Motion to Affirm — Highway Express Lines, Inc. v. Jones Motor Co.

IN THE

sang ostream

Ocroser Term, 1963

Higuway Express Lives, Ixc., er au., Appellants

a

Joxes Motor Co., Lye.

Pexnsyivanua Pusiic Urmrry Commission, Appellant

v.

Jones Moror Co., Ic.

On Appeal from the United States District Court for the

Eastern District of Penr<ytvania

MOTION TO AFFIRM OF JONES MOTOR Co.. INC.

Rotaxo Ricr 4

Rice, Carpenter and Carraway

618 Perpetual Building

Washington, D. C.

Craupe B. Wagoner

1518 Packard Building

Philadelphia, Pennsylvania

Caristun V. Grar

407 North Front Street

April 20, 1964 Harrisburg, Pennsylvania

Pauses or Breom S. Anamcs, Wasnineron, D.C.

=,

TABLE OF CONTENTS

Page

Sere OE Tk CONS ccc ch ccs ccc ncccns eeavessaeeese 2

Statement of Facts ........... ey ee re ey ee 4

ARGUMENT ...... rae ee See gee ae ee ear eae ee

Res Adjudieata Requires that the Appeals be,

Dismissed .......... er Pre as ee 11

The Chalienged pieces ix Interstate

ED ee PRT, Senne ain rs art Morya ABS Oye 3

Appellants did net Meet the Burden of Proof of

NN ei OX, Cl, ota G hired ie a bee Salas 4)

The aestanny, Raised by the Jurisdictional State-

ments“are Unsubstantial .........1............. a)

Conelusion .............. pe ee wy er APs at

TABLE OF CASES CITED

Jepran Decistons Crrev:

Arrow Carrier Corporation v. United States, 375 U.S.

RS Arr ge a ree at oe ry a, > - Panera ey eee 2

Atlantie Freight Lines, Ine. v. Pennsvivania Public

Utility Commission, 163 Pa. Superior Ct. 215, 6

De SoS oe etal ow tinea Cente cee eee ac 14

Camden Trust Company v. Gidney, 301 F, 2d 521.(1962) 22

Central Grevhound Lines v. Mealey, 554 US. 568 C1948) 15

Correll Steamboat Co. v. United States, 321 U.S. 634

(14+) ape pate dae e eae Tae apa eee Gey PRES OM

Hanley v. Kansas City Southern Railway Company,

1<7 l oe BS.) ee St Cn cone See 16,18

Jones Motor Co. Inc. v. Peinsvivania Publie Utility

(Commission, PSs Pa. detect Ct. 48, Mo AL 2d

PR SP ree aren as Parner MeN Ree gure ys

Jones Motor Co... Ine. ‘Penns vivania Publie Utility

Commission 125.A, alee de Docket ......... 2

Jones Motor Co., Inc. vo Pennsvivania Public Utility

Commission, 361 U.S. 11 .............. a, 3 01, F 2. 30

=> &

il Contents Continued :

Pa ge

Jones Motor Co., Ine. v. Pennsylvania Public Utility

Commission, 361 U.S. 904 ..........0seea 2,3, 11, 12

Jones Motor Co., Inc. v. United States and Interstate

Commerce Commission, 218 F. Supp. 133.(1968) 2. 4

Jones Motor Co., Inc. v. United States and Interstate

Commerce Commission, 223 F. Supp. 835 (1968)... 4

Los Angeles Fisheries v. Crook, 47 F. 2d 1081, 1935 .. 22

Missouri Pacitic Railroad Co. v. Roy Stroud, 267 U.S.

| ere Tee eee rere 15

Pacitie Coast Steamship Co. v. Railroad Commis-

sioners, 9 Sawyer SE Nab hanees wate tkaaled eens 16

Pennsylvania Public’ Utility Commission yv. Atlantic

Freight Lines, Inc., Rayuity Docket Number 20008,

EE Na wicn cane wh Bera reek ie chee ah aay ck Ww

Serviee Storage a arnl Transfer Co., Inc. v. Common-

wealth of Virginia, 199 Va. 797; 102 S.E. 24 399... 19

Service Storage and Transfer Co., Ine. v. Common-

wealth.of Virginia, 359 U.S. 171... 2... .12. 18, 20, 24

Southern Pacitie R. Co. v. United States. 168 U.S

‘4S § eRe bE? 0 Same mneepe- Wate Grn ah Ne keer 12

Western Union Telegraph Company v. Speight, 20

EE clea rus Pucca cee aha Ure Oke oe cancun Is, 24

oy

Interstate Commerce Commission Cases Crrep:

Atlantit Freighr Lines, Ine.—Petition for Declaratory

Order, MQ (7477, 51. M.C.CANRS ...........08, i

Dixie Freight.Lines, Inc., Common Carrier Application,

24 M.C.C. 780 *. ...< eke ae wis WEN EAS Kaas whieh 2 \4

H.C. Gabler, Inc., Extension—Cemeyt from Mary land

and Pennsylvania Counties, MC® 27817, Sub 35;

LOE 2 <a cede eaoke sed \ WRB areecgoaee 14

\

STATUTES CITE,

Interstate Commerce Act:

7? Sewtions Title 49 U.S. Code Seetions

MOS iad ila) ee es cori ao ek bk 13

OUL fh) ‘ RAE Pe, Dra Pi ate Sr 7

Bee 1) SE ete aac tten so rn Re Pare 17

IN THE

Supreme Court of the United States

Ocroser Term, 1963

Nos. 900, 977

Highway Express Lines, [xc., er au, Appellants

v.

Jones Moror Co., Ine.

Pennsyivania Pusuic Urivrry Commission, .lppellant

A

Jones Motor Co., INe.,

On Appeal from the United States District Court for the

Eastern District of Pennsylvania

MOTION TO AFFIRM OF JONES MOTOR CoO., INC.

Pursuant to Rule 16, Paragraph l(c) of the Revised

Rules of this Court; Jones Motor Co,, Inc. moves that the

judgment of the District Court be affirmed,

5 % »

-

HISTORY OF THE CASE

The factual de ermination presented by this proceeding

is before vour Honorable Court for the second time. A

brief chronological history is essential to an understand. |

ing of the issues,

Qn August 5, 1957, a Complaint against Jones Motor

'o., Ines was initiated by Pennsylvania Public Utility Com-

mission before itself and doeketed at Complaint Docket C.

