Appellant Railroads Statement of Jurisdiction — Akron, Canton & Youngstown Railroad v. Frozen Food Express

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1956/

AKRON, CANTON AND ‘YOUNGSTOWN RAILROAD

’ COMPANY, ‘et al.

| Appellants

FROZEN FOOD EXPRESS, et al.,

- Appellees

APPELLANT RAILROADS’ STATEMENT |

OF JURISDICTION fetcna

*

‘Filed: Juty — , 1997.

Cart HeLmetac, Jr,

1138 Transportation Center,

® Six Penn Center Plaza,

Philadelphia 4, Pa.

James W. NisBeET, ° ¢ «

_ 280 Union Station Building,

Chicago 06, Ill,

Cartes P. Reyvowps,

Seaboard Air Line R. R. Building,

' Norfolk 10, Va.

Counsel for Appellant Ratlroads.

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OPINION AND JUDGMENT BELOW™ - P \ 1

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JURISDICTION i hes cag bs es 2

THe Question RalsEp ON APPEAL. .... yt, ee

STATEMENT OF THE CAasE..°.... Ms 4

. “ PAGE-

THE SUBSTANTIALITY OF THE QURSTION...... 2. er) Lier,

CONCLUSION... . re ; , 2 20

Y ; re

CGRTIFICATE OF SERVICE... . : , ae .22

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Arrenpix A—List of Appellant Railroads... ee ee ae

- Appenptx B-Final Judgment of the Court Below..°....... 0° ~... ’ 26

s Table of Cases Cited |

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- : PAGE

hbctnt Assn. v. United States, 207 U. . 556 (1908) ° 13 «

Baltimore & Ohio K. Co. v, Premier Peat Moss Corp.., No. 1042 US. :. Sap.

Ct. October Term, 1956. eet! a. ity - 15

Consolidated Tyeck Service v. U nited States, 144 F. Supp. 814 (Dist. N. J.,

1956) . .

. ies is | 814 -

Determination ‘of Encenpted Agricultural Commoditi®, 52 M:.C.-C. 511 —

(1951). Lie Be cd aewcaees a 4,5, 6; 7.9, 10,41, 16

East Texas cz v. Frozen Food Expréss, 351 U.S & (1956) 2,3, 8, 10, 12,

13, 14, 15, 16, 17, 19, 20°

‘Frozen Food Express v. United States, 351 U.S. 40,(19563....... ,- 2,3,8

Frozen Food Express @ United States, = F. ‘Supp. 399 z :

(S. D. Texas; 1956)... ...... ee eee hae wus oe bees PS an SS 2,3, 9, 14

Frozen Food Express v. Cnited States, 128 F. Supp. 374-(S. D. Bena, 1955)... 2, ?.

Fruit Growers, Ing. v. a Co., 283 U.S. 1 (1931) “a bees es 13

‘Hartranft ». Wiegmann, 121 U. S., 609 (1887)... 0.0... Plc che

Home Transfer & Storage Co. v. -United States, 141 F. Supp. 599

ee ia ME Crecdacas oul eseWas s¥cecess sere Wk aad . .8, 10, 4, 19

Interstate Commerce Commission v. Home Transfer & Storage Vo., 352

U.S. 884 (19567. eat cians Sere ee earkae es ©. .3, 10, 14, 19

Premier Peat. Moss Ong 0. United States, 147 F. neat 169 (S-D_N. Y.,

SWS wo Guie-aco wa ; PS Pte Pitas ee pa! hw ee ga ee . i4

Table of Statutes Cited ° ;

0p

peti Commerce Act § 203 a sas Poa an oly SB, YOF14; 20°.

SE aC La ak By aes Fenty cee e sen hes 2

1.8. C$.651253, Os a. S... ; 3

28 U.S.C 4 1336, 1398, iis aie inc.

© 28: U.S. C, § 2825... Lett ge eet ne ene nage ees: 2

49 U.S.C. § 303 (iy(6) ore ; pegeerednees : 4

U.S. CLG 305 (g) : 2

DE ee > ae ee

monica f Table of Other Authorities Cited : >

Agricultural Statist ics, U. S: Dept. of Agriculture 1955. ..... ye Tee i

Transport Statistics for 1954, Interstate Commerce Commission. cree Se

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_ IN THE ..° ;

~ Supreme Court of the United States

OcTOBER Tin, 1950. eight Ne. ¢

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Akron, ‘Canton and Youngstown Raibroad C ompany, of ‘al.,

} Appellants,

. ar z v.

Frozen F 000 E rpress, et al.,

Appellees

Cc

APPELLANT RAILROADS’ STATEMENT oF

JURISDICTION.” © .

