United States v. Contract Steel Carriers, Inc. – Oral Argument – February 29, 1956 (Part 1)

Media for United States v. Contract Steel Carriers, Inc.

Audio Transcription for Oral Argument – February 29, 1956 (Part 2) in United States v. Contract Steel Carriers, Inc.

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Earl Warren:

Number 102, United States of America and Interstate Commerce Commission versus Contract Steel Carriers.

Charles F. Barber:

May it please the Court.

Earl Warren:

Mr. Barber.

Charles F. Barber:

This case is here on appeal from a three-judge District Court sitting in the Northern District of Indiana.

The case arises under the Motor Carrier Act.

It confirms the distinction between common carriers and contract carriers.

Those terms are used in the Act.

This is the distinction this Court has noted that Congress has preserved throughout the Act and upon which the economic regulation of the motor carrier industry is based.

The nub of the distinction is this.

A common carrier is one which undertakes to serve or hold itself out to serve the public generally.

A contract carrier, on the other hand, are carriers for hire that operate under individual contracts and agreements and are not common carriers.

The two types of carriers are mutually exclusive and embrace all carriers, all motor carriers for hire.

Appellee in this case held a contract carrier permit.

It was found by the Commission to have conducted operations as a common carrier unauthorized by its permit.

We have two issues in this case.

First, whether the Commission’s finding is supported by the evidence, and second, whether the remedial order entered by the Commission is void for vagueness.

The so-called specialization test discussed in the brief is in our view a part of the second question.

It goes to the specificity of the order.

The facts are these.

Appellee was issued a contract carrier permit in 1940 on proof that he operated a highly specialized carrier service for three shippers.

The service that he offered was this.

He had 10 trucks and trailers.

They were equipped to carry extra length steel reinforcing bars.

The motor carrier report filed by the Commission in the permit case says that the bars were up to 90-feet in length.

Such bars were used in highway, culvert and bridge construction.

They require delivery in many cases far off established highways.

The drivers were trained to follow the engineer’s survey marks and to deliver their loads of steel often in the absence of any of the consignees’ representatives by locating the engineering mark in the field and leaving the steel bars there.

By the spring of 1951, the proof showed, appellee had listed with the Commission 13 contracts.

Eleven of these were with Kansas City shippers.

Only one was with an Illinois Steel Company, none was with an Iowa shipper.

Charles F. Barber:

As you look at the names of the companies, you see they are steel companies and construction companies by and large.

At this point, in 1951, appellee underwent a burst of expansion.

Less than a year later, in March 1952, it had 69 contracts including eight with Illinois Steel Company and 47 with Iowa Shippers.

As you rundown the list of companies with which he had contracts, they include a range of light engineering companies.

Maytag is one, Furnace Company, a good many familiar names among them.

It’s no wonder that a group of small common carriers engaged in the business of hauling livestock from Chicago or from Iowa farms to the Chicago area and depending for their return load on steel products, which they had been certificated to carry by the Commission, became alarmed and brought this complaint.

What did the proof show?

How did appellee accomplish this extraordinary expansion in a short period?

Stanley Reed:

Did it require a special equipment to carry these — these bars?

Charles F. Barber:

As — to carry the 90-foot —

Stanley Reed:

What — what makes me ask a question, I have to realize that in — in the scope that I — I thought it was a special equipment that you spoke of here to change the cars if — with a lot of them.

That’s one aspect of it, doesn’t it?

Charles F. Barber:

Well, that — that goes to an important aspect of the proof in this case.

When the original permit was issued, appellee showed that he had 10 trucks.

Each of which could carry these oversized steel bars up to 90-feet in length.

The substance of the complaint in this case is that he had departed from that sort of business and was now engaged in quite a different type of business.

All be it within the scope of his permit.

I might explain that.

His permit was founded on the special requirements of these oversized bars used in bridges, culverts and highways.

In — when he was making a delivery, he, of course, carried other steel products use in highway constructions, tapes and clamps.

There are number of things that he listed in his proof.

His permit covered — steel products and steel articles and other products used and useful in highway construction except sand gravel and several other things.

Now then, later on at the period of his complaint, he was using the other things to transport the — the part of his permits which applied to other than steel bars.

Stanley Reed:

For Maytag.

Charles F. Barber:

To — for Maytag, for the Furnace Company and so on.

Well, the question comes down to a good deal to holding-out.

This advertisement at page 90 of the record was inserted in the Chicago Motor Traffic Directory.

This is a telephone book for shippers in the Chicago area, Steel Transportation Company, that was appellee’s name at the time of the hearing.

Iowa Division, serving all points in Iowa, daily dependable service, flat beds, condulets, vents, all standard equipment in further elaboration on your question, Mr. Justice Reed.

At the other end of the market, the proof shows that he appointed a divisional manager whose office was at Des Moines and who actively solicited accounts in Iowa.

Charles F. Barber:

He was extraordinarily successful.

The proof show that this man working in Iowa was able to sign up every steel receiver of consequence in the Des Moines area, a total of 16 contracts.

Moreover, appellee behaved in other ways like a common carrier.

There’s a true bill in evidence, on page 93 of the record, showing an interchange of shipment with a common carrier.

