Brief for the Respondents in Opposition — Federal Communications Commission v. Broadcasting Service Organization, Inc.

BLEED ‘THR OUGH — POOR «

IN THE

Supreme Court of the United States

October Term, 1948

ee

FeperaL ComMunicatTions CoMMISSION,

Petitioner,

—V.—

BroabcastinG Service Orcanization, Inc.,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

——

ee

Ben S. Fisuer,

Joun P. SourHMayp,

902 Warner Bldg.,

Washington, D. C.,

Attorneys for Respondent.

Watter M. Bastian,

National Press Bldg.,

Washington, D. C.,

Of Counsel.

ease

OPY

PAGE

I a elcaeadidlialabiinncsieniccietiendéabecnducaoin 1

elas eeitnnpdorasninnees 1

I sels cnarcasentssinnseniesieastesadsnoes 2

RLS 2

GT SE EE 2

Present Organization of Respondent ............ ‘iene 3

RR I ooo cccesoniececaecereascverenesaneveeuees 4

Claims Made Against the Stock 0... 6

pe eB esls on b 8

Reasons for Not Reporting the Acquisition .......... 8

Unauthorized Purchase of Stock in the Name of

I 9

Transfer of 60% of Voting Stock Reported in 1938 11

Purchase of Class A Non-Voting Stock ............. 11

Purchase of Remaining Interest in B Stock ........ 12

Final Settlement of Claims 2000000000000... 0ccccccccccecseese. 13

Application for Construction Permit —............ 14

Service Rendered by Station WORL 14

Proceedings Subsequent to Hearing ....00..00000.0......... 15

Reasons for Denying the Writ .00.00..00.00.00.0ccccccccccecceecseeoeee 17

Appendix

Conclusion

ii

CrraTIONs:

PAGE

Pp UD UD iS SS ees 27(n)

Riis: SIRI cacsceshstlccseeshicscirensanishetatenapdeninnpehindenibaldlismemuinadie 20

Bay State Beacon Inc. v. Federal Communications

Commission (App. D. C.) No. 9766, Slip Opinion,

decided December 20, 1948 _..0.........-.....-cccccecceceeceeneeses 27(n)

Black River Valley Broadcasts v. MeNinch, 101 F.

TID stieiceecnnstiteinrenittiiniaitaitaines 27(n)

Bonwit Teller & Co. v. Coumnr. of internal Revenue,

53 F. 2d. 381; Cert. den. 284 U. S. 690 ...................... 20

Brown Investment Co. v. Warner, Register of Copy-

rights, 161 I. 2d. 910; Cert. den. 382 U. 5. 3UL ........ 20

Carlson v. Federal Communications Commission

(App. D. C.) No. ¥5«7, Siip Upinion, decided f'eb-

ruary i4, ly4y 27(n)

Chicago Junction Case, 204 L. dS. 208 . 2U

Clark v. Lebersee finanz-iiorporatiou, A. G., 332

U. S. 484 27(n)

Consolidated iKdison Co. v. National Labor Kela-

FS LS DS ee 20, 28

Crowell v. Benson, 285 U. 8S. 22 ....... 28

Donaldson v. Read Magazine, 333 U.S. 178 .00000....... 25, 26

E. Anthony and Sons, Inc. v. National Labor Rela-

tions Board, 163 F. 2d. 22; Cert. den. 332 U. S.

errr rrr rrr

BLEED ‘THR OUGH — POOR C

iii

PAGE

Federal Radio Commission v. Nelson Bros. Bond &

Mortgage Co., 289 U. S. 266 .2...2...2-...--cc-eecceeceres 23, 27(n)

Fields v. Hannegan, Postmaster, 162 F. 2d. 17; Cert.

A I Oi 25

Hannegan v. Esquire, Ine., 327 U. S. 146 2.00... 27(n)

Hilton v. Sullivan, 334 U. S. 323 2.002222... eeeeceseeeeeee 27(n)

Hurley v. Lowe, Deputy Commr., Bureau of Km-

ployees’ Compensation, 168 F. 2d. 553; Cert. den.

PRE ie ie Seed CRON een Re NO 25 |

Leach v. Carlisle, 258 U. S. 138, 140 ~...002.000 ee 20

Liberty Mutual Insurance Co. v. Cordello, 330 U. 8S.

IO sicecisc delsiash ceahieieaneshceiiadk abecb kiatiahlasnttiaabaasaemneialents 26

Mansfield Journal Company v. Federal Commiunica-

tions Commission (App. D. C.) No. 9817, decided

IE Teas UIE cecstbccindcpidintatnsiasisdsesieilhchiabssttrinantitahaattantahienoaiiba 26(n)

National Labor Relations Board v. A. 8. Abeil Co.,

Be A: OEE cdescasosanatoesguebiealapleshh ninidinhdiasidaabiiumlantsictnguaiens 20

National Labor Relations Board vy. Columbian

Enameling and Stamping Co., Inc., 306 U. S. 292,

aR RE eens ce eRe me eee 20, 28

National Labor Relations Board y. Pennsylvania

Greyhound Lines, 303 U. S. 261, 271 — 20... 20

National Labor Relations Board vy. Sheboygan Chair

A EE Re ee en ee 20

National Labor Relations Board v. Waterman

Steamship Corporation, 309 U. S. 206 2... 26(n)

Norris & Hirshberg, Inc. v. Securities and Exchange

Commission, 163 F. 2d. 689; Cert. den. 333 U. 8.

PAGE

Panhandle Eastern Pipe Line Co. v. Federal Power

Commission, 169 F. 2d. 8S1; Cert. den. 332 U. S.

UO ech ciesctehiedacadetebibecdacibilsaidebsnidtdaihanetninoe 25

Saginaw Broadeasting Co. v. Federal Communica-

tions Commission, 96 F. 2d. 554; Cert. den. 305

RESINS RRS an RET AEG ee ae ae 23

S. E. C. v. Chenery Corp., 318 U. S. 80, 94 00000... 23

Simmons v. Federal Communications Commission

(App. D. C.) No. 9607, decided May 24, 1948,

PUT Ne SF ie MN I cicemveconsreciousvooeremennesivapintttinononieas 26(n)

WOKO, Ine. v. Federal Communications Commis-

RG RAAR SOR OR 2, 16, 17,

21, 24, 28

Yankee Network, Inc. v. Federal Communications

AS | Se . . eee 28

Sratutes Cirep

Communications Act of 1934, 48 Stat. 1064, 50 Stat.,

BO Ge Oe a OE IIE erecsarcccacdchecenceccersbnc 2

TOOTIITE TOO) ccccevecnecenrocsscccvoserenene TEMAS 2, 17, 24(n)

Ne ube lial 9, 15, 16, 22

28 U.S. C. 1254(1)

BLEED ‘THR OUGH — POOR |

IN THE

Supreme Court of the United States

October Term, 1948

No. 584

>

FEDERAL COMMUNICATIONS COMMISSION,

Petitioner,

—vV.—

BroapcastinG SERVICE Organization, INnc.,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

—$—~»—_

BRIEF FOR THE RESPONDENT IN OPPOSITION

Opinions Below

The Decision and Order of the Federal Communications

Commission (R. 539-568, 600-601) have not yet been re-

ported. The opinion of the United States Court of Appeals

for the District of Columbia Circuit (R. 608-620) has not

yet been reported.

