay-Pauncefote Treaty in this case?

    J. Lee Rankin:

    We don’t think you are because of this.

    We think it’s very simple that the Congress of the United States has seen fit in the statute to give them better than just and equitable rates.

    That the various points that I pointed out running into millions of dollars result in a reduction of the rates that were recognized as just and equitable for some 30 some years without protest between the countries.

    Felix Frankfurter:

    The reason that I asked is because in the few cases that we’ve had in this Court involving such treaty, the Court, I think wanted to receive the views of the State Department regarding the construction.

    So, all the historic and complicated in — instrument is a Hay-Pauncefote Treaty.

    J. Lee Rankin:

    Definitely.

    We don’t think that (Voice Overlap).

    It’s a proper —

    Felix Frankfurter:

    (Inaudible) you do not like to give us advice but — but I should think even you would want it from the State Department?

    J. Lee Rankin:

    Now we should and we would.

    If it was an issue in this case properly, we would certainly want to bring the interpretation before you.

    (Inaudible)

    J. Lee Rankin:

    Yes, they do, whether or not it’s just and equitable.We think it is not —

    (Inaudible)

    J. Lee Rankin:

    Well, you — you do not if you confine that this, the formula is substantial below just and equitable anyway according to the communication between the party, the representations.

    You see, we’re not getting the full interest that the British said we were entitled to under their communication that set out.

    (Inaudible)

    J. Lee Rankin:

    It’s —

    (Inaudible)

    J. Lee Rankin:

    Except its better.

    So that there is no basis for relying on the treaty because what they don’t — what they want is not what is just and equitable or what is reasonable, which is the — the standard for private utility, just and reasonable.

    But what they want is what the statute provides, which is better than any of that.

    And if you come to that point and I think that is true, then you don’t have to get into the construction of the treaty as such is what I think.

    Hugo L. Black:

    Is there a charge that the — the rates are unauthorized by the statute, Congress cited?

    J. Lee Rankin:

    Yes.

    They — they say that the petitioner’s position is that it has determined that the — that the present rate was in effect at the time the statute was passed and then at the statute, is the proper rate and should not be changed.

    They contend that it was the obligation of the petitioner to proceed to change the rate and proceed to reduce it and take into account this overhead charges at the Comptroller General referred to in his report.

    And the expense of the Canal Zone Government and that those charges in connection with the business operations would amount to — would do — if applied, would reduce the rate some 26%, about 24 cents thereabout below the 90 cents rather than having the 90 cents.

    So we then get into the — the great problem in this case on the merits.

    Hugo L. Black:

    But the — I — I was asking you because I don’t quite yet understand how the treaty proposition could get into it.

    J. Lee Rankin:

    Well —

    Hugo L. Black:

    Is — is it plain that Congress does not have a right to pass this law because it’s forbidden to do so by treaty?

    J. Lee Rankin:

    No.

    J. Lee Rankin:

    They — they relied greatly on that — on the law, but they say they have standing because the Congress Incorporated in one of the sections, the statement that the tolls would be comp — compiled or fixed in accordance with the treaty.

    Hugo L. Black:

    That would — that would — that could bring it in.

    J. Lee Rankin:

    Yes.

    If you found that under the factual situation, it became operative but if the rates are lower than the treaty could ever require, then it doesn’t come in and —

    Felix Frankfurter:

    And that the statute must be read and interpreted in the light of what are deemed to be the demand of the treaty.

    That’s their —

    J. Lee Rankin:

    Yes.

    Felix Frankfurter:

    That’s what it gets now.

    J. Lee Rankin:

    That’s — a — a part of it, certainly.

    Now —

    Felix Frankfurter:

    That is if you reach the merit.

    J. Lee Rankin:

    That’s right.

    The statutes are set out, the crucial ones on page 167, 168 of the Government’s brief and Section 411 of the Amendment.

    I’d like to call the — to your attention the language that is in controversy.

    Since the Panama Canal Company is authorized to prescribe and from time to time change the rules for the measurement of vessels for the Canal — Panama Canal.