There is a lease in evidence of a truck and the testimony in the record shows that this truck is a livestock truck which transported bulls to Chicago moving in the other direction.

The —

William O. Douglas:

(Voice Overlap) Suppose it often showed the original applications for contract carriers (Inaudible)

Charles F. Barber:

Oh, I — I assume it would, yes, sir.

William O. Douglas:

(Inaudible)

Charles F. Barber:

You have 16, you say, sir?

William O. Douglas:

Yes.

Charles F. Barber:

Well, 16 contracts, I should think, is — is closer to the line.

This man had 69, 69 contracts with a variety of shippers in the (Inaudible)

William O. Douglas:

Well —

Charles F. Barber:

It is where you have it to —

William O. Douglas:

I thought all of the shippers (Inaudible)

Charles F. Barber:

Yes, sir, that is all he was certificated to carry or — it is (Inaudible) Company.

William O. Douglas:

These facts — all facts, cattle, is that exempt?

Charles F. Barber:

Well, cattle are exempt from the requirements of the Motor Carrier Act and so anyone can haul cattle.

William O. Douglas:

(Inaudible)

Charles F. Barber:

I made that comment not say it hold it against him as you say, but to point out that the trucks which were leased to him were not specialized equipment in anyway.

They were standard livestock trucks like common carriers, motor carriers generally use in their business.

William O. Douglas:

(Inaudible)

Charles F. Barber:

Yes, sir.Yes, sir.

William O. Douglas:

(Inaudible)

Charles F. Barber:

Well, it’s the — it’s a central issue that the Commission is interested in.

We are very concerned that the court below dealt with the specialization test as it did.

In this case, we think on the issue of whether or not this carrier had held itself out to serve the public.

We have about as clear a case as you could imagine, a full page advertisement in the Chicago directory, widespread solicitation of Iowa steel receivers and a burst of expansion of business in a very short period, showing in easy interchange of contracts as well as a — a holding-out to accept any business he could get.

So, on the holding-out issue, on the question of whether the Commission finding that he operated as common carriers supported by the evidence, I think, we have a — with all due respect to the court below, an open-and-shut case on the question of whether or not the order is sufficiently definite to stand the test which have been applied by this Court to such cases.

Charles F. Barber:

We must look to the reasonableness of the criteria to which the order refers and those criteria are the specialization tests as it has been elaborated by the Commission.

So, I think, the specialization test comes up in the second branch of the case rather than the first.

Earl Warren:

Where does the certificate printed?

Charles F. Barber:

It’s at page 2 of the record.

I’ll read —

Hugo L. Black:

(Voice Overlap) is — is it your idea that if one violates the law that way, clearly, that the license that you take on to waive on this because of the previous violations, is that involved here?

Charles F. Barber:

That is not involved in this — here.

A motion was made for — that the Commission on the basis of the record in this case institute what is called a revocation proceeding, to determine — issue an order requiring this carrier to show cause why his permit should not be revoked under the provisions of the Motor Carrier Act.

The Commission, the examiner said that that motion was not within the scope of the hearing and it was not renewed before the Commission.

So, to answer your question, that is not involved in this case.

It is a possible remedy which the Commission has in the case of aggravated violations of the law.

I’m not quite clear —

Charles F. Barber:

Yes.

— of what you said last.

As I understand it, your position is irrespective whether the specialization was a proper test or not.

We are holding-out here is whether the Commission is right irrespective of whether I can give the wrong reason if I didn’t understand it.

Charles F. Barber:

It is — was — yes, sir.

It was right in finding that there has been a violation.

Now, did you say that when it comes to the enforceability of the order, the vagrancy, the order of specialization test is the one?

Charles F. Barber:

Very much so, yes, sir.

The order required appellee to cease and desist from the operations as a common carrier by motor vehicle which it is found in said report now to be conducting without appropriate authority by the Commission.

Felix Frankfurter:

Is that the whole order?

Is that the order?

Charles F. Barber:

That is the order with (Inaudible) introductory paragraph and so on, yes, sir.

Felix Frankfurter:

Is that’s the order then — then why does this have to turn on these common carriers?

Charles F. Barber:

Well, the —

Felix Frankfurter:

(Inaudible)

Charles F. Barber:

I — I’m not sure I have your question, sir.

Felix Frankfurter:

Please read again about the order.

Charles F. Barber:

The order which is appended to a report which reviews the facts.

Felix Frankfurter:

What page is that?

Charles F. Barber:

It says the order is at page 18 of the record which reviews the facts, reviews the operations which appellee was found to be conducting.

It sets forth the need for it to reform its operations to bring itself into compliance with the law.

Sets forth the criteria which the Commission has used in such cases.

Those criteria are summed up in specialization test.

Then, the order says, is require —

Felix Frankfurter:

The specialization test relates to the contract carriers.

Charles F. Barber:

Yes, sir.

Felix Frankfurter:

And the order — that’s in my point, the order indicate that the Commission, as — as you say it, hasn’t opened in such cases as to the common carriers.

Charles F. Barber:

Yes, sir.

Felix Frankfurter:

Then, why are we doing — well, how can we not sustain the order?

Why should we not sustain the order to go into this — would — for decision on what does or doesn’t constitute a contract carrier?