Jurisdiction

The judgment of the Court of Appeals was entered on

November 24, 1948 (R. 620-621). The jurisdiction of this

Court is invoked under 28 U. S. C. 1254 (1).

a

Ory

2

Question Presented

Whether the Court below erred in holding that, as a

matter of law, the Federal Communications Commission

is not empowered by the provisions of the Communications

Act of 1934, as amended, and the Decision of this Court

in the WOKO case (329 U. S. 223) to deny the application

for renewal of license of Station WORL on the ground

that respondent does not possess the character to be en-

trusted with the responsibilities of a licensee, there being

no substantial evidence to support the findings and conclu-

sions of the Commission with respect thereto.

Statute Involved

The pertinent provisions of the Communications Act of

1934, 48 Stat. 1064, as amended, 47 U.S. C. 151, et seq. are

set forth in the appendix to the Government Petition for

Writ of Certiorari, pages 23-26.

Statement of Case

Because of certain inaccuracies and inadequacies in peti-

tioner’s statement of the case, respondent finds it necessary

to review in detail the facts established by the record.

Broadeasting Service Organization, Inc. has been the

licensee of Station WORL, which operates in Boston,

Massachusetts, on 950 Ke., with 1 KW, daytime only, since

November 20, 1931. That it has been and is rendering a

meritorious program service in the public interest, con-

venience or necessity is established by the record and not

questioned by the Commission (R. 288-296).

On May 27, 1944, respondent filed an application pursuant

to Section 309 (a) of The Communications Act of 1934, as

BLEED ‘THR OUGH — POOR

3

amended, for renewal of its station license. Thereafter,

this application was designated for hearing. The hearing

was held in the fall of 1944 before an Examiner designated

by the Commission.

Present Organization of Respondent.

Broadcasting Service Organization, Inc. is a Massachu-

setts corporation with outstanding capital stock consisting

of 1000 shares of non-voting Class A preferred and 1000

shares of voting common designated as Class B. Since

November 1943 the officers, directors and stockholders have

been :

B Stock

Name Office A Stock (Votirg)

Harold A. Lafount Director-President 1000 400

Sanford H. Cohen Director — 400

George Cohen Treasurer a 200

Robert E. Davison Director-Clerk — —

Secretary

(R. 235, 355, 391)

All are citizens of the United States and possess the qual-

ifications required of officers, directors, and stockholders of

a licensee corporation. In 1927, after a successful business

career, Harold A. Lafount was appointed a member of the

Federal Radio Commission. He left the Commission in

1934 and since then has been employed as General Manager

of ali the radio interests of Mr. Arde Bulova (R. 21-23, 305).

Sanford H. Cohen, a former Assistant United States Attor-

ney, and George Cohen are brothers who have been asso-

ciated in the practice of law in New York City since 1920.

Robert H. Davison of Boston is an attorney-at-law of high-

est reputation (R. 26, 27, 83, 225-27, 279, 305-6).

The 1937 Agreements.

Prior to March 25, 1937 the stock of the licensee was

distributed as follows:

Name A Stock B Stock

George A. Crockwell 400 200

James K. Phelan 300 150

William H. Eynon 300 150

Robert C. Nordblom —_ 500

(R. 354, 386)

Station WORL had been steadily losing money and the

stockholders decided to sell the stock (R. 62, 322). Negotia-

tions were held with Crockwell. Nordblom, Crockwell,

Phelan and Eynon entered into an agreement between them-

selves of their intended sale of 700 shares of the stock

owned by them in the corporation owning and operating

Radio Station WORL (R. 382). Lafount had nothing to do

with this agreement and was not even aware of its existence

(R. 57-8, 67, 71).

On March 16, 1937, Crockwell, Nordblom and Lafount

entered into an agreement for the transfer of 400 shares of

B Stock (300 to be supplied by Crockwell and 100 by Nord-

blom) to Lafount for a consideration of $48,000.00. Crock-

well and Nordblom undertook to pay all the debts of the

corporation existing on March 25, 1937 (with certain excep-

tions) from the proceeds of the sale, to reduce the liquidat-

ing value and the annual dividends of the preferred stock,

and to cause certain changes in the by-laws of the corpora-

tion. The closing was set for March 25, 1937 (R. 385).

On March 25, Crockwell, Nordblom, Phelan, Eynon,

Lafount and Ben 8. .Fisher (attorney for Lafount and the

Cohens) met at the office of Robert H. Davison, attorney

BLEED ‘THROUGH — POOR

5)

for the licensee and its stockholders. An escrow agreement

was entered into between Crockwell, Nordblom, Lafount

and Davison providing tat $48,000 was to be paid to

Davison as escrow agent to pay off the debts of the corpo-

ration, the balance to be distributed 6214% to Crockwell

and 3714,% to Nordblom (R, 74, 75, 80, 81, 593). The Cohens

not being present at the closing, Ben 8. Fisher, as Agent,

entered into a separate agreement with Nordblom whereby

he (as such agent) agreed to purchase 200 shares of Class

B stock for $4,500 (R. 396). A cashier’s check in the amount

of $52,500 was delivered by Lafount to Davison in payment

for the 400 shares purchased by Lafount and the 3U0 shares

purchased by the Cohens (R. 82-85). Temporary certificates

were issued, one to Lafount for 400 shares and one to Nord-

blom for 300 shares. The latter was endorsed by Nordblom

in blank and delivered to Lafount. The temporary certifi-

eate for 300 shares was issued in Nordblom’s name because

Lafount did not know at that time how the Cohens wanted

their 300 shares apportioned between them (R. 106, 109, 115,

116). No arrangement was made at the closing as to how

the permanent certificates were to be issued (R. 104).

Though all the agreements were closed simultaneously,

Lafount at all times considered his purchase of the 400

shares and the Cohens’ purchase of 300 shares as separate

transactions. They were two distinet purchases negotiated

separately and based on separate contracts (R. 62-3, 76,

77, 83, 120, 172-3, 333).

Lafount’s acquisition of 400 shares of Class B stock was

reported to the Commission on Mareh 31, 1937 (R. 399). Of

the $48,000 Lafount paid for his 400 shares of B stock,

$38,000 was used to pay off the existing debts of the eorpo-

ration. The Cohens had agreed with Lafoun. that they

would pay their share of the debts and that the cost of the

700 shares should be divided ov a per share basis to equalize

6

the purchase price, Lafount’s cost being $30,000 and the

Cohens’ $22,500 (R. 27, 76, 150, 151, 228, 243). For this

reason the “Amount Actually Paid for Stock” by Lafount

was reported as $20,000 (R. 112, 399). The consideration

for the 600 shares of Class A stock acquired by Crockwell

was reported as $26,400, the par value of $44 per share.

The report of March 31, 1937 was prepared by Davison,

Crockwell’s attorney. At the time it was filed Lafount had

no detailed knowledge of the arrangements among Crock-

well, Nordblom, Eynon and Phelan for the setilement of

the value of the A stock among themselves (R. 56, 66, 74,

399).