16813. The Pennsylvania Commission heard its own Com-

plaint, sustained it by its own decision and issued a Cease

“and Desist Order.

Jones then appealed to the Superior Court of Pennsyl-

vania, which sustained the Pennsylvania Commission in

Jones Motor Co., luc. v. Pennsylvania Public Utility Com-

mission, ISS Pa. Superior Ct. 449, 149 A.2d 491. Jones

then filed its Petition for Allowance of Appeal with the

Supreme Court of Pennsylvania at 125A, Miscellaneous

Doeket. Allocatut wae refused.

Jones next filed its Petition for Writ of Certiorari

with vour Honerable Court and vour Honorable Court

granted the Petition and reversed the judgment of the

Superior Court of Pennsylvania in Jones Motor Co., Ine.

v. Pennsylvania Public Utility Commission, 361 U.S. 11.

Thereafter, the Pennsylvania Commission filed a Peti-

tion for Reconsideration and Clarification, praying your

Honorable Court ‘to file a clarifying opinion or memoran-

dum order expressly stating that the judgment of the

Court below was reversed on jurisdictional grounds with-

out regard to the merits of the controversy in the instant

cause’’, A like Petition containing a similar prayer was

filed on behalf of Intervenors in that proceeding ( Appel-

lants in Number 900 herein),

Your Honorable Court denied these Petitions for Recon-

sideration in Jones Motor Co,, Inc. © Pennsylvania Public

Utilifi Commission, 361 U5. GO4,

\

)

The Pennsylvania Commission then filed a Complaint

with the Interstate Commerce Commission cdocketed at

MC-C.2732, naming Jones Motor Co,, Inc. as Defendant.

The Complaint averred that operations by Jones in trans-

porting property between certain Pennsylvania points over

routes Iving partly in New Jersey were bevond the seope

of its certificated authority and requested the issuance of

vo cease and desist order,

OF importance here, that Complaint was predicated upon

the identical shipments of the identical property on the

identical davs from the identical consignors to the identical

consignees involved in the prior proceeding determined by

vour Honorable Court in 361 U.S. 11 and 361 U.S, 904,

By reason thereof, Jones Motor Co., Inc. filed with the

Interstate Commerce Commission a Motion to Dismiss the

Complaint, predicating the Motion upon the Doetrine of

Res Adjudicata and on the merits. The Metion was denied

and the matter was heard before an Examiner. The Motion

to Dismiss was renewed at the hearing.

The Hearing Examiner in his Corrected Report and

Recommended Order foune that Jones Motor Co., Ine.

was performing authorized transportation between points

in Pennsylvania through points in New Jersey, recom-

mended the dismissal of the Complaint on the merits, but

denied the Motion to Dismiss.

After Exceptions, the Interstate Commeree Commission,

through its Division 1, adopted the Findings of Fact of the

examiner, but reversed, concluding that the transportation

performed by Jones constituted a subterfuge and was not

authorized. A Petition for Reconsideration and Oral

Argument filed by Jones was denied, whereupon Jones filed

its Complaint in the United States Distriet Court for the

astern District of Pennsvivania,

The Court below heard argument and reversed the Inter

state Commerce Commission, Jones Motor Co. Ine. y.

United States and Interstate Commerce Commission, 218

+’

4

kK. Supp. 183) (1963). Upon Petition, the Court below

heard reargumeMm and after reargument, affirmed its prior

Order of reversal. Jones Motor Co., Inc. v. United States

and Interstate Commerce Commission, 223 F. Supp. 835

(1963).

Appeals were filed by Highway Express Lines, Ine.,

Modern Transfer Co., Inc. and the Pennsylvania Commis-

sion. The United States did not appeal and the appeal of

the Interstate Commerce Commission was dismissed on that

Commission's Petition.

Despite the withdrawal of Appeal and the failure of”

the United States to Appeal, there has been filed a *t Memo-

randum on Behalf of the United States and the Interstate

Commerce Commission’’.

STATEMENT OF FACTS

The facts as presented before the Interstate Commerce

Commission are not in dispute, a matter upon which both

the Hearing Examiner and the Court below commented.

The following stipulations of fact appear of record:

itis admitted by Respondent that the ekasstumios

referred to in Paragraphs 4 to 25, inclusive, of the -

Complaint was performed by Respondents. It is

agreed that the routes emploved were as follows:

From Philadelphia, Pennsylvania, over U. S. 1 to

Trenton, New Jersey; thence over New Jersey 69 to

Clinton, New Jersey; thence over U.S. 22 to Allen-

town, Pennsylvania. This same route was operated in

the reverse direction as well.

It is further agreed that: (1) Clinton, Nw Jersey, is

Within 30 miles of Princeton, New Jersey: (2) points

in the Allentown area, except Easton, Pennsylvania,

and Bethlehem, Pennsylvania, mentioned in this Com-

plaint are all within 25 miles of Allentewn and were

served as off-route points via the same route set forth

above; (3) Easton, Pennsylvania, and Bethlehem,

Pennsyivania, were served as intermediate points on

‘

In contrast, Jones Motor Co., Ine. presented the follow-

ing unrefuted evidence to establish the lawful nature of

its Operation under its valid interstate Certificates :

1. Its base Certificate at MC-49623 (Exhibit 3) and its

Certificate at MC-4963, Sub 7 (iexhibit 4).

2. Testimony indicating the portions of the base Certifi-

cate and the Certificate at Sub 7 relied upon to support its

contention that the grants of authority properly were

tacked (N.T. 62-66).

5. The Report of the Commission by Division 4 at MC-F-

4955, which authorized the acquisition by Jones Motor Co.,

Ine. of its present Sub 7 authority and which specifically

authorized the combination of the Sub 7 authority with

the other interstate authorities of Jones in the following

words:

“Upon consummation of the purchase, Jones Motor

Co., Inc., will be entitled to operate under the operat-

ing rights granted in No, MC-10O8161, which rights are

herein authorized AD. he wnified with rights Otherwise

confirned in # and to be embraced in a certificate in

its yame, with duplications eliminated,’ (Emphasis

supplied) (Exhibit 5; Sheet 7).

4. That all of the shipments referred to ii Paragraphs 4

to 25 inclusive of the Compiaint were handled over the

ronte set forth in the stipwlation hereinbefore mentioned

in relianee upon the tacking of authorities contained in

Exhibits 3 and 4 (N.T. 67) and specificaily authorized by

Exhibit 5 as quoted above.