    And subject for the provisions of section next following the tolls that should be levied towards the use of the Panama Canal.

    That is — the — it’s the construction of that Section that is crucial between the parties as well as the application of 412 (b) in that.

    It’s the position of the respondent’s that the petitioner had no discretion as to whether or not to change the tolls that it was directed by the statute to proceed at once or at least promptly with determining new tolls and then applying the formula under 412 (b).

    This is exactly the same language as far as the authorization is concerned that was formally in the statute for the President to fix the tolls.

    Felix Frankfurter:

    Now, where — where is the proprietor?

    Where is the provision regarding the President’s relation to the problem under the new statute?

    J. Lee Rankin:

    The pre — President’s relations and provided further on the — further down.

    Felix Frankfurter:

    That’s right, further down, all right.

    J. Lee Rankin:

    On 167 that changes in basic rules of measurement and changes in rates of tolls shall be subject to and shall take effect upon the approval of the President of the United States, whose action in such matter shall be final and conclusive.

    Now, it’s the position of the Government that this is an authorization provision in expressed terms that it gives the authority.

    It doesn’t say that they have to, it isn’t compulsive as far as the petitioner is concerned to change the rates but it does provide that they may.

    Felix Frankfurter:

    Is the — under either this statute as the general statute for the government of the Canal, was the President had power to prompt it as I understand initiate action — prompt action on the part of the Canal Company?

    J. Lee Rankin:

    Well, he has a complete control of it.

    Felix Frankfurter:

    I —

    J. Lee Rankin:

    He’s the sole stockholder.

    Felix Frankfurter:

    He’s the whole thing.

    J. Lee Rankin:

    He points — that’s right.

    And he can — he’s entirely responsive to his will.

    Its budget is passed.

    Felix Frankfurter:

    It has been changed since the original act or not at all?

    J. Lee Rankin:

    No.

    The budget is passed upon by the Bureau of the Budget, submitted to the Congress, the Congress passes on it and determined whether the appropriations are properly — proper and appropriates the money because the — a good portion of money is covered into the Treasury.

    William O. Douglas:

    — presidential appointments is that right?

    J. Lee Rankin:

    Yes.

    William O. Douglas:

    (Inaudible)

    J. Lee Rankin:

    No.

    They’re presidential entirely.

    In respect of President’s function (Inaudible)

    J. Lee Rankin:

    He rely —

    (Inaudible)

    J. Lee Rankin:

    Well, he relies on the Bureau of the Budget in — in regard to the function which the government is —

    (Inaudible)

    J. Lee Rankin:

    Yes, which is a part of the office of the President on our governmental structure and it reviews this budget and it makes recommendations and so forth and — and then only then is, it sent to the Congress as far as the proposed appropriations and it makes up the — apart of the presidential budget that he has to account for and the total appropriations that have to be taken care of by the Congress either approving or reducing or enlarging upon.

    Well, of course that (Inaudible)

    J. Lee Rankin:

    There’s not been any change in the tolls, but there have been budgets that have been filed and there have been appropriations by the Congress on the very — after the petitioner told the Congress, that it thought the rate should be the same, that it did examined the question, determined it, that the rate should not be changed and that it’s — the budget should be a certain amount based upon that assumption, then the Congress have examined in — in the Appropriations Committees and the Congress as a whole in 1956, 1957, 1958, they approved it on that basis.

    Now in 1955, they tried to get through a special act of by which they’d have a right of judicial review in the Court of Appeals of the Second Circuit of the toll rates that were fixed on the Panama Canal.

    And the Committee examined in their hearings, this question and they unanimously reported the bill out, but they recognized in their report that there was no authority for such judicial review at this time and that bill went to the floor and it was called up three different times and objections were made each time and it failed the passage and it’s never been passed.

    (Inaudible)

    J. Lee Rankin:

    Well, that is the — the size of the vessel and there — there are great many ways of computing it but apparently, they work it out.