Claims Made Against the Stock,

Shortly after the closing date Crockwell started com-

plaining to Lafount about the deal. He called frequently

on Lafount, telling him that he wished to get the station

back. He stated that Nordblom was dissatisfied too and

something had to be done about it (R. 30-31, 103, 117, 155-

157). Crockwell discussed his dissatisfaction with Nerd-

blom and with many others. The subject was also con-

sidered at a number of directors’ meetings (R. 332-333, 335-

336, 339, 340). Though Crockwell was telling Lafount that

Nordblom was dissatisfied, the latter never made any com-

plaints or claims and testified that he never was dissatisfied

with the transaction (R. 110, 327). The evidence is con-

flicting as to whether Nordblom ever expressed any dis-

satisfaction to Lafount. However, there is no question that

Crockwell led Lafount to believe that both he and Nordblom

were very displeased with the whole deal. Furthermore, it

is clear that shortly after the March 1937 closing a dispute

had arisen between Crockwell and Nordblom which con-

tinued over a considerabie period of time (R, 110, 117-118,

155-158, 362). As all the negotiations leading up to the

BLEED ‘THR OUGH — POOF

7

March 25, 1937 closing had been conducted with Crockwell,

and as he had made all the complaints, Lafount attempted

to straighten things out with him rather than with Nord-

blom whom he hardly knew (R. 30-31, 57-58, 117).

These complaints were received before Lafount had ascer-

tained how the Cohens wished to have their 300 shares

divided. When Lafount advised the Cohens of Crockwell’s

complaints, they refused to permit the permanent certifi-

cates for the 300 shares to be issued in their names until

all dissatisfaction had been ironed out and no further claims

against the stock were outstanding (R. 34-35, 109, 121, 143,

175-176, 228-229, 250). Pending the settlement of the differ-

ences a permanent certificate was issued in the same form

as the temporary one. Nordbiom endorsed it in blank, and

on April 30, 1937 it was sent to Lafount. Nordblom testified

that he did not recall why he permitted the stock to remain

in his name but believed it was a matter of convenience to

the buyers. He was glad, however, to remain a voting stock-

holder with 400 shares because the station was a tenant of

the hotel he ran and it was good business for him to watch

its progress (R. 32, 340, 342).

Early in 1939, before any settlement had been reached

with Crockwell, both Davison and Crockwell advised Lafount

that a Miss Natalie Whitwell claimed to own all the stock

of the corporation (R. 31, 176, 222, 252, 333, 339-340, 359-

360). On July 21, 1941 Hines, counsel for Miss Whitwell,

wrote Lafount demanding that all the outstanding stock of

the corporation be turned over to his client (R. 261-262,

361). In January 1942 Miss Whitwell brought a suit at law

| against the corporation in Massachusetts. The court held

for the defendants (R. 31, 177-178, 228-230, 261-263). Hines

wrote the Commission a series of letters beginning in June

1939 and ending in September 1941 i which he advised the

F. C. C. of the Whitwell claims and complained about the

COPY

8

ownership of WORL. As late as December 15, 1943, Hines,

in testimony before a Congressional Committee, asserted

claims against the Corporation on behalf of Miss Whitwell

(R. 254).

Acts of Ownership.

The permanent stock certificate for 300 shares, endorsed

in blank by Nordblom, was turned over to Sanford H. Cohen

by Lafount immediately upon its receipt and remained in

the Cohens’ possession thereafter (R. 30, 121, 228, 280). The

Cohens could have sold the stock or had it put in their

names because the certificate was negotiable (R. 248, 250).

However, the Cohens never voted the 300 shares of B stock.

While it stood in Nordblom’s name they never attended

directors’ meetings or stockholders’ meetings. No dividends

were ever paid on the stock (R. 263). Nordblom voted the

stock at all times. In fact, he voted 400 shares of B stock

at ten stockholders’ and directors’ meetings from March 5,

1937 up to and ineluding April 16, 1943. There existed no

arrangement or understanding governing the stock or the

manner in which it should be voted (R. 123-126, 219, 265,

329, 335, 342, 364-373).

Reasons for Not Reporting the Acquisition.

Thus the B stock continued to be owned of record, 400

shares by Lafount, 400 by Nordblom and 200 by Crockwell

(R. 33). Both Lafount and the Cohens believed that as

there had been no transfer on the books of the Corporation,

and as Nordblom remained the record holder of the 300

shares, it was proper for the applicant to report Nordbiom

as the holder of the stock. They did not think that the status

of the stock had changed in any way as the certificates

were still in Nordblom’s name. They felt that any transfer

BLEED THR OL'GH — POOR CO

9

to their names would be unwise at that time for they might

wish to rescind the sale and ask for the return of their

money. Jn their minds the sale remained unconsummated

and the deal had not been closed. The evidence is clear

that although the principals might have exercised poor

judgment in this respect, if they made a mistake they did

not make it in had faith (R. 34, 112, 115-116, 117, 120, 223,

143, 175-176, 228-229, 250-252, 254, 280, 284). Similarly,

Lafount and the Cohens believed that in view of the circum-

stances and the uncertainty concerning the final transfer

of the 300 shares of B stock to the Cohens it was unnecessary

under Section 310(b) of the Act to apply for a transfer

of control of the corporation. They did not think there

had been a transfer of control within the meaning of the law

(R. 119, 120, 173-174, 254-255). Sanford Cohen was not

admitted to practice before the Commission in 1937—his

admission occurred in 1940. Commission records show that

George Cohen has never been admitted to practice before

the Commission. There is no evidence indicating that in

1937 either of the Cohens was familiar with the Rules and

Regulations of the Commission. It is fair to infer—as was

in fact the case—that in failing to report the transfer the

Cohens were relying upon the advice of the attorneys

handling the deal—Ben S. Fisher (radio attorney) and

Robert H. Davison (R. 236-237).

Unauthorized Purchase of Stock in the Name of Arde Bulova.

On July 12, 1937 at Lafount’s request Arde Bulova loaned

Crockwell $5,000 on a six months’ note underwritten by

Lafount and received 200 shares of B stock as security.

Six months after the note fell due Bulova foreclosed, and

the 200 shares of B stock were sold at auction for $100. In

July 1938 Sanford Cohen left on a vacation. Knowing a sale

was going to be held, he told Lafount that he would buy the

10

stock. Lafount instructed Davison to purchase the stock

for Sanford Cohen. Because of some legal technicality

which Davison though would delay the transfer if the

stock were sold to one other than the pledgee, Davison

purchased the stock in Bulova’s name on July 28, 1938.

When Sanford Cohen returned from California in Septem-

ber, he found the stock had been bought in Bulova’s name.

The cleanest way to clear title was to have Bulova make a

simple assignment of the stock to Cohen so as to show the

actual facts. Lafount had advanced the $100 for the pur-

chase and was repaid by Sanford Cohen. Cohen was at

all times the owner of the stock (R. 35-36, 137-139, 230-

231, 267-270, 402). The purchase in Bulova’s name was a

mistake; Bulova was greatly annoyed when he discovered

that the stock had been bought in his name, because he was

not the purchaser and was not interested in the station.

Bulova never considered that he had an investment in

WORL (R. 203-204, 317, 319-320). This transfer of 200

shares of B stock from Crockwell to Sanford Cohen for a

consideration of $100 was reported to the Commission on

November 22, 1938. The date of acquisition was given as

September 30, 1938, the date when it was assigned by Bulova

and issued in Cohen’s name (R. 141-142, 204-205, 357, 436).

At the time the report was made out Cohen had paid

only $100 for the stock. The $100 was credited to Crockwell.

After the assignment, Cohen advised Bulova that he would

attempt to collect the deficiency from Crockwell and that

if he did not succeed he would make good to Bulova. No

payment was made to Bulova until it became evident that

there was no chance to collect from Crockwell. Then Cohen

paid Bulova $5,000, the amount of the debt. However, at the

time the report was made to the Commission, $100 reflected

the actual consideration paid. Sanford Cohen testified that

the failure to report the $5,000 might have been an error

BLEED ‘THROUGH — POOR C

ll

in judgment but the report had been made in good faith

(R. 231-232, 268, 270, 319-320).