». The routes in question are published as interstate

rontes in Middle Atlantic Conference Tariff 16 (NT. 69),

and the rates charged and collected also are published in

appropriate interstate tariffs (Exhibit 6).

Jones Motor Co., Inc. operates terminals at Phila-

delphia and Allentown, Pennsvivania (N.T. 69). During

the period of its operation of the Sub 7 authority under

8

temporary authority and for a vear and a half thereafter,

during which time the Sub 7 authority was operated as an

integral part of the Jones operation, a terminal was also

maintained at Clinton, New Jersey (N.T. 69-70-71).

7. When the Clinton terminal was first used, it performed

breakbulk funetions, serving shippers in the North Jersey

territory (N.T. 71). Subsequently, Jones discovered that

the breakbulk operations could best be handled out of the

Allentown terminal and it accordingly closed the terminal

at Clinton, New Jersey. The route, however, still operates

through Clinton (N.T. 71).

&. The operations over the route in question initially

commenced on July 30, 1951 by virtue of temporary au-

thority granted by the Interstate Commerce Commission

at MC-P-4955 (NJT. 72), and were continued upon issuance

of the Certificate at Sub 7, pursuant to the express au-

thority to combine its routes as quoted above (fxhibit 5).

4. Joues, prior to, at the time of the Complaint, and

since, has maintained solicitors at both the Allentown and

the Philadelphia terminals and also had a_ solicitor in

Trenton, New Jersey (N.T. 76). At the time covered by

this Complaint, these solicitors solicited traffic for freight

forwarders, for steamships, for export, for movement over

the routes of Jones Motor, as well as for movement in

connection with other lines for which through routes and

joint rates are published (N.T. 76-77).

10. Jones presented Exhibits setting forth all the ship-

ments mentioned in the Complaint and also detailing’ the

other traffic moving in conjunction therewith on the same

vehicles (M-xhibits 7, 8; 9 and 10). These Exhibits reveal

tratlic handled for the sane consignors and the same con-

signees, Whose shipments were challenged by the Com-

plaint (NJP. 97). Al of this traffic destined to points

intermediate between Philadelphia and Allentown was de-

livered by peddle runs in the daytime operating out of

9

the respeetive Allentown and Philadelphia terminals (N.Y.

101; 99-100-101).

.

11. The transportation referred to in Paragraphs 4 te 25

inclusive of the Complaint all took place at night (N.T. 82),

Sinee it is a normal terminal-to-terminal operation, there

were neither pickups nor deliveries made en route on those

trips (N.T. S+).

12. In contrast, Jones Motor Co., Inc. presented as Ex

hibit 12a treftic study showing pro numbers, dates, origins,

destinations, descriptions and weight of certain traffic

moved during the same period of time covered by the Com-

plait on which deliveries. were made while the vehicles

were en route, as well as deliveries made from the respee-

tive Allentown and Philadelphia terminals (exhibit) 12;

NT. 108). This trate afso moved over the challenged

route, in whole or in part (N.T. 114).

13. At no time did Jones Motor Co., Inc. make any effort

to coneeal its mode of operation over the considered route

ONT. 105). On the contrary, it followed its authorized

rontes (N.T. 67), published those routes inva proper rout-

ing guide (N.T. 69), published proper rates and charged

and colleeted them (Exhibit 6) and handled the traftie cor

cerned In@onjunction with other interstate traffic (lexhibit-

7.8, % and 10). .

The Hearing Examiner, who observed the witnesses and

their demeanor, concluded from these fygts that Jone.

Motor Co., Inc. possessed valid Certificates” properly eom-

bined them, properly conducted its operation over the chal

lenged routes, had logical reasors so to doe and that the

Pennsvivania Commission failed to establish any subter

fuge or bad faith.» As the Court below indicated in both its

decisions, there were logical, practical and feasible reason~

from the standpoint of operating efficiency and economy

for Jones to transport the challenged shipmeiuts ever the

route im question.

Sienifieantly, the Interstate Commerce Commission

adopted the faets found by the Examiner; admitted the

10

validity of the Jones’ Certificates; admitted that the Cer-

tificates were properly combined, but reversed — the

Kexaminer,

The Court below commented upon these factors as fol-

lows:

“It is interesting to note that the Commission in its

Report at p. 612 adopted the Examiner’s statement of

the facts, and rulings on evidence, such as, his allow-

ance of certain exhibits which proved the interstate

character of the other 108 shipments commingled with

the challenged 22 shipments from the same consignors

destined for Pennsylvania points. Division 1 also

agreed with the Examiner’s finding that the tacking

by Jones of its two interstate authorities was lawful

and proper. (p. 613)"" (218 F. Supp. 133, 137)

e . *

“The only testimony offered to prove bad faith or

subterfuge were the statements by officers of the inter-

venors, Modern Transfer Co. and Highway Express

Lines, as to the use of Pennsylvania routes by their

companies because they were more logical and prac-

tical for theig operation. Also, there was testimony by

a Mr. Dutfy who had a conversation with one of Jones’

drivers who stated that he had been making the trip

for approximately five vears, five nights per week over

the routes covered by the stipulation mentioned above,

An investigator for the P. U. C. gave testimony which

the Examiner regarded as merely cumulative to Mr.

Duffy's testimony and unrelated to any data mentioned

in the Complaint.

‘*Apart from ihis testimony offered by the P. U. C. to

support its position that Jones’ routes were circuitous,

and somewhat long, no direct evidence of bad Qaith on

the part of Jones was offered by the P.U. CL Service

Transfer Co. vy. Virginia, supra, P. 175."

6 The Supreme Court dealt with this identical situation with these

words:

* . *

.

Aside from the testimony of highway officers as to the

actual shipments, none of which is disputed, the Commonwealth 's

evidence consisted soleiy of maps substantiating its position that

petitioner's rontes were circuitous and often long, sometimes ex

eveding twice the shortest pessible route. However, it: offered no

direct evidence of bad faith on the part of petitioner in moving its

trafie through Blnefield, West Virginia.’ (At Page 137).