Charles F. Barber:

Well, you — you have a very valid question that we maybe anticipating the issue which will come up when this carrier comes into the Commission, it says, “This is what I have done to comply with the order and which a hearing, if he request it, will be held and a determination of the Commission is entered.”

So, our discussion of these criteria may in a sense be premature but they go to the form of the order.

It’s like the usual case in antitrust decree.

You had it in the United Shoe decree which was before you shortly ago.

In that case, Judge Wyzanski directed United Shoe to come in with a plan to accomplish the termination of certain leases.

Now, if that had been contested, you could have say, “Well, why should we discuss now what is the appropriate thing for United Shoe to do.”

If United Shoe is not satisfied with the action that the District Court takes on the plan which it submits, of course, it can bring out that later adjudication for review by the Court.

Felix Frankfurter:

I think you’re — you’re analogizing what seems to me a very simple situation.

Yes.

Charles F. Barber:

— or rather complicated.

The Commission had given through this, this carrier, the common carrier operating without a license.

Felix Frankfurter:

Yes.

Charles F. Barber:

As do yourself in conformity, you come in and get license to the common carriers.

Felix Frankfurter:

No, sir.

No, sir, that is not — that — that’s where we got across purposes.

All right.

Now, I don’t understand it.

But why is nothing (Voice Overlap) —

Charles F. Barber:

This — this proceeding is a complaint proceeding.

This carrier has not come in for a common carrier or if it —

Felix Frankfurter:

But — but the second paragraph would be also on page 18.

Charles F. Barber:

Yes.

Felix Frankfurter:

I’m addressing — leaving — addressing out that was —

Charles F. Barber:

Yes.

Felix Frankfurter:

— to the precise order which has been invalidated —

Charles F. Barber:

Yes.

Felix Frankfurter:

— with this judgment if you’re asking review.

Charles F. Barber:

Yes.

Felix Frankfurter:

Now, the question before this Court, the question before the lower court was the validity of this order.

Charles F. Barber:

Yes.

Felix Frankfurter:

And therefore, I don’t agree with the order.

What I read is that the machine has found that this was a common carrier not having a common carrier license.

And you should get it out of there that — is that right or am I wrong?

Charles F. Barber:

Well, when they order to cease and desist from operating as a common carrier and I see what you’re looking to until such authority has been obtained.

Well, now, I assume that appellee’s assumption would be that if he came in for common carrier permit or certificate, he could not get one.

Why?

Because a number of common carriers have been certificated to carry this traffic from Chicago to Iowa.

He would have to show public convenience and necessity.

And as we all know in an industry which is well-developed, it is not easy for a carrier to show public convenience and necessity for traffic that is well-taken care of by existing common carriers.

So, his problem under this order, if he decides not to come in for a common carrier, a certificate which, of course, is an alternative open to him, his problem will be to reform his operations so that they meet the test of a contract carrier.

If, for example, he — his modus operandi becomes as it was when he got his contract carrier permit, there is no question about what the Commission would enter an order finding him in compliance with the Act.

William O. Douglas:

And that was the deduction of number of — of contracts?

Charles F. Barber:

It is a question of degree.

If a carrier serves a very few shippers, so that he operates virtually as a part of the shipper’s organization, an example is the contract carrier who carries for A.N.P.

Then, the Commission finds him entitled to contract carrier status.

It’s a special individualized service.

On the other hand, if a carrier has highly specialized equipment, the Commission finds that it meets this requirement of the Act for individual contracts and agreements.

Appellee qualified under both of those tests.

Charles F. Barber:

Now, as you increase the number of carriers in order to qualify as a contract carrier, the Commission requires a higher degree of specialization in service.

One of the largest contract carriers in terms of number of customers is a carrier which has a service in metropolitan areas of moving checks from banks to the clearing house and clearing house to the banks.

They have bonded employees.

They have keys into their customers’ establishments.

You’ve seen the vaults that sit-out in access to the street.

And the Commission has permitted them to operate as contract carriers despite the fact that they have many customers.

Felix Frankfurter:

Mr. Barber.

Charles F. Barber:

Yes.

Felix Frankfurter:

I’m rather ready for deciding what I don’t have to decide.

Charles F. Barber:

Yes, sir.

Felix Frankfurter:

Maybe as a goodness of the case that I say that, within the alibi that appellant has that alibi.

As I understand it, the Commission starts out with the proposition that the distinction between contract and common carriers is a basis.

Charles F. Barber:

Yes, sir.

Felix Frankfurter:

It can’t be both.

Charles F. Barber:

Yes.

Felix Frankfurter:

The Commission here approved this is a common carrier not having a common carrier license.

Charles F. Barber:

Yes.

Felix Frankfurter:

Why isn’t that the only question before me whether this common carrier, if I — if I — if as I agree with you, assuming I agree with you —

Charles F. Barber:

Yes.

— that this is an — this is an open-and-shut case of common carrier.

Why do I have to bother about the suggestion of contract carriers?

The appellee will say, “The Commission has issued an order.

If I don’t comply with that order, I can be taken to court and assess penalties of $100 for each day that I am not in compliance.”

He says, “I don’t know how to comply with that order.