Transfer of 60% of Voting Stock Reported in 1938.

In report filed with the Commission on November 22,

1938, Harold Lafount was shown as the owner of 400 shares

of Class B voting stock, Sanford Cohen the owner of 200

shares, and Robert Nordblom the owner of the remaining

400,—thus indicating that Lafount and Cohen together

owned 60% of the voting stock. Although the Commission

by this report acquired knowledge that Lafount and Cohen

together owned 60% of the voting stock, it did not require

that an application for transfer of control of the Corpora-

tion be filed (R. 207, 232, 255, 354, 391).

Purchase of Class A Non-Voting Stock.

In March 1939, on the advice of Davison, Lafount bought

900 shares of Class A non-voting preferred stock at auction

for $2,450. Through oversight this acquisition was not re-

ported to the Commission on a stock ownership report

form until about a year later. Lafount was under the im-

pression that the acquisition had been reported immedi-

ately but later found out that it had not. He was shocked

when he discovered the omission. As proof of his belief

that the acquisition of this stock had been reported, the

record shows that, upon an application for construction

permit, Lafount’s ownership of said 900 shares of Class A

stock was set forth (R. 37-38, 98-99, 210-212).

In September 1940, Lafount purchased the remaining

100 shares of A stock from one Endlar for $3,100. This pur-

chase was not reported until April 1941, again through

oversight, Lafount being under the impression that it had

been reported immediately, The purchase price of the

12

stock was reported as $3,500., which included $400 legal

fees incurred in connection with the purchase (R. 38-39,

208). Lafount’s present ownership of all the A stock has

been a matter of record with the Commission since April

1941 (R. 354, 391). On July 7, 1942 the Commission granted

an application for renewal of license to Station WORL for

the period ending August 1, 1944, having full knowledge

of this and other reports filed prior thereto.

Purchase of Remaining Interest in B Stock.

In September 1940, besides purchasing Endlar’s remain-

ing 100 shares of A stock, Lafount purchased Nordblom’s

remaining 100 shares of B stock for $1,500. This stock

was acquired because there existed a possibility that the

corporation would be sold to new interests and in order

to do so it was necessary to have possession of all the

outstanding stock (R. 140-141). The 100 shares of B stock

were purchased from Nordblom for George Cohen at the

latter’s request. The stock was endorsed in blank by Nord-

blom and given to George Cohen. The $1,500 paid by

Lafount was repaid him almost immediately (R. 245, 280,

285). Shortly after the sale Nordblom expressed dissatis-

faction with the deal and stated that he did not want it to

go through. He was dissatisfied as to the price and because

he understood that the station was to be sold and no sale

had taken place. Again George Cohen refused to permit

the transfer of the stock in his name and Norblom remained

the holder of record. For this reason the transfer was not

reported (R. 144, 160-161, 280, 285, 336, 391, 403-404).

Nordblom centinued to vote the 100 shares as well as the

300 involved in the 1937 transaction. He continued to take

an interest in the Corporation, discussed its problems, and

attended its meetings. He was glad to remain a stockholder

because the station was a tenant of the hotel he ran and it

BLEED ‘THR OUGH — POOR ¢

13

was good business for him to watch the progress of the

station. He was alse glad to remain because he was dis-

satisfied with the sale (R. 335, 340, 342).

Final Settlement of Claims.

The final settlement oceurred in November 1943, when

Lafount, after consultation with Sanford Cohen, paid

Nordblom $750 and received a receipt and general release

from

“all claims not only on account of the purchase

of 100 shares of the Class B stock of Broadcasting Ser-

vice Organization, Inc., but from all other claims aris-

ing out of your purchase from me of both Class A and

Class B common shares * * * ”

The $750 was paid by the Cohens but the release ran to

Lafount because he had handled all the negotiations (R. 33-

34, 172-173, 350). Though letters written by Nordblom and

Davison prior to the execulion of the release refer to the

$750 as being “in full payment for 100 shares,” Lafount

and Cohen testified that the $750 was to clear up all claims

against the 400 shares of B Stock (R. 33-34, 280-281, 406)

which is supported by the receipt and general release

signed by Nordblom referred to above.

The 400 shares of B stock were owned of record by

Nordblom until the final settlement of $750 was paid him

in November 1943 in final adjustment of all claims (R. 33,

165-166, 281). By this time the Whitwell and other claims

had also cleared up. On November 9, 1943 the 100 shares

were issued to George Cohen. This was reported on Novem-

ber 15, 1943 (R. 36-37, 146, 429). On November 27, 1943

the remaining 300 shares of B stock standing in Nordblom’s

name were transferred, 200 shares to Sanford Cohen and

14

100 shares to George Cohen and a report of this was filed

with the Commission on December 2, 1943. Though $4,500

had been specified as the contract price, $5,000 was reported

as the consideration. This was the actual cost to the Cohens

at the time the report was made after the various adjust-

ments (R. 34-35, 146, 215-216, 354, 357, 391, 440).

Application for Construction Permit.

In 1937 the licensee filed an application for full time

operation of WORL. The application was denied solely on

technical grounds of objectionable interference during night

time hours. In connection with this proceeding Lafount

submitted a balance sheet of the licensee as of April 30,

1937 listing “Cash in Banks $25,362.11.” At that time the

actual cash in the corporation’s bank account was $362.11.

Lafount explained that the stockholders actually had the

cash available and if the permit had been granted they

would have placed the $25,000 in the Corporation’s account

to pay the cost of construction of the full time operation.

The balance sheet was a proposed balance sheet and it

should have been so designated. Lafount considered it ex-

tremely unfortunate that the accountant who prepared the

statement had not included the $25,000 as a liability. He

had not intended to infer that the cash stood to the actual

credit of the corporation (Docket 4206, 7 F’. C. C. Reports

242, 246; R. 298-299, 303, 345-348, 401).

Service Rendered by Station WORL.

When Lafount became President of Broadcasting Service

Organization, Inc. in March 1937, the corporation was in

bad shape financially. The debts paid off at the closing

amounted to $38,000. The station as a whole, including

programming, equipment, and accounts receivable, was in

very bad shape. As soon as Lafount became President a

BLEED ‘THROUGH — POOR ¢

15

new station manager was hired. Together they succeeded

in putting the station on its feet and in furnishing the

public with good service. in 1938 the station showed a loss

of $11,424, on total receipts of $54,754. In 1943 there was a

profit of $25,101 with receipts amounting to $240,468. The

Hooper rating rose progressively, putting WORL in a tie

for first place during the daytime hours among Boston

listeners. All profits were spent to build up the station.

Time was regularly donated to at least seventy outstanding

national or local organizations as well as to numerous gov-

ernmental agencies; and the station received the MeNinch

Award for its outstanding weekly public service programs

(R. 351, 353, 374-381, 41, 43-4, 135, 288-296).

Proceedings Subsequent to Hearing.

On October 24, 1945 the Commission adopted a Proposed

Decision denying the WORL renewal application. The Pro-

posed Decision held that a transfer of control of respondent

had occurred March 25, 1937 without Commission consent,

as required by Section 310 of The Communications Act and

the Rules adopted pursuant thereto, and also found that

respondent had submitted false reports and testimony to

the Commission concerning this transfer of control and

other matters. The Proposed Decision concluded that the

WORL renewal application should be denied because re-

spondent could not be entrusted with the responsibilities of

a licensee (R. 475-502).

