United State v. Boston & Maine Railroad

PETITIONER: United State
RESPONDENT: Boston & Maine Railroad
LOCATION: The Realtor Building, formerly McCrory’s Five and Ten Cent Store

DOCKET NO.: 232
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 380 US 157 (1965)
ARGUED: Jan 21, 1965
DECIDED: Mar 08, 1965

Facts of the case

Question

Media for United State v. Boston & Maine Railroad

Audio Transcription for Oral Argument - January 21, 1965 in United State v. Boston & Maine Railroad

Earl Warren:

Number 232, United States versus Boston & Maine Railroad et al.

Mr. Hummel, you may proceed with your argument.

Robert B. Hummel:

Mr. Chief Justice, and may it please the Court.

This is a direct appeal from the dismissal of Count I of a two-count indictment by the District Court of the District of Massachusetts, Chief Judge Sweeny.

The appeal is directly to this Court under the Criminal Appeals Act since the dismissal was based solely on the Court's construction of a statute.

The appellees are the Boston & Maine Railroad and three individuals, who held the positions which I shall describe during the pertinent period, Patrick B. McGinnis who was president and director of that railroad, George F. Glacy and Daniel A. Benson, both vice-presidents.

The charge was laid under Section 10 of the Clayton Act and, in essence, it was that the appellees -- the appellee, Boston & Maine Railroad, with the aid of and direct participation of the individual appellees, sold 10 railway cars to a company known as International Railway Equipment Corporation without competitive bidding which, in our view, was required by Section 10 of the Clayton Act.

We postulate the requirement for competitive bidding on the ground that there existed the interlocking relationships which Section -- Section 10 requires when a railroad is dealing in its own property or in supplies and equipment with another company.

Statute provides the following types of interlocking relationships give rise to the necessity for competitive bidding.

On the part of the carrier, if the person is a director, president, manager, purchasing or selling officer, or agent in a particular transaction and, on the part of the other company, if he is at the same a director, manager, purchasing or selling officer, or has any substantial interest in the other corporation, firm, partnership, or association, then the requirement for competitive bidding arises.

And, in this case, the narrow question is, the meaning of the place, any substantial interest since there's no allegation that the individual appellees held a position as director managing or purchasing or selling officer with the International Company.

Our position, in brief, is that if the other firm, the firm with whom the railroad is dealing, is being operated in substantial part for the benefit of the carrier officials who hold the position with the railroad specified in the statute, in that event, carrier officers have a substantial interest in the company and the need for competitive bidding follows.

Arthur J. Goldberg:

Where there is one bribe.

Robert B. Hummel:

Well, the bribe case, we think, presents a slightly different question.

It might depend on the kind of a bribe.

If it were a promise of stock to be delivered 20 days after the transaction had taken place, I think it would be -- it would give, perhaps, the bribee very clearly an equitable stock interest in the company.

It might not be a --

Arthur J. Goldberg:

What about cash payments?

Robert B. Hummel:

Cash payment would raise, perhaps to attenuated a -- an -- an interest.

I'm not sure it would be substantial -- a substantial interest in that event, although I think, in a -- in appropriate circumstances, it might be sufficient.

If you could show a course of dealings which would indicate that the person taking the bribe had a real solid expectation of additional bribes, I think it might meet the -- the test.

Arthur J. Goldberg:

Am I wrong in my recollection here that this involved a cash payment?

Robert B. Hummel:

Well, these involved payments of $71,500, all except a payment of, I believe it was, $1,500 being subsequent to the transaction.

And, the allegation of the indictment is that there was a scheme and arrangement, under which the individual appellees would direct property to the International Company and, in return for that, when the International Company made, for the purpose of producing profits for International and that they would then subsequently receive substantial moneys, now --

Potter Stewart:

Why isn't that just a bribe?

Robert B. Hummel:

Well, I -- I suppose you could describe any type of grant -- an interest in the company as a bribe.

Our position was --

Potter Stewart:

Well I understand -- I understand your point that if the bribe were in the form of shares of common stock of the bribing corporation, that would be a substantial interest because that meets the common ordinary sense of that term “substantial interest,” a proprietary interest, an ownership interest.

But, that was not this case.

This was money and why wasn't it simply a bribe as my brother Goldberg has suggested.