‘In compliance with Rule 13, paragraph 2, of the Re- '

vised Ryles of the Suprenie Court of the United States,

the Appellant Railroads, a list of which is attached. and

‘marked Appendix A, each.of which was an intervening -

defendant below,.most respectfiilly submit this their state-—

ment ‘particularly’ dise.osing the basis upon which the

Supreme Court has jurisdiction on appeal to review the —

order and “judgment of the District Court of three judges

entered i in this cause. —

_ OPINION AND J UDGMENT BELOW. . at

. The opinion ‘of the United States’ District Court for

nr Southern District of Texas, Houston Division, Which ;

Court consisted of the Honorable J. C. Hutcheson, Chief

Circuit Judge; the Honorable Ben. C. Connally, District

Judge: and the Jlonorable T. N. Kennerly, District Judge,

« 3

is reported under the -name Froz en Food Express v.

United States, 148 F. Supp. 399 (8. D. Texas, 1956). The

, final jadgment of that Court was entered on oak 14,

1957, a copy of which is attached and marked Appendix B.

‘It sh8uld be notéd at this point that-this appeal. is from

only-a portion of. the.judgment. It should also be rioted _—

that this appeal involves, to some extent at least, Ktiga-

tion previously before this Court, and therefore it deemed_

appropriate to invite ‘attention to the following reported

eases, all directly concerned: with the question here the

subject of review :

: - Prosen Food ae v. United States, 128 F.

- Supp. 374 (S. D. Texas, 1955) ;

|. Frozen Food Express v. United States, 351

U.S. 40 (1956); .

East Texas Lines x, Frozen Food Express, 351 a |

U. S. 49 (HE6F, ? |

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JURISDICTION. .

ae. Pee oe

The scene had its beginning in an action go

to enjoin and set aside cartain orders of the, Interstate -

. Commerce Commission pursuant to the requirements/of:

5.U. S. C. § 1009, 28 U. S. C. $1336, 1398, 2321-2325,’

‘and 49 U. S.-C. § 305 (g), brought by the Appellees

Food Express. ‘That cause was heard by a Dis

of three judges in _accordance with the requireffents. of 28. -

U. S. C. $2325. The Court, after considéring the matter,’

concluded that the order of.the Commission was not re-

viewable and ordered the action dismissed. oe

Express ‘v. Umited Stdtes, 128 F. Si p. 374, 379 (S. D

Texas, 19: Do). These Appellants and others appealed the

order dismissing the action to’ this Court and thereafter

this Court held, contrary to the District Court, thd the

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3

Commission’s order was reviewable and ordered the Dis-

trict Gayrt to adjudicate the merits. Frozen Food Evpress

District Court thereafter heard ‘arguments addressed to -

the merits of tlt® Commission’s order, and on December as

1956, issued an opinion in which it sustained to sone éx-

' tent, and enjgined to other-extent, the Commtiasionts order

‘which was-the subject Sf review. -Frozen Food Express v.-

_ a judgment entered March 14, 1957. It. is-from a portion

f= “ of this judgment that the instant appeal is taken. A Notice

of Appeal from this judgment was filed by these Xppel-

lants in the v nited States District Court for the Southern

i District-9 v9 Texas, Houston Division, on May 11, 1957.

| 2)

4 urisdiction of a direct appeal from a. pes judge dis- |

trict court in matters of the type here involved is vested:

./in the Supreme Court by — 28 U. S. C. §§ 1253 and.

“2101 (b).

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(3)

Such jurisdiction. of the Supreme Court is also made

plain by East. Teras Lines stale cen F ood Express, dol

U.S. - (1956),

: THE QUESTION RAISED ON APPEAL.

Whether the three judge district Court below was in

' error in interpreting the decisions of the Supreme Court

of the United States-in the cases of East Texas Lines v:

Frozen Food Express, 351 U. S. 49°(1956), and -Interstate

Commerce: Commission v. Home Transfer €: Storage Co.,

352 U. S. 884 (1956), and thereby holding that dried egg

_ powder; dried egg yolks; milk, powdered; buttermilk; and

fruits or végetables (quick frozen) are “agricultural

v. Unité “dd States, 351. U.S. 40, 45 (1956). The three judge _

_ United States, 148 F. Supp. 399 (S. D. Texas, 1956). The - se

determinations of the Court below were made effective by."

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‘ eominodities’’ as that ternr is nséd in Section 203 (b)(6) &

of the Interstate Commeree“Act, 49 U.S. C. §303 (b) (6),

and, that- beso averd commodities m&v be moved over

' the highways jn interstate commerce by motor carriers not —

apo fing-& certificate ¢ or ‘permit issued: by the Commission

a

STATEMENT OF THE CASE.