On November 26, 1945, respondent filed Exceptions to the

Proposed Decision accompanied by a Memorandum Brief

(R. 503-538). On January 24, 1946, the Commission heard

oral argument on its Proposed Decision.

On August 26, 1946, respondent and Bitner Broadcasting

Company, a corporation having no present broadcast inter-

ests or connection with respondent, filed joint application

——_

16

requestion Commission consent under Section 310(b) of

The Communications Act for transfer of control of respon-

dent from its present stockholders to Bitner Broadcasting

Company for a total consideration of $200,000 (R. 606-607).

On April 23, 1947, the Commission released its Decision

adopted April 21, 1947, denying the application for renewal

of license of Station WORL and dismissing as moot the

pending application for transfer of control of respondent

from its present stockholders to Bitner Broadcasting Com-

pany. A dissenting opinion was simultaneously issued by

E. K. Jett, Commissioner. The dissenting opinion points

out that on its facts this case differs from that in WOAO,

Inc. v. Federal Communications Commission (329 U. 8.

223), and concludes that since the parties are not guilty of

having made false statements and concealments designed |

to mislead the Commission, the pending applications for

renewal of license and for transfer of control of respondent

should be granted (R. 565-568).

On May 13, 1947, respondent filed a petition for rehearing

pursuant to Section 405 of The Communications Act (R.

569-597). On July 28, 1947, the Commission issued an order

setting the petition for rehearing for oral argument which

was held October 8, 1947 (R. 598-599). On October 15, 1947,

the Commission adopted a Memorandum Opinion and Order

simply stating that “After careful consideration of our

Decision and Order of April 21, 1947 and the record on

which they are based, we have concluded that no sufficient

reason has been advanced for departure therefrom * * * ”.

Ne decision was made on respondent’s request in its peti-

tion for rehearing for an opportunity at a further hearing

to present testimony on the character and integrity of its

principals and no decision was made on respondent’s con-

tention that dismissal as moot without hearing of the

application for transfer of control to Bitner Broadcasting

BLEED THROUGH - POO

—

17

Company contravenes Section 309(a) of the Act (R. 600-

601). E. K. Jett, Commissioner, simultaneously issued an

opinion dissenting from the October 15, 1947 Opinion and

Order, in substantially the same language as his dissenting

opinion on the April 21, 1947 Decision (R. 602-605).

Respondent has continued to operate Station WORL

since the expiration of its last regular license August 1,

| 1944, by virtue of extensions of temporary license granted

| by the Commission from time to time.

Reasons for Denying the Writ

1. The petitioner urges that the WORL case raises legal

issues identical to those decided in Federal Communications

Commission v. WOKO, Inc., 329 U. S. 223, and therefore

“the supervisory jurisdiction of this Court must be exer-

cised in order to vindicate the precedential effect” of this

Court’s rulings. Respondent’s position is that the legal

issues in this case are completely different from the issues

decided in the WOK O case; that the decision of the court

below is in conformity with established principles of admin-

istrative law; that no new or novel question of importance

is presented ; and, therefore, there are no special and impor-

tant reasons for grant of the writ. As hereinafter shown,

there is not the slightest justification for any assertion of

need to invoke the supervisory jurisdiction of this Court

over the court below because of the decision.

It is apparent from a study of the WOKO decision that

the question presented was whether admitted concealment

from the Commission of stock ownership for purposes of

deception supports a conclusion that the licensee cannot be

entrusted to continue its operations in the pubiic interest,

convenience, and necessity. In the instant case, the question

presented is quite different—to wit, whether there is sub-

COPY

18

stantial evidence to support findings of fact of misrepre-

sentation and concealment of stock ownership, expressly

denied by the licensee and its principals, and not contro-

verted by other witnesses, which will support a conclusion

that the licensee cannot be entrusted to continue its opera-

tion in the public interest, convenience, and necessity. The

distinction between the cases is far from putative—it is

fundamental, as the decision of the court below points out

in detail (R. 615-617). Only the most superficial comparison

could result in the erroneous conclusion that the cases in-

volve “slightly variant factual patterns” but “raise legal

issues identical to those already authoritatively decided”.

Pages 15-19 of the petition cite a list of authorities to

support the proposition that a “course of admitted falsifica-

tions and concealments, either entirely unexplained or

explained by testimony demonstrably unworthy of belief”,

is sufficient basis from which to draw an inference of

wilfulness. Respondent does not take issue with this propo-

sition or with the authorities cited in support thereof.

Respondent does, however, take sharp issue with any con-

tention that in this case the record reflects a “course of

admitted falsifications and concealments, entirely unex-

plained or explained by testimony demonstrably unworthy

of belief”. As indicated above, nowhere in the record is

there admission of falsifications and concealments. On the

contrary, the record is replete with uncontradicted evidence

of good faith on the part of the respondent and its principals,

professional men of high standing and good reputation.

Any omissions or deficiencies which occurred are fully

explained.

As the court below points out, one of the fundamental

defects of the Cominission decision is that it bases in-

ference upon inference (I. G18). It finds that there

have been certain omissions by the licensee from which

BLEED THROUGH — POC

19

it infers (without evidence) that these omissions were

deliberate misrepresentations and concealments, from which

it concludes that respondent does not possess the character

to continue as the licensee. The fallacy of this reasoning is

the complete absence of evidence of wilful misrepresenta-

tion or concealment. Bad character cannot reasonably and

logically be concluded from failure or delay in the filing of

certain reports, particularly when all of the witnesses

specifically disavow any intention to conceal or misrepre-

sent and nothing in the record indicates a purpose or object

in misrepresentation or concealment.

The opinion of the majority of the Commission (R. 561)

admits that “the purpose which may have led the principals

in this case to conceal the full extent of the various stock

transactions is not entirely clear”, and then attempts to

justify the Commission’s action on the ground that the

alleged misrepresentations were willful, of which there is

not a scintilla of proof. Commissioner Jett in his dissent

correctly stated that the record does not support the finding

that any of the parties are guilty of having made willful

misrepresentations (R. 566-567). Evidently, the Court of

Appeals likewise concluded—as its opinion shows—that the

record does not support the finding on which is based the

decision to deny t'1e respondent’s application for renewal of

license, and to deprive the owners of the Corporation of an

investment valued at, at least, $200,000.00.

The Labor Board and other cases cited on pages 15 and

17 of the petition establish (1) that administrative orders

supported by substantial evidence are conclusive on appeal

and (2) that administrative agencies may draw reasoned

inferences from such findings of fact. The authorities cited

do not, however, hold that where, as here, the findings of

fact are not supported by substantial evidence, they shall

be conclusive on appeal, nor do they hold that unreasonable

2@s.* 6-8. ert

COPY

inferences or inference upon inference may be drawn from

the facts of record. Substantial evidence is evidence of

quality; it must have rational probative force and be ade-

quate to support a conclusion in the mind of a reasonable

man. Consolidated Edison Co, v. National Labor Relations

Board, 305 U. 8. 197; National Labor Relations Board v.

A. S. Abell Co., 97 F. 2d 951. Substantial evidence is “more

than a scintilla and must do more than create a suspicion of

the existence of a fact to be established”. National Labor

Relations Board v, Columbian Enameling And Stamping

Co., Inc., 306 U. 8. 292, 300. Under the system of law guar-

anteed by the Constitution, the subsidiary facts must be

reached from the evidence and the ultimate facts from the

subsidiary facts, not arbitrarily or by assumption or con-

jecture or by a process contrary to reason, but according

to reason. Although inferences are to be drawn by the

agency and not by the court, the inferences must necessarily

be reasoned inferences. National Labor Relations Board v.