The Commission didn’t tell me to cancel 10 contracts or 12 contracts or 15 contracts.”

Felix Frankfurter:

The Commission has told him not only as approvance — made an administrative adjudication that he is a common carrier.

And if I do get a common carrier license, that’s what the plaintiff, I’d like to ask.

Charles F. Barber:

Well, I think appellee will bear me out in saying that if you approach the case that way, you’re — [Laughs] you’re paying short trip to his very earnest urgings that he can’t get a common carrier permit —

Felix Frankfurter:

Are you —

Charles F. Barber:

— or maybe he can’t get a common carrier —

Felix Frankfurter:

I don’t know anything about that.

Why would I make judicial knowledge of that?

Charles F. Barber:

But he says, “What I have to do under this order is to get within my contract permit.”

Felix Frankfurter:

No, you —

Charles F. Barber:

That’s my order for today.

If I get —

Felix Frankfurter:

That isn’t the order at all.

If he doesn’t want to become a common carrier, then he get some other difficulties or opportunities ahead of him.

The Commission said, “You’re a common carrier, get a licence.”

Now, he can challenge the correctness of that, the foundation of that order and say he’s not a common carrier.

But he can’t say very well, “I’m a common carrier, but I want to become a contract carrier and will the Court please tell me what is necessary to bring myself in conformity with an order which the Commission has made.”

Charles F. Barber:

Well, I’ll —

Felix Frankfurter:

All right, (Inaudible) —

Charles F. Barber:

[Laughs] I don’t want to be arguing his case.

Felix Frankfurter:

No, but you have to argue —

Charles F. Barber:

I think —

Felix Frankfurter:

— your case.

Charles F. Barber:

— we —

Felix Frankfurter:

Your case is that you’re arguing what’s to be valid as to contract carrier is and I say that’s not an issue.

Charles F. Barber:

Sir, let me state what we are arguing.

We are arguing that this order which requires appellee to cease operations which it has found in the report of the Commission to be unauthorized by its permit, his order to cease those operations.

Felix Frankfurter:

But is that opinion —

Charles F. Barber:

No.

Felix Frankfurter:

— one more phrase, Mr. Barber, that in order to cease operating as a common carrier.

Charles F. Barber:

Or get a permit —

Felix Frankfurter:

Or get a permit —

Charles F. Barber:

— or get a certificate so that he —

Felix Frankfurter:

Therefore, that order is valid if he’d be a common carrier.

Charles F. Barber:

I welcome any suggestion that will lead this Court to reverse the decision below.

I would only add a footnote to it and that is that the criteria of the Commission which are set forth in its report are reasonable and sensible criteria.

Felix Frankfurter:

Well, the criteria for the (Voice Overlap) —

Charles F. Barber:

Criteria for distinguishing between contract and common carriers.

I think Your Honors have said in regulatory cases that the order entered by the agency must be sufficiently definite to apprise the appellee of what’s required.

Felix Frankfurter:

And all of it —

Charles F. Barber:

We think —

Felix Frankfurter:

And all — and all of it (Voice Overlap) —

Charles F. Barber:

It has —

Felix Frankfurter:

I put it to you, in all candid, about my intelligence in (Inaudible) is, I can’t imagine an order more definite than this one.

Charles F. Barber:

Well, sir, that’s a — a statement which I can —

Felix Frankfurter:

Well, he’s — well, he’s one of the common carrier and he has to get a license.

What’s indefinite about it?

Charles F. Barber:

Well, if Your Honor — suppose (Voice Overlap) —

Felix Frankfurter:

It’s definitely a challenge —

Charles F. Barber:

Yes.

Felix Frankfurter:

— if that is in my case.

Charles F. Barber:

If — if Your Honor —

Felix Frankfurter:

(Voice Overlap) let’s — it may be — it may be without foundation.

It may not be a common carrier and in your problem (Inaudible)

Charles F. Barber:

I would hope in approaching the case and that way if you do that you not toward the reasonableness of the criteria of the Commission set forth in the report.

Felix Frankfurter:

Well, if — has the Commission — has the Commission in this report laid down, indicated any criteria or criterion for determining what is a common carriers except the old one going back of (Inaudible) namely, holding out generally, has it?

Charles F. Barber:

Well, yes, yes.

Felix Frankfurter:

You mean in determining what is a common carrier?

Charles F. Barber:

Well, we — we have two mutually exclusive definitions.

The common carrier definition as it appeared in the law originally, spoke of carriers who undertake motor transportation by motor carrier.

And contract carriers were carriers who undertake carriage for hire under individual contracts.

Now, the administrative problem was fitting the pattern of operations of motor carriers for hire into those two categories.

The Commission obtained a great deal of light from the common law cases which imposed obligations of common carriage on carriers which hold themselves out.

I — those were the word — words of art at common law.

Those were not the words in the original definition of common carriers.

Felix Frankfurter:

So there was no definition, is there?

Charles F. Barber:

Yes, there was a definition.

Felix Frankfurter:

What was the definition?

Charles F. Barber:

The definition —

Felix Frankfurter:

In the statute?

Charles F. Barber:

In the statute.

Felix Frankfurter:

What is the definition?