    At one time in the early days, Panama had a different scale of measurement for measuring vessels from the United States and the rate was fixed by President Taft at a $1.40 — $1.20 cents and the effect of that, because of the different rate of measurement of Panama was that it was a low rate and — but that — that was eliminated in 1937, that difference in measurement.

    The basic problem that we have here is a question of discretion that has to be exercised by the petitioner in the present, in the operation of these great properties and the United States recognizes that this is an international waterway, that it has an obligation to the people of this country and the rest of the world that it’d be properly operated without discrimination and theory, but it also has an obligation to try to carry out the will of Congress as expressed and it has innumerable business problems day by day to try to work this out.

    Now, the Comptroller General says that the various commodities of the business operations and the services that are rendered by this petitioner should be priced differently, so there wouldn’t be this deficit, so they could take care of all this — this overhead of this corporation and half the cost of the Canal Zone Government.

    Now, they want the application of those cost of the operation of the overhead and of the government to be applied unit by unit and it’s just impossible to do because for example, let me point out to you, that in the commissaries, they have thousands and thousands of different items that people buy and you can’t price those items at a price that’s above the market.

    It’s just like a drugstore or a grocery store, if you have a package of cereals in your — the neighboring grocery price of a certain amount, you’ve got to be competitive.

    And if you put your price too high, you will not sell that package and you will not sell other things.

    J. Lee Rankin:

    And consequently, your gross income will go down, your opportunity to take care a part of this overhead would be even more reduced and you can’t do business on that kind of a basis.

    Felix Frankfurter:

    Why you — why are you putting these matters to us?

    J. Lee Rankin:

    Because this is the problem that seems to me inherent if this Court undertakes to judicially review the propriety of the action of the petitioner in the light of the Comptroller General’s criticism of its books because it seems to me the Court then has to undertake and say, “Well, you should raise the prices on your services, you should raise the prices on your commodities — excuse me — in all your various business activities and that will get you enough money, so these tolls don’t have to be so high.”

    That’s the argument.

    Now, the fact is —

    Felix Frankfurter:

    Do they suggest that we have to go to those matters or they merely say, “You ought to — you ought to do something and get new rate?”

    J. Lee Rankin:

    Well, that they really say, “We don’t care whether you lose money or not.

    If you lose money on your business activities even though we construe this language to say that on 412 (b) that the “Tolls shall be prescribed at a rate or rates calculated to cover, as nearly as practicable, all costs of maintaining and operating the Panama Canal, together with the facilities and appurtenances related thereto,” which we construed to mean all of these business activities.

    They say if you don’t get that, it’s just too bad.

    You just take it off the interest.

    Felix Frankfurter:

    Would they — would the respondent agree with you that we have to take into account the conflict that we have to — that the decision which stayed out to be sustained involves reaching the items that you put before us, the last two or three minutes that we have to consider things like that?

    I can’t imagine the — I don’t myself feel securely qualified to pass on this —

    J. Lee Rankin:

    Well, that’s — what I’m trying to point out is that in the first place, it was never contemplated by the statute that there’d be judicial review that involves the act of the President and the Congress said it was found conclusive.

    But there was never any judicial review before and it was never claimed or contemplated under the prior statute that had much the same terms and only placing it in the — in the hands of the President, that this is the property of the United States and that this Court treats the handling of that different, then if it was regulation of the personal property or personal rights of individuals that they — this Court recognizes that the United States has a right to price its various operations of its own property.

    Felix Frankfurter:

    Is a suggestion that — that the — the tolls that are charged and sought to be left to be charged as they are involves deprivation of property without due process from the consumer to which the ship owners could go through the Canal?

    J. Lee Rankin:

    No.

    The only claim is that we didn’t — we are not carrying out the terms of the statute that when the statute says facilities and appurtenances shall be taken into account so that the tolls will pay all of that together with all of the cost of operation.

    Their claim is of that that means, only the business operations that were put in the company in 1951.

    There — there were some business operations put in the company in 1949 and there were some before.

    And in the charter and in other legislation that was passed in 1949, it expressly refers to many of these different operations as being facilities and appurtenances, but because in the Section 14 of this amendment, it refers to the transfer of the remaining business operations into this, as facilities and appurtenances.