Pennsylvania Greyhound Lines, 303 U.S. 261, 271. To make

an essential finding without supporting evidence is arbitrary

action, since a hearing implies both the privilege of intro-

ducing evidence and the duty of deciding in accordance with

it. Chicago Junction case, 264 U.S. 258. See also Baltimore

& Ohio Railroad Company v. U. S., 5 F. Supp. 929; Bonwit

Teller & Co. v. Commissioner of Internal Revenue, 53 F. 2d

381 cert. den. 284 U, 8. 690; National Labor Relations Board

v. Sheboygan Chair Co., 125 F. 2d 436. In short, there must

be a reasonable exercise of administrative discretion having

a logical relationship to the facts, which is not the case here.

The conclusions of the Commission as to wilfulness and

intent to mislead, not having been fairly arrived at, and not

being supported by substantial evidence, can “justly be said

to be palpably wrong and therefore arbitrary.” Leach vy.

Carlisle, 258 U.S. 138, 140.

BLEED THROUGH —- PO

21

2. Petitionc» complains that the decision of the court

below recognizes the good public service record and in-

creased financial stability of WORL, whereas this Court in

the WOKO case rejected the contention that the Commis-

sion must take cognizance of the public service record of a

station notwithstanding that concealment and misrepresen-

tation had been admitted. The fact is that the court below

recognized the ruling of the WOKO case that if there is con-

cealment, materiality of such concealment is irrelevant (R.

614, 616). What the court below said on the public service

record of WORL is as follows (R. 617-618):

“In the view of the majority of this court, the record

amply supports appellant’s protestations of good faith.

True, the record is replete with evidence that appel-

lant’s agents were careless and inaccurate and, perhaps,

lacking in good judgment as to the reports required by

the Commission, but none of these characteristics in

themselves imply bad faith and it is equally certain

and of record that none of these characteristics were

projected over to and affected the management and

conduct of appellant’s business as a radio broadcasting

licensee. In fact, appellant’s outstanding public servic

record and its progressively increasing financial stabil-

ity—both matters of record in this case—expressly

negative any such projection.”

In petitioner’s effort to establish that the court below

ignored the decision of this Court in the WOKO ease, it

has distorted the language of the opinion. The statement in

that opinion that there are no harmful consequences to the

Commission or to the public interest because of respon

dent’s improper reports, is made only in connection with:

disproval of the poor analogy between this ease and criminal

R COPY

22

or tort cases in which intent may be imputed upon a show

ing of heedlessness of the foreseeable harmful consequences

(R. 618).

In Paragraph 13 of the conclusions of its decision denyiny

the WORL renewal of license, the Commission made specific

findings on alleged violation of Section 310(b) of the Act

by respondent, although the denial is predicated upon

alleged misrepresentations and concealments rather than

violation of Section 310(b) (R. 563). In view of the con-

clusions of Paragraph 13, it was entirely proper for the

court below to advert to the Commission action of July 7

1942, granting an application for renewal of the WORI.

license with full knowledge that Lafount and Sanford Cohen

had acquired control of the licensee corporation (R. 618-

619). This action by the Commission is cited by the court

not as a bar to denial of the pending renewal application

but rather as an indication of the arbitrariness of the Com-

mission’s refusal to renew. The court below specifically held '

as follows (R. 619): i

“We wish it clearly understood that we are not rul-

ing that, once forgiven, a licensee should always there-

after be forgiven for irregularity in compliance wit)

statute or with rule or regulation. The fallacy of suc: P

a rule is obvious. Nor are we ruling that a licensee can

with impunity disregard or disobey statute, rule, or

regulation. Further, we do not question the power of

the Commission, within statutory bounds, to adopt and

administer a stricter policy of enforcement of its rules

and regulations with regard to revocation or renewal

of broadcasting licenses. But the Conunission, and this

court on review, must constantly be guided by the pre-

vailing purpose of the Communications Act in ascer-

taining the result in each case which will best serve tlic

eee ee

BLEED ‘THR OUGH — POOR C<

23

public interest. In such a determination there is no

place for the arbitrary application of pointless tech-

nicality unsupported by substantial evidence. We hold,

therefore, that, as to this particular case, taking into

consideration all of the circumstances discussed abov:

the Commission’s decision of April 21, 1947, was im-

proper as a matter of law and lacked the support of

substantial evidence and was the result of arbitrary

and capricious action by the Commission. Accordingly,

pursuant to Section 402 (e) of the Act, the decision of

the Commission is reversed and the case remanded to

the Commission to carry out the judgment of this court.”

(Emphasis supplied.)

In reversing the Commission, the court below properly

used its judgment on the questions of law raised in the

appeal. S, E. C. v. Chenery Corp., 318 U. S. 80, 94. It did

not substitute its own findings of fact for those of the

Commission but held that the findings of the Commission

do not rationally support its conclusions as to wilfulness.

The court stated that upon independent search, it was unable

to find “any single specific portion of the voluminous record

before us which would justify the Commission’s conclusion

of wilfulness” (R. 616). There can be no doubt that deter-

mination by the court below under Section 402(e) of the

sufficiency of the findings of fact to support the conclusions

of law is a proper exercise of the judicial function. Federal

Radio Commission v. Nelson Bros. Bond & Mortgage Co.,

289 U. S. 266; Saginaw Broadcasting Co. v. Federal Com-

munications Commission, 96 F. 2d 554 cert. den. 305 U. S.

613. The Court’s decision is not concerned with the wisdom

or the expediency of the Commission action, but is directed

entirely to consideration whether substantial evidence sup-

ports the findings and conclusions drawn, and considera-

24

tion of the improper application by the majority of the

Commission of the rule of law in the WOKO case to the

facts of record in this case.’

3. Apparently recognizing the necessity of strengthen-

ing his doubtful contentions on the similarity of the WOKO

and WORL cases, the petitioner urges as a further ground

for grant of certiorari that the court below, which plays

“so vital a role in the review of administrative action” is in

need of “supervision by this Court” because of its persis-

tent departure from accepted legal principles and substitu-

tion of its views for those of administrative agencies. This

unwarranted and unjustified attack on the court below, a

court long and widely recognized for its competence and

experience in administrative law, requires some comment.

Table I of the Appendix to this Brief shows that in the |

two year period from January 1, 1947, to January 1, 1949, |

there have been eighty-five petitions filed for writs of cer-

tiorari to the court below. Sixty-eight of these petitions

have been denied, and one dismissed. At least twenty-six

of the sixty-eight petitions denied involved review by the

court below of administrative action. In the sixteen cases

in which certiorari was granted, six have been affirmed,

six have been reversed, and four await decision. Of the

twelve cases decided by this Court, six involve review of

administrative action, three being affirmed and three re-

versed. Thus, a total of thirty-two cases involving review

of administrative action on which petitions for certiorari

1 Respondent urged on the court below that the Commission violated

Section 309 (a) of the Communications Act in denying a hearing on

its application for transfer of control of the licensee corporation to

Bitner Broadeasting Company. The court held that in view of its

reversal of the decision on other grounds, “it is unnecessary to make 4

decision at this time” on this contention (R. 619).

BLEED ‘THR OUGH — POOF

—

25

to the court below have been filed, only three resulted in

reversal of the decision of the Court of Appeals.