The matter. now before this Court was first presented

in a proceeding before.the Interstate Cominerce. Commis- .

_ sion, Determination of Exempted Agricultural Commodi-

ties, 52 M: C-C. 511: (1951). That proceeding involved ‘an —

extremely important. but very troublesome section of the ~

Interstate Commeree Act, namely, Section, 203° (b) (6)?

49 U. S.C. § 308 (b)(6), which provides as follows:

‘Nothing in this part [t.e., the: provisions pro-

- viding: for economic regulation of the motor carrier

industry] * * shall be construed. to include * * motor

vehicles used in carrying a 7 agricultural eommodi- —

ties (not including manufactured products thereof)

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+ Prior .to the Determination case, and from the very _

inception Af regulation of the interstate motor cartier _

industry in 1935, there bad been considerable doubt and —

much eonfusion among those in. the transportation in-

dustry as to wheré'the line should be drawn in separating

agricaltuyal commodities that had- been merely processed

from-those which had been manufactured, in ‘determining

-whether such items had to be handled under regulation or

could be transported over the highways outside of regu-

lation. The language of the statute itself was not af all

helpful in establishing this line, and the legislative history’

was little better. Left.to their own devices, the carriers

made such determinations largely upon the basis of what

was individually thought beneficial without regard: for the

’ basic and over-all objectives of the statute dnd the regu-

¢

.

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we ‘scheme éreated’ by it. "Attempt on the waits vi. the -

Commission to classify particular items were on ‘an

isolated or fragmentary ‘basis and, in the few instances: .

where the courts -became inyolved, the approach was‘sub- -

. stantially the same. Direction and a well defined course —

"were, entirely lacking and it is fair to say that the regu-

latory étheme was being ‘seriously endangered by the

flounderings: ‘that were taking place. It cannot be gainsaid

that what was urgently needed was. Commission action

-whigh would outline a pattern that could be easily followed -

” and which would at the same time provide a sensible and

_ workable ‘solution so that the entire industry, within rea- -

sonable limits, would have clearly jn mind what type of

items were exempt and what type of items were required

to be handled under regulation: - Stated a little differently,

. what was needed was a Commission interpretation of the

statute which would have every-day workability, as con- —

trasted with legalistic and academic accuracy and precision. *

- In the’ Determination case it is apparent that the.

Commission’ s objective and purpose were to provide: the

transportation industry, shippers, and others vitally. con-

_ eerned with interstate commerce with just such an inter. —

pretation and application “of the statute. A reading of *

the Commission’s report will demonstrate that the method .

it followed was to review the legislative history of the -

. section and the. court decisions dealing’ ‘witli similar Con-.

gressional language. From this-review it was concluded

that the term ‘agricultural’ : ordinarily includes farming,

horticulture, forestry, dairying, and live stock “and poultry —

raising, and that the term when used in the _Interstate

Commerce Agt should be given its ordinary meaning. Thus

‘*apricultural commodities” as used in Section 203 (b) (6),

the Commission said: ~

) berth embraces all products raised or produced

on farms by tillage and cultivation of the soil (such.

‘as vegetables, fruits, and nuts); forest products; live

a

. . Fen aes ,

poultry and bees’ and commodities produe ae by ordi.

enary livestock, live poultry, ‘and bees .(sach. as ‘milk,

; ‘wool, eRES, and honey).”’ : Re)

ies embraced

Having found the Scope of the commod)

within the- term ‘‘agricultural commoditié . the .C ommis-".

sion next turned ‘to the meaning. of sie ‘(not in-

cluding - manufactured. products thereof)’?. which is the

statutory standard whiéh. détermines ‘whether the trans-°

portation is: under/ regulation er outside of it. This term’

takes on importance when commodities; which in the first

instance are adinittediy agricultural commodities, are

. Subjected. to processing. In such situation the inquiry is

whether the processing has converted the once agricultural

commodity, into a manufactured product. No deep or

He searching thinking is required: to reach the conclusion that

such fn inquiry—with the myriad: degrees of processing”

actually applied, or likely. of application as new techniques —

are developed, to agricultural eommodities—results in the-

finest shades of distinetion and almost hopelessly con--

fusing analogies. The line between merely progessed and

7 manufactured would seem to be as difficult to ‘draw as the

‘line between educated | and uneducated. .