11

‘Conversely, Jones was specifically authorized to com-

bine its Certificates in proceedings at MC-F-4955 by

these words:

‘Upon consummation of the purchase, Jones Motor

Co., Inc., will be entitled to Operate under the op-

erating rights granted in No. MC-10S161, which

rights are herein authorized to be unified with rights

otherwise confirmed in it and to be embraced in a

certificate in its game, with duplications eliminated

6 82

‘Jones also proved that it provided a complete and

economical transportation service to its customers by

Exhibits 7, 8, 9 and 10, which show that the same con-

signors are served at the same time on traftie going to

other points and that all of this traftie ean be picked

up as time. By'this nightly terminal to terminal

road run Jones can assure its customers morning de-

livery via local peddle runs which would be handled in

the daytime because the businesses then would be

open to receive freight (Ex. 12).°° (21S F. Supp. 133,

137-138).

7 Modern Transfer Co., Intervenor herein, was 4 protestant to. th:

acquisition by Jones of this Sub 7 authority (Ex. 5)."" (At Page 13s).

ARGUMENT

Res Adjudicata Requires That the Appeals Be Dismissed

Throughout this proceeding Jones Motor Co., Inc. has

urged the dismissal of the Complaint on the basis of Res

Adjudicata. It filed a Motion to Dismiss on that ground

and the Motion was renewed and pressed at each step of

the proceeding.

The identical shipments, without exeeption, not merely

similar shipments, were before vour Honorable Court in

Jones Motor Ce... Ine. ve Pennsylvania Public Utility. Com-

mission, 361 U.S. 11 and 361 U.S. 904. As previously

stated, that other proceeding arose out of a Complaint by

the same Pennsylvania Commission involving the identical

traffic. The Pennsylvania Commission, after hearing its

a2

own Complaint, issued a Cease and Desist Order which

wee appealed by Jones to the Superior Court of Pennsyl-

vacva. The Superior Court of Pennsylvania affirmed the

Order of the Pennsyivania Commission, and on Petition

for Allowance ef Appeal filed by Jones with the Supreme

Court of Pennsylvania, alloeatur was refused.

Upon Petition for Certiorari, vonr Llonorable Court re-

versed in Jones Motor Co. Inc. ve Pennsylvania Publi

Utility Commission, 361 US. 11, citing Service Storage and

Transter Co., lnc. v. Commonwealth of Virginia, 359 U.S.

171.

The Pennsvivania Commission then filed its Petition

for Reconsideration and Clarification, praying vour

tlonorable Court ‘to file a elarifving opinion or memoran-

dum order expressiv stating that the judgment of the

Court below was reversed on jurisdictional grounds, with

out regard to the merits of the controversy in the instant

eanse’’. Your Honorable Court denied this and like Peti

tions filed by Intervenors in Jones Motor Co. lies ve Penn

suylvania Public Utility Commaisston, SO. US. 904.

In S®,eree Storage and Trauster Co, Ine. v. Common

wealth of Virginie, supra, the reversal by vour Honorable

Court revoked a fine which had been imposed., Ino the

first Joues case, the action of vour Honorable Court null

tied a Cease and Desist Order, which most assuredly would

not nave been procedural er jurisdictional in its effect if

not reversed. In the second Jones ease, though expressly

petitioned to declare the first Jones ease to be jurisdic

tional merely, vour Honorable Court ruled adversely to the

Vennsvivania Commission.

Since neither the Service Storage ease, supra, nor the

two Jones eases were jurisdictional in their effect, the Doe

trine of Res Adjudieata applies. This principle was sue

emetiv set forth in Southern Pacific PR. Co, Vv. Unite A Ntate <,

168 U.S. 1 C1897), as follows:

‘The general principle announced in numerous case-

is that a right, question, or fact distinctly put in issu

and directly determimed by a court of competent juris

diction, as a ground of recovery, cannot be disputed in

a subsequent suit between the same parties or their

privies; and even uf the second suit is dor a different

cause of action, the right, question, or taet onee so

determined must, as between the same parties or therr

privies, be taken as conclusively established. so long

as the judgment in the first suit: remains unmodified

This general rule is demanded by the very object for

which civil courts have been established, which is te

secure the peace and repose of soetety bw the settle

ment of matters capable of pudicial determination. It.

enforcement is essential to the maintenanee of social

order: for the aid of juedieial tribunals would not be

invoked for the vindieation of rights of person and

property, if, as between partres and their privies, con

clusiveness did not attend the judgments of sneh tri

bunals in respect of afl matters properly put iH USS:

and actually determmed bay them tp. 48-49) Com

phasis supplied )

The Challenged Transportation Is Interstate Commerce

The challenged transportation ‘‘between places in the

same state through another state’" constitutes interstate

commerce, pursttant to Act of Congress and the decided

cases thereunder,

‘The Congress of the United States has detined interstate

commerce in Seetion ZOS¢a)( lO) of Part TL oof the Inter

state Commerce Act (Tithe 49 US -C. Seetion S05 .a)¢10))

as follows:

‘The term ‘interstate ecommerce” means commerce be

tween any place in a State and anv place in another

State or between plac s in the same State through an

other State, whether such commerce moves wholly by

motor vehicle or partly by motor vehicle and partly bs

rail, express, or water”’. Ckomphasis supplied)

This Section of the Act has been interpreted time atte:

hime.

The Interstate Commeree Cormission gave recognition

to the Congressional definition in Drew Freight Lines, Ine..

“Ny

14

Common Carrier Applieation, 24 M.CLC. 780, wherein a

question arose as to whether transportation from Atlanta,

Georgia to Fort Benning, Georgia via Opelika, Alabama

constituted interstate commerce. It deeided that it did,

th» Commission stated:

‘oo there cam be no question but that property trans

ported from Atlanta to Fort) Benning via’ Opelika

moves in interstate commerce. This is seen from the

detirution of that term in Seetion ZOS(ay CTO) of the

Motor Carrier Aet of 1955. which reads as follows :*

(Act ented) (24 M.CLC, TSO, 782).

As recently as August 1, 1961, the Interstate Com

meree Commission .ranted authority to a number of car-

riers to transport cement from producing origins in a

specific state to destinations in the same state. HM. ©.

Crabler. duc. Reetenston—tement trom Marulaud and Penn

sulrania Counties, 86° MCC. 477. One of the carriers

which seenred such authority is Modern Transter Co., Ine.,

ene of the Appellants in Number S00. In the Gabler case,

this carrier secured a Certificate at MC-LISSS6 to tran-

port cement froma producing plant at Northampton, Penn-

sVivania, to points in a number of states, specitically in-

cluding Pennsvivania (86 M.CLC, 447, at 516).