Charles F. Barber:

The definition in the statute as it was originally enacted, the amended version is at page 2 of our brief.

Read, “The term common carrier by motor vehicle means any person who or which undertakes whether directly or by a lease or by any other arrangement to transport by motor vehicle and interstate of foreign commerce and so on.”

Felix Frankfurter:

Is there any difference in the commerce?

Charles F. Barber:

Well, I don’t know whether it’s any different or not.

But I —

Felix Frankfurter:

Those words are found in (Inaudible) of the cases or — or before there’s a — a common fact that allow the motor carriers.

Charles F. Barber:

I — I contest with you on this for this reason.

The court below said, “The common law task of common carriage was perfectly clear and definite.

Therefore, the Commission could not look at the words of the statute in order to develop a practicable test in which to handle the borderline cases.”

And there are very few borderline cases.

A recent estimate by the Contract Carrier Conference is that there are fewer than 20 contract carriers with more than 15 customers.

That’s only in those very few cases where the Commission is led to find the holding-out by the pattern of operations.

Felix Frankfurter:

What you’re now —

Charles F. Barber:

Now —

Felix Frankfurter:

— saying to me is that I must change my view and it has to change my view of what is a common carrier under the Motor Carriers Act, is that it?

Charles F. Barber:

No, sir.

You don’t have to change your view.

I only ask that you —

Felix Frankfurter:

Well, I’m suggesting I shouldn’t.

Charles F. Barber:

— that you do not use it as a reason for preventing the Commission from doing the reasonable, sensible thing with its eye on its regulatory purpose to these few contract carriers which you might think — or these few carriers which may or may not meet a strict common law test.

I’m not sure whether they do.

Felix Frankfurter:

And now that you suggest, of course, whether a particular situation, reach the common law test on that situation to have a right or view whether the fact or within the pattern.

That’s a different question.

You spoke with an assurance which I had to break to you, waive as make it but this is an open-and-shut case.

Felix Frankfurter:

It is a common carrier.

Charles F. Barber:

That he had operated as a common carrier.

Felix Frankfurter:

And that’s what a common —

Charles F. Barber:

Yes.

Felix Frankfurter:

— carrier is and I don’t know what’s inside —

Charles F. Barber:

Yes, he held himself up.

Felix Frankfurter:

— his own mind if he operates as a common carrier.

Indeed, whoever wants his facilities can have them (Inaudible) the facilities —

Charles F. Barber:

Yes.

Felix Frankfurter:

— as a common carrier unless if the statute has a special meaning.

The statute doesn’t have a special meaning.

Charles F. Barber:

Yes.

Felix Frankfurter:

And what you say is view of complicated circumstances —

Charles F. Barber:

Yes.

Felix Frankfurter:

— which may grind the position one way or the other in finding whether it’s a common carrier.

And I say that’s none of my business, provided it isn’t wholly wanting in evidence that consider.

Charles F. Barber:

Well, let me reply by saying, in this case, I don’t have any difficulty either under the common law test.

I am led to caution only because a distinguished Circuit Judge and two District Judges thought that when he looked to the common law test, he was required before we can reach a different conclusion in this case.

Felix Frankfurter:

And that’s why you said —

Charles F. Barber:

That’s why I’m led —

Felix Frankfurter:

(Voice Overlap) — is open-and-shut.

Charles F. Barber:

That’s why I led to caution.

Felix Frankfurter:

(Inaudible)

Earl Warren:

Mr. Burchmore.

Robert N. Burchmore:

Mr. Chief Justice, Your Honors, may it please the Court.

The Court has observed that the order in this case ordered the appellee to cease operating as a common carrier.

If there had been evidence that the appellee was operating as a common carrier, the order could not be successfully obtained, but the Commission acted without evidence.

The Commission substituted for evidence a theory as to what constitutes a contract carrier and it held in its report that if you are not a contract carrier according to the Commission’s theory of contract carriage, you, therefore, automatically become a common carrier ergo the order issues.

Felix Frankfurter:

Are you suggesting that if I read this record, as I have not done, if I read it conscientiously, I would have to find that this carrier is not a common law common carrier, is that your position?

Robert N. Burchmore:

That is my position and it has not operated at any time as a common law common carrier or as a common carrier as defined by Congress in the statute.

Hugo L. Black:

Now, what you say is on — on the record, it’s an open-and-shut case or just the other way from what’s the requirement of this?

Robert N. Burchmore:

I do, most assuredly.

Felix Frankfurter:

That’s what makes the law vis-à-vis?

Robert N. Burchmore:

Four years ago, I left my office to attend a hearing in this proceeding which was held by the Commission in Chicago upon the complaint of some competitors of the client, the appellee, from whom he had attracted some of their trucking business.

Rather than compete in the marketplace of carriage, his competitors chose to attack the appellee before the Interstate Commerce Commission and alleged that he was violating the law.

The Commission set the case for hearing and the hearing lasted long enough to make a 60-page record.

It started with the examiner’s usual announcement of what the Commission had set for hearing and this is, you will see from the record, was followed by the complainant searching the hearing room for some officer or a person from the defendant appellee and he could question as to his operations.

There being none in the room, they proceeded to testify, practitioner himself offering the testimony that a large number of contracts had appeared in the Commission’s files as having been entered into by this defendant appellee here.