' Attempting. to deal with this perplexing problem, the

Commission looked ta.the decisions of this Court and con- —

cluded that. an agricultural. commodity becomes ‘‘manu-

facture” when, as.a result ‘** * of treating ox_process-.

ing, [it acquires] new forms, qualities, properties, or com-. ..

binations’’,?\and on the basis of this definition it then

classified & number. of processed agricultural commodities ;

‘as either in the exempt classification of ‘agricultural com- :

modities’’ or in the regulated classification of ‘*manufac-

tured, products. 23, ie \° .

527- 558 inc. (1951).

1 Determenation of Exempted . Agricultural Commodities, 52 M. C.'C. 511,

519 (1951).

2 Determination of Exempted Agricultural Commodities, 52 M. C. Cc 511,

521 (1951).

3 Determination of Exempted Agric ultural Comniodities ad MCC. Sil, °

be ~d 7

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“Frozen Food. Express, a certificated. ngotor carrier,

~ handling some traffic. of the ‘type involved in: ‘the’ Detempi-

‘nation case under ' regulation—but faced. with, competition:

from— other. motor carriers operating outside of regula-

tion and handling as exempt particular commodities held.

by the’ Commission. to be -in-the_non- exempt . category,

4inder_a claim that the Commission’s interpretations were |

. not proper—in ‘order to test the legality of the Commis-

-. sion’s classifications, brought suit in July of 1954 in the

Southern District of -Texas ‘before the three judge Court

below to gpjoin the Commission from enforcing its order

in the Determination case. These ‘Appellant Railroads, ,

the. American Trucking Association’ Inc., and others in

the transportation industry having an. interest in ited

serving fair and ‘equitable | regulatidn intervened in =

port of the Commission’s order. The Secretary of. Agri.

- eulture and the Department of J ustice also intervened but

for the purpése of having the Commission’s~order ssét -

aside as it applied to particular processed items. After .

hearing argument. and receiving briefs, the three. jpdge

Court concluded that the Commission’s: order was} not

pe and dismissed the suit. Frozen Food Eu press

. United States, 128 F. Supp. 374, 379. (S: D. Te: xas -

: 1955).

In addition to secking a review a the: Commission's:

* order in the Deterinination ease, Frozen Food Express in

_the same proceeding asked the three: judge Court’ to en-

join and: set aside another order of the Interstate Com-

merce Commission which specifically. directed Frozen Food

. Express to cease and desist from transporting fresh any

frozen dressed poultrv in, interstate commerce until a cyr-

tificate was secured. ? :

The crinieecititten embraced in the cease and d¢siat

order, namely. f resh and frozen dréssed poultry, had/heen _

placed in: the: manufactured cdtetory in the Determination -

case. The Court below granted the injunction. Frozen

Food Express v. United States, 128° F. Supp. 374, 381

.

iS. DL TPexas, 1955), These Appella) Raitionds, the

Vinerican ‘Trucking Associations, Inc., terested certifix’

{ted anoter carriers, and the Commission appealed hoth

ers ot the three judge Cour, to this Court. Probable

irledie ‘tion Was noted with oe to beth orders of the

lower Court. The ‘reatter, this Court in se parate opinions

uid orders, imepne instance reversed and in the other in-

stant affirmed: the Court below, In Frozen Food Express

x ited States, BAL USS. 40 (1956), this Court with Mr.

Fixstiee Harlan dissenting, .held) that) the, Commission's

rdey in the Determination case. was re viewable. and. re-

yirne’ that case to the three judge ¢ ‘ourt below for review

su-the merits, rea ers

In Mast Teras.Lines ve Frozen Food Express, 81 |

PS. 49 (1956), this Court in a five. to four decision af-

irmed’ the lower ‘ourt’s holding that the Commission had

‘rred in concliding that fresh and frozen dressed poultry

vas not an agricultural commedity. Mr. Justice Douglas

n stating the views of the majority said at Page 54;

‘At some point processing and manufacturing

will merge. But where the commodity retains a con-

tinuing substantial identity through the processing

stage, We cannot say that it has been ‘manufactured?

within the meaning of ¥ 208 (b)(6)."

‘his language has: given(rise to much spetulatfan

vithin the transportation industry as to whether this Court

as pronouneed a new and different test from that adopted

Vy the Commission for determining the point. at which

irocessing becbmes mnanufacturing. Certainly in cases be-

‘ore three judge courts following the decision in the Kast

Pevas Lines ‘case, there are strong indications that those

courts have taken this. language to prescribe a new test,

me whieh is more liberal in favor of the exempt status

han the Commission’s.¢ The importance of this test will

"See Consolidated Truck Service v. Untted States Jy 53 Fk. Supp., 814,

17 (Dust N. J. 1956); Hlome Trattsfer & Storage Co. v. United States, 141

Supp. S599, 62 OW DW ash. 1956),

. become evident after the proceedings in the Court below,

are examined, - > _

After this Court had one bea the ( “omg sdanny orde e

in the De termination case.to be reviewed” on the merits,

the case was again Riehl ws argued orally before thé

© ourt below,” In both the briefs and the oral arguments;

particular attention was given to the so-called ** Continuing

Substantial Identity ‘Test’ and its application to the many

commodities, the Matus of whieh was before the Court.