The proceedings involving Atlantic Freight Lines, Tne.,

which concerned the identical statutory detinition here at

issue, is also werthy of note. There, as here, the Pennsy!

vania Commission tistituted a Complatat before itself

awdinst the carrier, averring that transportation between

two Pennsvivania points via an interstate certificated route

traversing another state constituted intrastate commerce.

After the Penunsvivania Commission had sustained its own

Complaint, the Superior Court of Penmsvivania. on Appeal,

sustained the Pennsyivania Commission.’ The Supreme

— .

' Atlantic Freaght Limes, Tne. vo Pennsylvania Public Utilaty

ConimisSion, let Pa. Superior } 15. b A. ld an

1D

Court of Pennsvivania refused alloeatur and vour Honor-

able Court denied certiorari. Atlantic Freight Lines, Ine.

then filed a Petitien for Declaratory Order with the Inter-

~state Commerce Commission, which Commission took juris-

dietion and found for Atlantie Freight Lines, Ine. Altantic

Freiaht Lines, Ine.—Petition for Declaratory Order, 51

MCX’. 075. ?

The Atlantic Freight Lines litigation did not terminate

with the Declaratory Order proceeding. The Pennsvivania

Commission instituted an equity action in the Court. of

Common Pleas of Dauphin County, Pennsvivania, at

Equity Doeket 20008, Commonwealth Docket 2672.2 In that

proceedime, the Ponhsvivania Commission entered into a

Consent Deerge, whereunder Atlantic Freight hines;-tne-——— -

Was permitted to operate between two Pennsvivania points

Via interstate routes of movement through anoth?r state.

Your Honorable Court has construed transporation be-

tween points in the same state via another state to be inter,

state commerce. In Central Greahound Lines vo Mealey,

S34 US. 568 (1948), a question arese to whether a New

York State Tax applied with respect to operations begin-

‘ning and ending at a point in New York State but which

puvolved routes also traversing Pennsylvania, This Court

stated:

‘It is too late in the day to deny that transportation

which leaves the state and enters another state is cory

merce among the several states simply because the

points from and to are in the same state’? (S54 U.S.

Hoop, ee fe

In Missourt Pacitte Railroad Co. Vv. Roy Stroud, 47 U.S.

404 (1925), the carrier operated two routes between Onxiy,

Missouri and St. Louis, Missouri. The first route was en

tirely located within the State of Missouri while the seeond

* Pennsylvania Public Utility Commission v. Atlantic Freight

Lines, Tne., ED. 20008, C.D. 267.

16

traversed a portion of Missouri and a portion of Ulinois.

A shipper sued the Missouri Pacifie for damages under a

Missour*? Statute for loss resulting to it from delay in

furnishing freight cars. In the course of the testimony, it

developed that the shipper’s traflie moved over the route

traversing both Missouri and Illinois. .

In its decision, this Court called attention to the penalties

provided in the Missouri Statute and those in the Inter-

state Commerce Act, with reference to unreasonable pref-

erence or advantage and added ‘*It is elementary and wel]

settled that there can be no divided authority over inter-

state commerce, and that the aets of Congress on that sub-

ject are supreme and exclusive. Transportation from

Oxly to St. Louis over the route partly within and partly

outside of Missouri is interstate commerce** (267 U.S. 404,

40s).

Hanley ve Kansas City Southern Ratleay Company, U7

U.S. 617 67 903), involved an effort by the State of Arkansas

to fix the rates On traffic moving between points in Ar-

kansas through what was then Indian Territory. The

goods were shipped from Fort Smith, Arkansas for some

52 mules in Arkansas and nearly 64 miles’ in Indian Terri-

tory. The charge imposed by the railroad was higher than

that preseribed by the Arkansas Commission. Wir. Justice

Holmes, writing the Opinion of the Court, reviewed nu-

Nee. S Cases, some of which declare the interstate nature

of ra between points in one state through an-

other state and some of which make similar holdings with

respect to the nature of commerce for tax prrposes, and

quoted Mr. Justice Field in Pactfic Coast Steamship Co.

v. Railroad Commissioners, 9 Sawyer, 253; as follows:

‘To bring the transportation within the control of the

State as part of its domestic commerce the subject

transported must be within the entr®e vovage under

the exclusive jurisdiction of the State*’* (187 U.S. 617,

620).

7

Cornell Steamboat Co, v. United States, 321 U.S. 63

(1944), held that transportation by a towing operation

from one port in New York to another port in the same

State issregulated transportation, subject to the jurisdic-

tion of the Interstate Commerce Cormission, even when

the operation traversed merely the border water separat.

ing New York and New Jersey and also conducted for

part of the distance within the water boundaries of the

second state. The statute governing water carriage is

lass speeifie in its definitions tham that governing motor

carriage. Seetion 302(h) of the Interstate Commerce Act

(49 U.S.C. 902(h)) provides:

¥

‘(h) The term ‘transportation’ includes the use of

any transportation faeility CGirrespective of ownership

or of any contract, express or implied, for such use),

and ineludes any and all serviees in or in connection

with transportation, including the receipt, delivery,

elevation, transfer in transit, refrigeration or icing,

ventilation, storage, and handling of property trans-

ported or the interchange thereof with any other

agency of transportation”’.

‘ Paragraph (i) of Section 302 of the Act (49 ULS.c.

02(i)) reads, in pertinent part, as follows:

‘*(]) The term ‘interstate or foreign transportation’

or ‘transportation in interstate or foreign commerce’,

as used in this part, means transportation of persons

or property —

(1) wholly by water from a place in a State to a

piace in any other State, whether or not such trans-

portation takes place wholly in the United States; "Seu

In holding that the transportation in question is inter-

state, and subject to regulation by the Interstate Com-

merece Commission, althopeh under statutory language less

specific than that in tugs at bar, this Court said:

‘Parts L 1i, and [TV of the Interstate Commerce Act,

relating respectively to regulation of rail carriers,

18

motor cariers, and freight forwarders, explicitly or by

judicial interpretation cover all shipments which pass

through the territory of two or more states even though

both terminal points are in the same state. And so

if railroads or truckers should use tugs for the same

purposes and over the same route as Cornell the

movements would be interstate under the Aet and

subject to regulation by the Commission; and appar-

ently the same is true of freight forwarders. From the

language of Part II] of the Aet, its history, and its

general purpose, we conclude that the Commission and

District Court correctly decided Cornell’s —trans-

portation through New. York and New Jersey waters

also is subjeet to regulation by the Commission’? (321

U.S. 654, 640-641).