There was not a word of evidence as to what the contracts contain.

They were not offered in evidence, although they were on file before the Commission and the Commission never took the trouble to examine them.

All that was really laid before the Commission in that hearing was the quantity of business that was being done.

We were doing too much business.

I’ll come back to that because the statutory definitions of carriers is not — does not hinge upon quantitative elements.

It hinges upon qualitative elements not how much business a carrier does but what kind of business it does and in what manner it does it.

Beyond the matter of how many contracts had been entered into, there were these other elements which I, with all respect to the Commission, termed trivia, namely, a bill of lading which showed that one shipment that had been carried under a contract properly on file with the Commission in accordance with its regulations had been “interchanged” with another carrier.

In other words, the appellee had not carried the shipment from its first origin to final destination but had picked up the shipment from another carrier to take it to destination for its contracting party.

Now, I should not labor a trivial matter but just by way of illustration, let me describe to the Court that in transportation parlance, and as the Commission well knows, interchange is a term of art having to do with a movement of goods where one carrier transports them partway and turns them over to another to be transported the rest of the way.

And there are myriad of arrangements of combination or joint-through rates which is not necessary to go into here.

Ordinarily speaking, the Commission has said, “Contract carriers do not interchange shipments with common carriers.”

That is true and we have not interchanged shipments.

But it being necessities of commerce that people who employ contract carriers be able to have the facility of moving their goods by their contract carrier and fence beyond when the goods need to move beyond.

The Commission, in a formal proceeding, held that it is entirely proper for a contract carrier to carry for one of its contracting parties a shipment and then at the end of the line of that contract carrier, to act as the agent of his contracting party for the purpose of placing the goods in the hands of some other carrier, common or contract, to move beyond.

So the physical movement of the goods is permitted and it is done in that way.

There was no evidence at this hearing as to how the so-called interchange was performed in this case.

But the reason I call it trivia is because no matter how it was performed, it was merely a matter of forum and not of substance.

If we made the mistake of using the wrong papers, that was all the mistake we made.

We could have accomplished the same result by using different forms of papers.

Now, at the conclusion of the hearing —

William O. Douglas:

What about the ads in the papers?

Robert N. Burchmore:

The ad in the paper was another item.

Robert N. Burchmore:

That was a — a listing in the Chicago motor traffic directory which blazoned across the page that we were a carrier and we hauled steel between Chicago and Iowa and we offered daily service.

There was no evidence as to whether that paper in which that circular was printed was circulated to the public generally.

All the record show is this, that it was put in the hands of Chicago shippers.

We may as well not have any question about it from the beginning of this case.

This carrier did go out after business.

He went out and negotiated new contracts.

He wanted to increase his business and he did increase his business.

We think that a contract carrier has the right to do that and this Section 903 of the Act specifically says that nothing shall prevent the right of a carrier to add to his or its contracts or substitute contracts as the — as the demands of the public and the requirements in his business dictate.

But in any event, that ad or listing did not hold out an indiscriminate service to the public generally to take the business of all commerce.

It’s simply dated boldly that we are in business and we do hold traffic.

Now, if pursuant to that ad and there is no — nothing in the record to show that this happened, if it had happened that a shipper saw that and approached the carrier, the carrier still would be wholly within his rights and acting properly if he negotiated with the shipper, the terms on the possibilities and the methods of entering into a contract and performing as a contract carrier or not performing it.

Stanley Reed:

I understand that all of her contracts must be a part of Interstate Commerce Commission.

Robert N. Burchmore:

That is correct.

That’s required by regulation.

Stanley Reed:

Each — each contract would be making the file.

Robert N. Burchmore:

Each contract that was made was filed.

Stanley Reed:

You’re not sure whether these were contracts for singles shipments or whether they were contracts of running over volumes.

Robert N. Burchmore:

The record doesn’t show anything about the contracts except that they were on file with the Commission.

The Commission didn’t bother to look at them although we invited them to.

Stanley Reed:

We — we don’t know what the contracts were.

Robert N. Burchmore:

No, the record does not show.

Felix Frankfurter:

Mr. Burchmore, you suggested a minute ago that (Inaudible) there’s no doubt about it you went wholly out of that (Inaudible) of your phrase.

Robert N. Burchmore:

Yes, sir.

Felix Frankfurter:

But that’s all the common carrier does, involving a none — such as the world and you tell me what it is to and I’ll take it.

Robert N. Burchmore:

We did not —

Felix Frankfurter:

Well, a common — a common carrier doesn’t say, “I’m a common carrier.”

That’s a conclusion of law.

That’s not an assumption.

Robert N. Burchmore:

I should not —

Felix Frankfurter:

As I read — as I read the report of the Commission as I’ve just read it, here is an announcement that involved courts in Iowa, it wasn’t contested that that was the (Inaudible) I don’t know how all carriers been more flagrant, meaning by flagrant, more — more candidly and more flagrantly to say, “Anybody who wants my services should come to me and — and I’ll give it.”

Robert N. Burchmore:

Well, I didn’t —

Felix Frankfurter:

For all the common carrier and that — that’s makes a man a common carrier.

