# Motion to Affirm — Highway Express Lines, Inc. v. Jones Motor Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0485%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Motion to Affirm - **Published:** January 1, 1964 - **Citation:** 377 U.S. 217 ## Text 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 - 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 & 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 *. ... - 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0485%3A4. Public record. Not legal advice.