Moreover, only one of the three cases of reversal on

review of administrative action involves a determination

whether substantial evidence supports administrative find-

ings of fact. Donaldson v. Read Magazine, 333 U. S. 178,

Justices Burton and Douglas, dissenting. The court below

has repeatedly given full recognition to the well established

rule of law that administrative findings of fact, if based on

substantial evidence, are binding on appeal. For instance,

in granting enforcement of an order of the National Labor

Relations Board, the court recognized that the Board’s

findings were supported by substantial evidence and fur-

ther recognized that the court cannot weigh evidence or

resolve contradictions in it, if that evidence supporting

each conclusion is substantial. EL, Anthony and Sons, Inc.

v. National Labor Relations Board, 163 F., 2d 22, cert. den.

332 U. 8. 773. In a recent case in which question as to

completeness of an administrative record on appeal was

raised, the court below carefully enunciated its duties and

responsibilities in reviewing orders of administrative

agencies and said that “thus restricted and simplified, the

function of the court is simply to see if the Commission’s

factual findings are supported by substantial evidence”.

Norris & Hirshberg, Inc. v. Securities and Exchange Com-

mission, 163 F. 2d 689, cert. den. 333 U. S. 867. See also

Panhandle Eastern Pipe Line Co. v. Federal Power Com-

mission, 169 F, 2d 881, cert. den. 332 U. S. 762, 93 L. Ed. 39;

Hurley v. Lowe, Deputy Commr., Bureau of Employees’

Compensation, 168 F. 2d 553, cert. den. 334 U.S. 828; Fields

v. Hannegan, Postmaster, 162 F. 2d 17, cert. den, 332 U.S.

773; Brown Investment Co. v. Warner, Registe, of Copy-

rights, 161 F. 2d 910, cert. den. 332 U. S. 801.

COPY

26

Of the six cases of reversal of the court below cited on

Page 21 of the petition, all pose difficult questions of ad-

ministrative law in the main without precedent. It must be

remembered that because of its location at the seat of

government, the court below is frequently called upon to

decide administrative issues of first impression. Of the six

cases cited, only Donaldson v. Read Magazine, supra, and

Liberty Mutual Insurance Co. +. Cardillo, 330 U. 8. 469

raised issues of support by substantial evidence of admin-

istrative determinations. These two cases must be com-

pared with the several more recent cases above reaffirming

the principle of finality of administrative action when based

on substantial evidence.

It seems clear from the foregoing analysis and cases that,

nothwithstanding the ill-advised protestations to the con-

trary in the Brief of the Petitioner, there is no persistent

“trend in the court below” to depart from accepted princi-

ples of judicial review and substitute its views for those of

administrative agencies.* On the contrary, the recent rec-

ord of the court below on review of the actions of adminis-

2 In National Labor Relations Board vy. Waterman Steamship Corp., 309

US 206, cited on page 21 of petitioner’s brief, this Court said that

“we do not ordinarily grant certiorari to review judgments based

solely on questions of fact”. This Court also pointed out that it granted

certiorari because of the earnest contention of the Board that this

was one of a series of decisions in which the court below (CCA Fifth)

had unwarrantedly interfered with the exclusive jurisdiction granted

the Board by Congress. The Court of Appeals for the District of

Columbia Cireuit has evidenced no such trend toward unwarranted

interference with the exclusive jurisdiction granted the Commission

by Congress. Besides the cases cited in footnote 4, broadcast decisions

of the Commission which have recently been affirmed by the court below

include Simmons v. Federal Communications Commission (App. D. C.)

No. 9607, decided May 24, 1948, cert. den. 93 L. Ed. 35, and Mansfield

Journal Company v. Federal Communications Commission (App. D. C.)

No. 9817, decided March 7, 1949.

BLEED ‘THR OUGH — POOR ¢

27

trative agencies is an enviable one by any cbjective stand-

ard.’

The petitioner does not amplify the very general asser-

tion of his petition that “the rationale of the decision be-

low is such that, if allowed to stand, the exercise by adminis-

trative agencies generally of powers virtually identical to

that here claimed by the Commission will be brought into

serious question”. It is difficult to see how the instant deci-

sion, confined as it is to the particular facts of record, can

undermine the well established principle as to conclusive-

ness Of administrative findings of fact when supported by

substantial evidence.* The decision specifically recognizes

the prior ruling of the court that it is immaterial that evi-

dence before the Commission is susceptible of other conclu-

sions than those drawn by the Commission and that, assum-

ing the presence of substantial evidence, the court will not

3 Recent eases determining varied questions of administrative law m

which decisions of the court below have been affirmed by this Court

include Hannegan v. Esquire, Inc., 327 US 146; Clark v. Uebersee

Finanz-Korporation, A. G. 332 US 484; Hilton v. Sullivan, 334 US 323;

Ahrens v. Clark, 335 US 188.

4 It is to be noted that less than a month after its WORL decision, the

court below, in affirming a Commission decision preferring one appli-

eant for a new station over another, reaffirmed the ruling of Black

River Valley Broadcasts vy. McNinch, 101 F. 2d 235, citing Federal

Radio Commission v. Nelson Bros. Bond ¢: Mortgage Co., 289 US 266

that the Commission’s “findings, under the law, must be maintained if

they are not arbitrary and capricious or erroneous in law, and are based

upon substantial evidence”. Bay State Beacon, Inc. vy. Federal Com-

munications Commission (App. D. C.), No. 9766, decided December 20,

1948. Moreover, on February 14, 1949, the court below rendered a per

curiam opinion in a case argued February 11, 1949 affirming an order

of the Commission denying renewal of license of Station WJBW, New

Orleans, La. because of violations by the licensee Carlson of the Rules

and Regulations. The opinion reads in whole as follows: “We tind no

error in the record. The decision of the Federal Commu ications Com-

mission is therefore affirmed”. Carlson vy. Federal Communications

Commission (App. 1D). C.), No. 9987, February 14, 1949. A petition for

writ of certiorari in the Carlson case is being filed April 1, 1949,

28

substitute its judgment for that of the Commission. Yankee

Network, Inc. v. Federal Communications Commission, 107

F. 2d 212 (R. 612). Likewise, the decision concedes that

where concealment is involved, the question of materiality

vel non of the facts concealed has been put to rest by the

decision of the Supreme Court in the WOO case (R. 616).

In effect, the rationale of the decision below is simply that

administrative findings of fact and conclusions which are

not supported by substantial evidence are arbitrary and

capricious and, therefore subject to reversal. This principle

of law is as sound and well established as the principle that

findings of fact and conclusions when supported by substan-

tial evidence are conclusive. Crowell v. Benson, 285 U.S.

22; Consolidated Edison Co. v. National Labor Relations

Board, 305 U. 8. 197; National Labor Relations Board v.

Columbian Enameling And Stamping Co., Inc., 306 U. S.

292.

4. From the foregoing it is manifest that the decision

below does not overstep the legitimate bounds of the judi-

cial function. It does not limit the Commission’s power to

deny broadcast applications, either for renewal of license

or for construction permits, when such denial conforms to

the requirement of Section 402(e) of the Communications

Act that the findings of fact and conclusions be supported

by substantial evidence. The decision does not announce

any new or novel standard to determine whether conclusions

of law reached by the Commission are arbitrary and capri-

cious, but simply reaffirms settled principles governing

judicial review of administrative action. In deciding that,

on the facts of this case, the rule of the WOKO decision is

inapplicable, and that the Commission acted arbitrarily,

capriciously, and unreasonably in refusing to renew the

WORL license where there was not substantial evidence to

BLEED THR OUGH — PO

29

support its findings of fact of wilful misrepresentation,

concealment, and deception, the court below did not render

a decision of such importance or of such general effect as

to require or justify issuance of a writ of certiorari.