In Western Union Teleqraph Company vy. Spetqht, 25

U.S. 17, a suit was brought in the North Carolina courts

against the telegraph company to reeover damages for

mental suffering caused by an error in‘delivering a tele-

graphic message. The message originated at Greenville,

North Carolina, was destined to Rosemary, North Carolina,

but was transmitted via Roane + and Norfolk, Virginia.

The jury found that the message was sent into Virginia

from North Carolina for the purpose of fraudulently evad-

ing liability under North Carolina law. Nevertheless, fhe

presiding Judge set aside the verdict as a matter of haw

and ordered a non-suit. On Appeal, the North Carolina

Supreme Court directed that judgment be entered on the

verdict,

In reversing, this Court stated: ‘The transmission of a

message through two states is interstate commerce as a

matter of fact. Hanley v. Kansas City Southern Railway

Co, IT US. 617".

The most recent Opinion by this Court in interpreting

the Seetion here in question was Service Storage and

Transfer Ce., Inc. v. Commonwealth of Virginia, supra.

The history of that proceeding merits attention.

>

-

19 nt

_

The Virginia Commission instituted a Complaint pro-

ceeding against Service Storage and Transfer Co., ne, and

after hearing, fined that carrier $5,000.00 for transporting

ten shipments which the Virginia Commission contended

were intrastate in nature and, henee, in vielation of Chap-

ter 12, Title 56 of the Code of Virginia. The Virginia

Court of Appeals sustained the Virginia Commission on

Appeal but reduced the fine. Service Storage & Transfer

Co. v. Virginia, 199 Va. 797; 102 SLE. 2d 399,

The Virginia Commission in its Order (in Case Number

13074 decided June 9, 1956) indicated that Servic

Was transporting property, inter alia, between Roanoke and

Wytheville, Virginia by way of Bluefield, West Virginia.

This decision found the distance between Roanoke and

Wytheville, Virginia by the shortest route, to be 80 miles

and the distance by way of Bluefield, West Virginia, as

traveled by Service Storage, to be 160 miles, or twice the

distance. The Supreme Court of Appeals of Virginia made

similar mention of this same transportation (199 Va. 797).

Both the Virginia Commission and the Virginia Appel-

late Court relied upon the question of cireuity and the fact

that the normal route would lie wholly within Virginia.

Service Storage and Transfer Co. filed a Petition for De-

claratory Order with the Interstate Commerce Commission,

at MC. 30471, which was decided in favor of Service Storage

by Division 1 on Mareh 29, 1957. In the course of the deci-

sion, Division 1 found tie routes empleved not unduly

circuitous,

In the interim, Service Storage appealed the decision of

the Virginia Court of Appeals to this Court, which granted

Certiorari and found as tacts the following:

1. The shipments originated at Virginia points and were

destined to Virginia points but were routed through Blue

field, West Virginia (at Page 172).

a)

20

J

”. Service Storage conducted its operations under Cer-

tificates issued by the Interstate Commerce Commission,

combining two of these Certifieates (at Pages 173, 174).

3. The Virginia State Corporation Commission had not

issued any Certificate to Service Storage authorizing any

intrastate carriage (at Page 174).

4. Virginia contended that subterfuge was to be found

by virtue of the cireuitous and unnecessarily long routes,

often exceeding twice the shortest possible routes (at Page

Wh).

h. Virginia offe d no direct evidenge of bad faith on

the part of Service Storage (at Page 175).

§. Service Storage offered evidence of its operations

under its interstate Certificates as proof of the bona fides

of its operations (at Pages 175, 176). '

This Court reversed the judgment of the Court of Ap-

peals of Virginia (and necessarily of the Virginia State

Corporation Commission) and found for Service Storage

and Transfer Co., Ine,, stating: **The Certificate on its

face covers the whole operation ”’ (BAO U.S. 171, 177).

The prior Jones proceedings at 361 U.S. 11 and 3861 ULS.

904, were decided on the strength of Service Storage and

Transfer Co., Inc. v. Commonwealth of Virginia, supra.

Appellants Did Not Meet the Burden of Proof of Subtertuge

Though the Complaint specifically raised as an issue a

subterfuge on the part of Jones Motor Co., Inc., no direct

evidence of bad faith such as deceit, concealment, fraud,

deception or artifice was presented. Moreover, in the ab-

sence of any element of subterfuge, the Commission has

found it to exist,

The Court below, on the contrary, in its initial Opinion,

recognized this fact when it found:

The only testimony offered to prove bad faith or sub-

terfuge were the statements by officers of the inter-

9]

venors, Modern Transfer Co. and Highway [xpress

Lines, as to the use of Pennsvivania routes by their

companies because they were more logical and prac-

tical for their operation. Also, there was testimony by

a Mr. Duffy who had a conversation with one of Jones’

drivers who stated that he had been making the trip

for approximately five vears, five nights per week over

the routes covered by the stipulation mentioned above.

An investigator for the P.U.C. gave testimony which

the Examiner regarded as merely cumulative to Mr.

Duffy’s testimony and unrelated to any data mentioned

in the Complaint.

‘Apart from this testimony offered by the P.U.C. to

support its position that Jones’ routes were circuitous,

and somewhat long, no direct evidence of bad faith on

the part of Jones was offered by the PLULC. Service

Transfer Co. vy, Virginia, supra, p. 175. (Footnote

omitted) (218 F. Supp. 138, 137)

* * *

The burden of proof on the subterfuge question is

placed upon the P.ULC.. not on Jones which admittedly

is operating under validly combined Certificates. Since

the Commission, in its Order, bottomed its findings of

bad faith solely upon the eireuity of routing by Jones

after agreeing with the Examiner in most respects, we

must reject this unwarranted conclusion and adopt the

Examiner's ‘Corrected Report and Recommended Or-

der’."”) (At Page 138)

In its Opinion and Order on reargument, the Court below

re-emphasized that the Interstate Commerce Commissions

finding of subterfuge was not sustained by the evidence,

when it stated: ‘*The basis of our prior opinion and order

was that the record failed to disclose substantial evidence

io support the Commission's finding of subterfuge on the

part of . ones”? (223 FL Supp. 835, 836). The Court below

then went on to indicate: **... we find no evidence of bad

faith in the record of this pre ceding’ (At Page S36),

The Distriet Court thus recognized that where subter

fuge is at issue, the burden of proof thereat is imposed

a

oO

upon the proponent of the proposition that subterfuge

exists. The cases are in accord.