Robert N. Burchmore:

That would make a man a common carrier but this man did not do that.

He did not say to the whole world, “All who want my services, come and I will give it.”

He’s —

Felix Frankfurter:

Everybody in Iowa could come, serving all points in Iowa.

Robert N. Burchmore:

That is correct but not serving all people in Iowa or not holding himself out to serve all people in Iowa.

If they came to him, he might and he might not take them on.

Felix Frankfurter:

That depends whether this ad doesn’t make things, isn’t a holding of it.

That turns on the — the legal (Inaudible) of what this transaction was.

Robert N. Burchmore:

The ad — the ad certainly is ambiguous in that — in that sense and at the time of the hearing, at the cause of the hearing, counsel for the appellee, who had not known of this ad, announced the examiner that on the advise of counsel, the carrier would hereafter make his motor carrier listings specifically show that he was a contract carrier and that was done.

In its report, the Commission waives the ad for whatever its effect may have upon status.

The Commission wasn’t concerned with holding-out.

The Commission was concerned with whether or not there were too many contracts and too little specialization because that is what it requires of a contract carrier.

It departed from the test of common carriage and did not decide the case on the basis of that test.

Felix Frankfurter:

The statement of the interveners account was not evidences and has had no effect upon all evaluation of the evidence of the record.

Robert N. Burchmore:

That is not the statement to which I’m referring, Your Honor.

Felix Frankfurter:

Yes, I know, but I am referring to that statement because if the appellant looks at an ad in the paper because I’ve heard all points in Iowa for myself and just for myself.

I cannot imagine a clear or holding of the common carriers in that.

Robert N. Burchmore:

But when the Commission made that statement, it was not referring to — to my statement as counsel regarding the ad.

It was referring to the statement of complainant’s counsel to the effect that they couldn’t make a case without having representative of the carrier present and asking the Commission to hold an investigation.

The Commission did not hold the investigation and said in its report when we said that that constituted an admission that they could not make a prima facie case that such a statement did not constitute such an admission.

Now, there’s — there is a statement in the Commission’s report with respect to the ad and — and that is —

Hugo L. Black:

What page is that?

Robert N. Burchmore:

The Commission’s report starts on page 7 of the record and the — the statement to which I have reference is — begins on page 12 at the bottom of the page.

Before reading that statement, I should point out that at the time of the Commission’s report of its examiner, we took exceptions to the report.

And regarding these matters as trivia, we filed an affidavit showing that none of the items which the examiner had criticized were being continued.

And among those items was the matter of this ad which we said would not be done anymore and hadn’t been done since prior to the hearing.

It is with reference to those statements that the Commission here says, at the bottom of page 12 of the record, statements one and seven of the analysis of affidavit are not relevant to the issues.

And here is the crucial statement, “And we can accept statements two, three and four and six as covering matters which have been accomplished for such effect as they may have upon defendant’s carrier status.”

Robert N. Burchmore:

Now, there’s —

Felix Frankfurter:

Let me — let me read you on page 15 of the Commission, although the fact here are meager in some respects to reveal a pattern with extraordinary expansion in the period of approximately eight months and its easy to turn over of context thereafter.

He believed that there is ample evidence to show that this expansion was brought about to some extent, I believe, by indiscriminate solicitation and advertising among other things, meaning subsequent to the cancellation of 13 contracts, some of which had been referred by others.

The number of contracts is being enormous in the circumstances here present.

Ultimate test to be applied in — in the nature of the holding-out to the public on the part of the carrier and with the freight case to which this is on.

This is all language that seems to me all echoes of all common laws just as our common carriers.

Robert N. Burchmore:

Yes, it does, Your Honor.

And the appellee admitted at the outset that that ad was bad because it was subject to misinterpretation and it said that it wanted to discontinue it that it had been done without the advise of counsel and unwittingly and the Commission accepted that statement for such effect that it had upon status.

In addition, the Commission waived everything except the number of contracts.

The statement that has just been read by the Court is a pertinent statement part of the Commission’s views about the case, but you have to read this report as a whole.

And when you read it as a whole, beginning with page 1 and again on page 3 and again on page 7 all the way through the report, the thing that is talked about is the number of contracts not how they were obtained.

It is the amount of business that is being done and the Commission expressly applied, explicitly applied, as the test of status in this case, its so-called specialization test.

This Court said in the Chenery cases that you can only go upon what the Commission has said was the basis for its decision.

The Commission here said, the basis for its decision was the specialization test.

If it — if the basis wasn’t — was not a holding-out and the Commission said it was not, then you — then this Court, under the Chenery case, can only accept what the Commission said.

Hugo L. Black:

Did — did the Commission criticize your specialization?

Robert N. Burchmore:

The Commission said as to the matter of specialization that the record was meager and the evidence was scanty but that there was no evidence in the record showing any sufficient specialization.

And that since there was no specialization, the number of contracts must be held to a minimum.

Stanley Reed:

I — perhaps, I don’t understand what specialization is.

Specialization, does that mean the things that you were authorized to carry by your contract by —

Robert N. Burchmore:

Despite —

Stanley Reed:

— by your license?

Robert N. Burchmore:

No, it does not go to the commodities.