CONCLUSION

The petition for a writ of certiorari should be de-

nied.

Respectfully submitted,

; Ben 8. FisHer,

Joun P, Sournmayn,

902 Warner Bldg.,

Washington, D. C.,

Attorneys for Respondent.

i Water M., Bastian,

Pe National Press Bldg.,

i Washington, D. C.,

j Of Counsel.

March 31, 1949.

° COPY

31

APPENDIX

Taste I

Petitions for Writ of Certiorari to The United States

Court of Appeals For District of Columbia Circuit

Filed January 1, 1947 to January 1, 1949

(Nore: Cases marked with asterisks involve administrative agencies

A. Petitions Dentep

Date

Case No. Filed Denied

Buckner et al v. Tweed 910 1/18/47 330 US 825

Friedman v. Swellenbach 990 2/6/47 330 US 838

DMW Contracting v. Stolz 1002 2/10/47 330US 839

Pepeo v. P. U. C. D.C. 1038 2/17/47 331 US 816

Kinnison v. U.S. 899 1/17/47 330 US 834

Hasson v. U.S. 1013 2/10/47 331 US 808

Garrett v. D. C. 1014 2/11/47 330 US 835

Thomas v. U.S. 1034 2/15/47 331 US 822

T. Higgins v. U. 8. 1079 2/28/47 331 US 822

Hawkins et al v. U.S. 1097 3/4/47 331 US 830

*U.8.v. P. U. C. 1135 3/17/47 331 US 816

Hensley v. U.S. 1138 3/18/47 331 US 817

B. Higgins v. U.S. 1177 3/28/47 331 US 840

*Young v. Anderson 1194 4/3/47 331 US 824

Curley v. U.S. 1211 4/5/47 331 US 837

Smith v. U. 8. 1235 4/11/47 331 US 837

*Jones & Laughlin v. United

Mine Workers 1236 4/12/47 331 US 828

- Case v. Government 1250 4/15/47 331 US 826

Mellen v. Hirsch 1322 5/5/47 = 331 US 845

Giddings v. Zellan 1490 6/1/47 332 US 759

*D. C. v. Johnson & Wimsatt 1504 6/18/47 332 US 760

*D.C. v. H. D. Lee Co. 1505 6/18/47 332 US 760

R COPY COPY BOUND CLOSE IN CENTER

Case

v. F. P. C.

Boone v. Boone

*Fields v. Hannegan

*Brown Instrument Co. v.

Warner

Burns v. Spiller

Pelley v. Matthews

*Beckham v. D, C.

Field v. U.S.

*Young Spring & Wire v.

N. L. R. B.

*Philadelphia Co. v. 8. E. C.

Gately v. Hariton

Fook v. U.S.

Wheeler v. U.S.

Capital Transit v. Grimes

Patton v. U.S.

Griffin v. U. 8.

Spruill v. Campbell

Edgerton v. Ooms

*Hurley v. Lowe

Ritchie v. Drier

Gray v. U.S.

Solis v. Clemmer

U.S. v. Davis

Holloway v. U.S. et al

Hall v. U.S.

Romney v. U.S.

Barsky v. U.S.

*Panhandle Eastern Pipe Lines

*Anthony & Sons v. N. L. R. B.

*Norris & Hirshberg v. S. E. C.

519

300 mise.

573

327 misc.

276 mise,

304 mise.

305

751

466 mise.

554 mise,

511 mise,

420 mise.

536 misc.

553 mise.

753

766

Date

Filed

6/24/47

7/10/47

8/20/47

8/27/47

8/21/47

8/29/47

9/16/47

10/27/47

11/26/47

12/29/47

1/12/48

12/17/47

12/22/47

1/7/48

1/12/48

2/4/48

1/26/48

1/6/48

1/15/48

8/29/47

4/19/48

4/22/48

6/3/48

5/13/48

4/24/48

5/24/48

6/3/48

4/20/48

4/27/48

Denied

332 US 762

332 US 766

332 US 773

332 US 801

=

332 US 773

332 US 792

332 US 811

332 US 825

332 US 851

333 US 837

333 US 867

333 US 828

333 US 838

333 US 838

333 US 829

333 US 845

333 US 830 |

333 US 857

333 US 864

333 US 874

334 US 828

334 US 860

334 US 853

334 US 860

334 US 849

334 US 852

334 US 853

334 US 847

334 US 843

‘BLEED /THR'OUGH — PO:

| Case

Airline Pilots Association v.

C. A. B.

Kingsland v. Carter

Carburetor Corp.

Billings et al v. Hill et al

Boye et al v. United Services

Life Ins.

Felton v. U.S.

Kirkland et al v. Atlantic

Coast Line

Simmons v. Federal Com-

munications Commission

Panhandle Eastern Pipe Line

v. F. P.C.

McCaffrey v. U.S.

Lawson v. U.S.

Brotherhood Locomotive

Enginemen v. U. 8.

Claxton v. Schaff

Harris v, U.S.

Fulton Iron Co. v. Larson

Pollard v. Hawfield

Meyers v. U.S.

Knowles v. War Damage Corp.

33

No.

858

123

158

215

27 mise.

254

78 mise,

438

450

467

492

Date

Filed

6/10/48

6/25/48

7/16/48

8/11/48

6/29/48

7/12/48

8/18/48

8/30/48

9/21/48

10/2/48

9/14/48

10/15/48

8/12/48

11/29/48

12/6/48

12/16/48

12/31/48

B. Petitions DisMissep

Case

Fleming v. Moberly Milk

Producers Co.

° COPY

No.

1095

COPY BOUND CLOSE

Date

Filed

3/4/47

IN CENTER

Denied

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed. 33

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed.

93 L.Ed. 426

93 L.Ed. 478

93 L.Ed. 480

93 L.Ed. 480

Case

Clark v. Uebersee

Finanz-Korporation

Donaldson v. Read

Magazine

Eecles v. People’s

Bank

Mitchell v. Cohen

Bakery Sales Union

v. Wagshal

Hurd et al v. Hodge

et al

Ahrens v. Clark

Frazier v. U. 8.

Hilton v. Sullivan

MeDonald et al v.

U.S.

Marzani v. U. 8.

Upshaw v. U.S.

Domestic & Foreign

Commerce v. Little-

C. Petitions Grantep

No.

934

1108

1414

1487-8

225

290-1

446

213 mise.

560

678

816

524 mise.

34

Action

Affirmed

Reversed

Reversed

Reversed

Affirmed

Reversed

Affirmed

Affirmed

Affirmed

Reversed

Affirmed

Reversed

Date of

Action

12/8/47

3/8/48

3/15/48

3/8/48

3/15/48

5/3/48

6/21/48

12/20/48

6/1/48

12/13/48

6/21/48

12/13/48

Argued

Citation

332 US 4

333 USI

333 US 4

333 US4

333 US 4%

334 US

335 US

335 US

334 US 32

335 US 451

335 US§

335 US

john 31 Pending Decision 11/12/48 =

Griffin v. U.S. 417 © “ Argued 12/15/48 —

T. W. A. v.C. A. B. 387 e “ Argued 2/8/49 —

Eisler v. U.S. 255 Pending Argument ao =