The Cireuit Court of Appeals of the 9th Circuit in a cause

involving purchase of corporate stock had before it a case

where subterfuge was expressly alleged, as in the present

case, but also like the present case, there was no affirmative

evidence thereof. The Circuit Court of Appeals in re-

versing the lower court said:

‘There is nothing in the pleadings and certainly noth-

ing in the evidence to support the contention that Ap-

pellant tried to keep anything from the knowledge of

the Appellee or tried ‘to get him to sign the letter by

unfair means’? Los Angeles Fisheries v. Crook, 47 F.

Yd 1031, 1035.

Also of relevanee here is Camden Trust Company v.

Gidney, 301 BF. 2d 521) (1962), cert. den, 569 U.S. S86, in

which ‘‘manifest subterfuge’’ was alleged to have been

practiced in arranging the opening of « banking facility

where a competing bank was already in operation.

’

The Camden Trust Company, with principal office in

Camden, N. J., had, sinee 1953, maintained a branch bank

at Erlton, in Delaware Township, N. J. Delaware Town-

ship was evidently a desirable site for a bank and in 1960

the Haddonfield National Bank, Haddonfield, N. J., sougut

authority to locate its main office here, while retaining as

u brancgi its Haddonfield office only two miles away. It

was refused by Gidney, Comptroller of the Treasury.

Thereafter, the Directors of Haddonfield National filed ap-

plication for the incorporation of a new national bank in

Delaware Township. Appellant, Camden Trust, objected,

and when it appeared that the Comptroller would approve

the new facility, action was filed in court by Camden Trust.

l'pon dismissal of the Complaint, Plaintiff appealed.

New Jersey law, as pertinent, provides that no bank shall

establish or maintain a branch office which is located out-

7)

U.S. 22 between Allentown, Pennsylvania, and Clinton,

New Jerse vy; (4) Chester, Pennsvivania, is within the

Philadelphia Commercial Zone; (5) Oaks, Pennsyl-

Vania, Was served as a free astray from Philadelphia

over route first set forth above; (6) Hatboro, Pennsyl-

vania, Was served via an unnumbered route between

Hatboro and Philadelphia, Pennsylvania, and thenee

to destination over the routes first set forth above’’

(N.T. 16-17).

The free astray described in the foregoing stipulation

was defined as a misplaced or lost shipment which subse-

quently appeared at the Philadelphia dock and was moved

over the routes in question (N.T. 18). _ -

Jones also stipulated that the transportation averred in

Paragraphs 4 to 25 inclusive of the Complaint” Was not

performed under any certificate issued by the Pennsylvania

Commission (N.T. 19).

The distances and driving times over the routes in ques-

tion and over other routes lving wholly within Pennsyvivania

also were stipulated, as follows:

‘It is stipulated and agreed between counsel that if

the witness now on the stand had testified as to dis-

tances and driving times between the Jones Motor Com-

pany, Inc., terminal in Philadelphia and Jones Motor

Company, Inc., terminal at Allentown, the follegving

would apply: Over the routes traversed by Jones as

mentioned in a previous stipulation the distance would

be 96.2 miles, and the driving time three hours. Be-

tween the same points over U.S. Highway 309 lving

wholly within Pennsylvania the distanee would be 5)

tiles and the driving time 2 hours 5 minutes.

(iver the Pennsylvania Turnpike between the same

points, Wholly within Pennsvivania, the distanee would

be 74. miles and the driving time one hour’ fifty

minutes,

In se stipulating it is understood that Respondent doe-

not agree that the distances and times over U.S. 309

and the Pennsvivania Turnpike are relevant to this

proceeding’’ (NTP. 2P-22).

The Pennsylvania Commission presented only the fol-

lowing evidence ; n

1. Mr. Duffy, who testified concerning his conversation

with one of Jones’ drivers during October, 1960.) Mr.

Duffy indicated that the driver informed him that he had

been making the trip for approximately five vears, five

nights per week over the routes covered by the stipulation

mentioned above (N.T. 29-30).

J. Witness John Staws’s testimony was originally

stricken (N.T. 40-41-42), but the Examiner, in his recom-

mended Order, reiustated it in its entirety (Sheet 6). As

the Examiner pointed out, the testimony was not related

to any date mentioned in the Complaint (N.T. 38; Sheet 6).

Otherwise, his testimony was merely cumulative to that

given by Witness Duffy, a faet on which the Examiner

commented in reversing his ruling (Sheet 6).

3. Witness Wetmore of Modern Transfer Co. (N.T. 43)

testified as to his company’s Pennsylvania intrastate op-

erating authority and the loeation of its ter uimals. He

added that U. S. Route 309, ving wholly within Pennsvl-

Vania Was the route used by his company and was ‘‘the

most practical and economical’’ for his company to use

(N.T. 52), but that his company did use the Pennsylvania

Turnpike in instances of bad weather (N.T. 55).

4. Wiiness Imhot of Highway Express Lines, Ine. (N.T.

95) identified his company’s intrastate operating authority

(N.T. 56), loeated his company’s terminals and was of the

opinion that U.S. 500, used by his company, was the most

logical and eeconomieal route for his company to use (NT.

os).

The foregoing was the only direet evidence offered in

support of the Complaint. There was no evidenee pre

sented by Pennsvivania Commission with relation to any

administrative or regulatory difficulties, violation-, irregu-

larities or bad faith on the part of Jones.

23

side the municipality in which its principal office is located.

Federal Law is so drafted that the Comptroller of the

Treasury, in granting approval for the opening of a branch

banking facility in a city, town, or village, must act con-

tormably with applicable state law on the subject. It was

argued by Camden Trust that since under State law no

other state bank could establish a branch bank in Delaware

‘Township, no New Jersey Bank could establish a branch

there. Aceordingly, it beeame important to determine

whether what the directors of Haddonfield National as in-

dividuals sought to have approved was the establishment

of a branch bank of Haddontield National, or the establish

ment of an entirely new bank. The court found it was

the latter.

The record shows that the directors of Haddonfield Na-

tional, after denial by the Comptroller of the Treasury of

the bank’s applieation to locate in Delaware Township,

acting as individuals, invited its shareholders by letter to

subseribe to shares in a new bank. The letter stated, inter

alia, that the new bank, te be called Deiaware Valley Na-

tional Bank, would be an affiliate of Haddontield Nationa!