It goes to the service, equipment, training of employees and that sort of thing.

The specialization test is a dual test, an alternative test which on the one hand allows the alternative of only a few contracts.

That is if you transport some material like iron and steel, for example, it doesn’t require any special equipment.

You can only have a few contracts.

But if you do perform some special service on the other hand like swing up the poles of the destination or some other — have some special equipment like a tank truck, then you can have more contracts.

The Commission has even authorized the contract carrier which had a thousand contracts.

Stanley Reed:

Well, I can understand specialization in trucks that carry automobiles or — or tanks that carry gasoline of that (Inaudible) specialization.

Stanley Reed:

Do you think there is something besides that?

Robert N. Burchmore:

No, that is the kind of specialization they are talking about, but the —

Stanley Reed:

What the specialization they gave you was to carry — not — not only the short and long steel bars but also carry steel equipment of different kinds as I —

Robert N. Burchmore:

They —

Stanley Reed:

— as I understand you.

Robert N. Burchmore:

They gave us no specialization.

What my Brother has said —

Stanley Reed:

(Voice Overlap) for anything except those long bars, would you?

Robert N. Burchmore:

We don’t — I don’t think that’s special equipment.

The long bars just takes a long flat that is all and the — the —

Stanley Reed:

I thought they were so long they had to be —

Robert N. Burchmore:

They have a pole trailer where — where the pole extends four-and-a-half to length in the trailer for the long poles.

But the point is whatever may have been shown about special nature of services, what the Commission did when it granted the permit was to grant a permit to do — perform service that had no specialization in it.

They authorized as the record shows transportation of steel articles and materials used or useful in highway construction projects and the like.

William O. Douglas:

(Inaudible) and of that specialization in —

Robert N. Burchmore:

There is no chart —

William O. Douglas:

— of the 69 contracts?

Robert N. Burchmore:

No, there’s no allegation or charge anywhere here that we went outside the scope of our certificate.

We held to the commodities we were entitled to carry.

We held to the territorial scope.

Jusitce Burton:

Did the —

Robert N. Burchmore:

So —

Jusitce Burton:

Did the District Court find that you were not acting as a common carrier?

Robert N. Burchmore:

The District Court found that the — that the Commission’s conclusion that we were acting as a common carrier was based upon test that was not — that was contrary to the statute.

The Court made no independent finding as to whether or not the appellee operated as a common carrier.

Supposing, Mr. Burchmore, that we should come to a conclusion that there was enough evidence here.

Suppose that the Commission order could be upheld on the theory of degree to be the proper cases, so you know.

What should we do with the case?

Robert N. Burchmore:

If you found evidence here to sustain a conclusion that this was a common carrier, I think you still would have to affirm the court below because under the Chenery cases, this Court will not sustain a Commission order upon a ground different than the Commission itself adopted.

You do not do in this Court with the Commission as you do with the lower court.

Robert N. Burchmore:

If the court below decided the case in the right way for the wrong reason, you will affirm the Court.

You will not do that for the Commission.

Felix Frankfurter:

I’m holding sympathetically a general proposition and you notice to imply it, I wouldn’t have to find on reading the Commission’s report and I think you would agree.

I would have to sign.

I’m reading the Commission’s report that they said, the criterion or what constitutes a common carrier is big length of business in these areas.

Robert N. Burchmore:

When you —

Felix Frankfurter:

Is that right?

Wouldn’t I have to find that?

Robert N. Burchmore:

You — I think you will have to find it and with all respect, Your Honor, I think when you read the report, you cannot escape so find.

The Commission here changed the statute to read quantitatively instead of qualitatively.

Felix Frankfurter:

Say now, you — both the one — both sides are equally clear in opposite directions, aren’t they?

Robert N. Burchmore:

Well, what exist in the minds of counsel might be different from what comes out of the advocate, [Laughs].

Felix Frankfurter:

Well now, what have you most derived?

Hugo L. Black:

I assume that you (Voice Overlap) —

William O. Douglas:

(Voice Overlap) Justice Harlan’s question.

Hugo L. Black:

I think I meant to answer the question by saying that even if there were evidence here that — that they had been at one time in operation as a common carrier, you would have to affirm the court below because the Commission did not decide the case upon that basis.

The Commission explicitly waived the evidence in favor of deciding the case on the basis of its theory of contract carrier.

It said, “You’re a common carrier because you’re not sufficiently specialized or don’t have few enough contracts to be a contractor.”

Sherman Minton:

Well, they did consider these other things along with that proposition, didn’t they, in determining whether or not you were acting as a common carrier?

Hugo L. Black:

I don’t think they did when they — I don’t see how you can say they did when they say that we accept these matters for such effect as they have upon status.

Now, that raises —

Felix Frankfurter:

You have to have contracts.

Stanley Reed:

What — what did that mean?

Felix Frankfurter:

To my mind, that means that — that they have nothing further to do with the case that we are now deciding the case upon the specialization test, the number of contracts and the lack of specialization.

And I may say further that if that is the case, the court below, Judge Lindley and District Judges Parkinson and Sweigert, earnestly attempted to find out what the Commission had said here.

And if those three judges were unable to find out from the Commission’s report, then the Commission’s findings are inadequate.

Your —