    They want the Court to take that limited language and apply that kind of a construction to it, which the —

    Felix Frankfurter:

    Does that — does that mean that if the President promulgates a toll and set forth in the document that some experts have joined with them and it defines this and this as appurtenances and facilities, there can be judicial review as to whether he properly denominated those appurtenance and facilities.

    J. Lee Rankin:

    Well, they claim that they have that right.

    They claim they have a greater right if the petitioner doesn’t.

    But they — they claim that they still have the right of the President.

    Well, I thought they didn’t go quite that far.

    You eliminate — forget their appeal for a moment to recoup for alleged past overcharges.

    J. Lee Rankin:

    Yes.

    I thought that what they were asking you to do, what the Court of Appeals says you’d have to do was to get busy and do something.

    J. Lee Rankin:

    Well —

    That did — their — your case, the case that you’re arguing doesn’t really go beyond that if they stay.

    J. Lee Rankin:

    That’s — that’s correct except in response to that, we have said to the courts and to the Congress time after time, we have done something.

    We have a — we have operated this business.

    We’ve tried to apply this formula.

    We have found that according to the formula in order to get all the cost back of operating this Canal and all of these business operations that are part of it, that we have to have to have these much tolls and it’s therefore our determination that this is a proper toll and it should not be changed.

    We reported that to the Congress, the Congress has voted appropriations, the Presidents, Bureau of the Budget have approved those that had budget.

    And 1956, 1957, 1958, the Congress approved it after hearings and all of its various procedures.

    And so we say that the procedures that we are following are exactly what Congress in — interpreted this statute to be and where carrying it out, they say we’re not and they want this Court to take and review that.

    Now, if you get down to the merits, I’m trying to point out that you and — and I are going to review it and determine that we have to do all these things.

    You’ve got to tell us how to operate this corporation and all these business facilities and whether to raise the prices or lower.

    And look what they’ve asked us to do.

    They say this brings benefits, we shouldn’t be giving to these employees down in the Panama Canal region and they admit.

    It’s conceded that it’s a common thing in a foreign area to do that, but if we take those fringed benefits away in the business activities and we have less of a loss there, what happens, we have to raise the salaries and wages over in the direct operation of the Canal and consequently, they don’t gain a thing by it.

    Felix Frankfurter:

    Mr. Solicitor, may I ask you?

    I always find it proper to find out, what — what the judgment is which I’m asked to either reverse or sustain.

    What is it that the Court of Appeals directed?

    J. Lee Rankin:

    The Court of —

    Felix Frankfurter:

    — where is the judgment?

    What is — what is the judgment?

    J. Lee Rankin:

    The Court of Appeals —

    Felix Frankfurter:

    They must have asked somebody to do something.

    J. Lee Rankin:

    The Court of Appeals rendered a — sustained the motion for summary judgment and it’s a remarkable thing that they could do it because the lower court didn’t even consider the motion for summary judgment.

    Felix Frankfurter:

    What if — what summary judgment which was — what’s the summary judgment which they granted?

    J. Lee Rankin:

    The summary judgment —

    Felix Frankfurter:

    I’m taught that there must be some — some indication as to what the Court did?

    J. Lee Rankin:

    It’s on 2 — page 258.

    Felix Frankfurter:

    So that law if we sustain this, you would have to advice — the committee have to advice the Panama Canal Company to do something maybe.

    258?

    J. Lee Rankin:

    Yes.

    You haven’t looked at the prayer for relief.

    J. Lee Rankin:

    Then you’ve got to look at the opinion in order to determine that.

    Felix Frankfurter:

    What was the prayer for relief?

    J. Lee Rankin:

    The prayer for relief is summarized in our brief, a footnote (Inaudible) —

    Felix Frankfurter:

    Common law pleading.

    That’s something to be said (Voice Overlap) —

    J. Lee Rankin:

    On page 8 of the record.

    Earl Warren:

    We’ll recess now Mr. Solicitor General.