Bank and that its affairs would be conducted by the same

management and under the same policies as the Haddonfield

National Bank.

The application of the Haddontield directors under the

tacts deseribed above was termed by Appellant Camden

Trust to be ‘on its face a manifest subterfuge to cireum

vent the provisions and purposes of the National Bank

Act by attempting to introduce into Delaware Township a

banking facility that will for all practieal purposes con

stitute a branch facility of the Haddontield National Bank",

Approval by the Comptroller would, under these cireum-

stances, it said, be bevond the Comptroller's authority and

an abuse of his diseretion.

The Court of Appeals for the District of Columbia Cir

cuit, Whose action, through denial of certiorari by this

24

Court, was not disturbed, affirmed the action of the Dis-

trict Court granting judgment for the Comptrolier.

The Court rejected the argument of subterfuge saving,

, .

among other things:

“Whatever weight is to be given to the appellant's

legal argument, it is difficult to think of the Haddon

field directors* action as a ‘subterfuge’, at least in an

invidious sense On the contrary, the preliminary

proceedings seem to have been open agd notorious.

Perhaps on that account the ‘subterfuge’ was alleged

to be ‘manifest’. The president of the Haddonfield

National Bank on its letterhead notified all of its share-

holders of the plan and the ghjective which the direc

tors sought. Appellant protested erally and in writing

to the Comptroller. The lattef and the New Jersey

Bank Commissioner corresponded Concerning the pro)

ect. It fairly may be said that we pereeive nothing

arcane or wrongfully covert in the effort... 7°) (391

F’. 2d at 523). >

" a

Western Union Telearaph Co.v. Speight, supra, also dealt

with the question of bad faith to the extent that said case

dealt with the motive of the telegraph company in tran®

mitting its message froma North Carolina origin to a North

Carolina destination via points, in Virginia. Therein, it

Was stated at page J";

‘The burden was on the plaintiff to make out her case.

Moreover, the motive would not have made the business

intrastate’.

Finally, in Service Storage and Transfer Co., Inc. v. Com-

monwealth of Virginia, supra, this Court emphasized that

Virginia had presented no direct evidence of bad faith, in

these words:

“It contends that petitioner's circuitous and unneces-

sarily long routes were a mere subterfuge to eseape

Intrastate regulation and evade its jurisdiction. Aside

from the testimony of highway officers as to the actual

shipments, none of which is disputed, the Common-

2

wealth’s evidence consisted soley of maps substantiat-

ing its position that petitioner's routes were cireuiious

and often long, sometimes exceeding twice the shortest

possible route. However, it offered no direct evidence

of bad faith on the part of petitioner in moving its

traflic through Bluefield, West Virginia’’. (Hmphasi-

oursy (359 US. TIT TS)

The Questions Raised by the Jurisdictionai Statements

Are Unsubstantial

The Pennsvivania Commission contends that the ques

tious presented are substantial in that the decision of the

Court below conflicts with Arrow Carrier Corporation v.

(nited States, 375 U.Seeb52: that the Court below made

findings at odds with the Commission; and inat the Court

helow erred in not remanding the ease to the Commission

for further proceedings. Appellants Highway and Modern

contend that the majority opinion embarrasses the Pennsy!

Vania Commission’. regulatory cllorts; misinterprets the

sicnificanes of the Examiner's Report; and restricts reiet

toa revocation proceeding. .

These contentions lack merit.

The United States District Court for the District of New

Jersey specifiealiy distinguished the Opinion of the Court

below in this matter. "The Interstate Commeree Commi-

sion in its Motion to Affirm in clrrow Carrer Corporation

\. United States, supra, stated at page 4:

“The issue in Jones was whether the tacts there sup

ported the Commission’s finding of subterfage. Om

rehearing, the Jones court emphasized that its reversal!

of the Commission was based upon it- evaluation of

the evidence (App., infra, pp. 11-12). The district

court im the instant case properly distinguished Jones

on its facts (IS. lla-tda, fn. 1)7*.

The Court below properly pointed out that the Hearing

Examiner made Findings of Fact which the Interstate

Commerce Commission adopted. The Court agreed with

mi)

these Findings and coneluded that these Findings did not

constitute any direct evidence of bad faith. The Court

below found logical reasons for the Jones’ operation and

found beyond dispute that the buracn of proof of subter

fuse had not been met.

The third contention of the Pennsvivania Commission

with respect to remission of the record upon its request, is

equally lacking in merit. The issue before the Court below

was whether subterfuge had been established, The Court

concluded it had not.

The contentions raised by Highway and Modern are un-

substantial. There is nothing in this record with respec:

to any administrative or regulatory burdens or difficulties

experienced by the Pennsvivania Commission and none

should be injected into this case by way of argument.

As previously stated, the Examiner in his Report made

Findings of Facet which were adopted by the Commission

; ‘ . ‘ _—

and recognized as valid bv the Court below. ,

The third contention of Armpellants Highway and Modern

is also net well taken. The instant proceeding hinged twoon

the burden of proof of subterfuge. The Court, fagnd that

that burden had not been met.

CONCLUSION

The question presented to the Court is Res Adjudicata

The transportation in question is clearly interstate com.

merce by specitic statutory terrm~sgnd has been so construe:

by the Courts. Moreover, the operation has been conducted

pursuant to certificates issued by the Interstate Commerce

Commission and is wholly without subterfuge. At no time

did the Interstate Commerce Commission cite any Section

of the Interstate Commerce Act which Appeitiee is said to

have violated The questions presented by the Appeal are

not substantial and do net require the plenary consideration

of this Court. With this view, the United States and the

yd

\ Gi

“ ..

interstate Commerce Co. cuission agree in th+ir: Memo-

randum filed herein, wherein they say: ‘The reasons for

plenary consideration do notappear compelling in the light

of this court's disposition of the Arrow litigation’* (Page

5). Appellee requests this Court to affirm the Opinion of

the Court below.

Respectfully submitted,

Rotanp Rice

Rice, Carpenter and Carraway

GIS Perpetual Building

Washington, D.C.

CuristTian V. GRAr . :

407 North Front Street

Harrisburg, Pennsylvania

CLaupe B. Waconer +

1518S Packard Building

Vhiladelphia, Pennsvivania

April 20, 1964