~The Court below in an opinion handed down on De-

cember 31, 1956, Frozen Food Express v. Unif&d States,

148 F.Supp. 399 (CS. D. Texas, 1956), applying the con-

tinuing substantial ‘identity test held the cme com

moadities to be exempt (148 KF. Supp. at page 402)

‘°° frozen- whole eges: dried egg hen dried

egg volks; clean ricey-riee bean; rice pelsh; pasteur-

ized milk ; fresh cut up vegetables in ¢ellophane bags;

fresh vegetables washed, cleaned and packaged in

ce ‘Hophane hags or boxes; fruits or vegetables (quick

frozen) ; shelled peanuts: peanuts shelled ground;

killed and picked poultry (although not drawn) ; rolled

barley; cottonseed hulls; beans (packaged, dried artifi-

cially or packed in small ¢ontainers for Retail trade);

dried ‘fruits (dried mee hanically cor artificially) ;

“peaches peeled, pitted and placed in cold storage in

unsealed containers; strawberries canned in syrmp in

unsealed containers and placed in cold. storage? milk,

skimmed, vitamin D; «milk, powdered; buttermilk;

feathers; frozen milk and eream: cotton linters;

‘chopped hay: seeds,’ deawned or scarified; redried —

tobacco: leaves.’ | ated

The Court then went on and found th@ following com-

‘modities to be non- exempt saving (148 F.Supp. at page

403) : ;

‘*For the reasons set forth in our opinion Frozen

Food Express v. 0. S., 128 FL Supp. 374, at page 379

Lv

et seq.. we hold. to be non-exémpt the following:

slaughtered ‘eattle; fresh meat; meat. products: We

likewise: hold non-exempt, under the. evidence, which

deals with commercial creamery products, as ‘manu-’

factured products’ of agricultural -commodities, the

following: cottage cheese; cream Cheese; butter? cot. |

-.tonseed meal; fruits and vegetables canneds, milk con-

densed. Each’ of: these. products has acquiged anew

identity, with new. properties, and is devoted to new

‘and different uses than its original principal ingreti-

ent. As result of combination with other constituénts,

of treatment and processing by varied types of-ina-.

chinery and équipment, agmew product has emerged.

-If the semanticist urges that a can of peaches or of

condehsed milk may not properly be described as a

‘manufactured product’, it may well be that these

‘items illustrate the point at which processing merges

with manufacturing.” |

The holdings of the Court below that frozen fruits

d vegetables are agricultural commodities were in- -

enced to-a considerable extent by a decision ‘of a three

lge court in Home Transfer & Storage Co. v. United |

ates, 141 FL Suppe 599 (CW. DL Wash. 1956) aff. wwith-

t opinion; Interstate Commerce Commission v. Home

ansfer & Storage Cox, 352 U.S. 884 (1956), which was_

nded down: after the opinion of this Court in Fast

vas Lines vy. United States, 351 U.S. 49 (1956).

In the instant appeal, ‘these Appellant Railroads i a

king this Court to review the holdings of the Court

low to the effect that dried egg powder; dried egg yolks;

Ik, powdered; buttermilk; and fruits or vegetables

uick frozen) are agricultural commodities, within the

aning of that term as used in Section 203 (b) (6)

> Interstate Commerce Act. Fach of these commodities;

» Commission in the Determination case had earlier

ld was not an agricultural commodity. The other hold-

ings 0° the Court be low, poe One of whether they. are

in accord with those of the Commission in the Dete rmina-

fton ease, are not disputéed* before this Court’ by these

Appellants. . |

The notice of appeal instituting this ‘appeal was filed

_ with the District Court below on, May 11, 1957.

~~

THE SUBSTANTIALITA OF THE QUESTION.

The agric cultural production of this nation.for the y year

1954, furnished gross farm income of almost 34 billion ‘dol-

Jars® and was a principal source of trafic for all forms

of for-hire carriage. For the Class I Railroads which are

parties in this litigation curing this same year this tre-

mendous agricultural’ production furnished freight rev-

entes in’execess of 1.4 billion ‘dollars, or approximately

17.7 percent of their total freight revenues.” Thus, it an

he seen that the transportation of agricultural produc. -

tion. whether unprocessed, processed, or manufactured

is a commercial undertaking of gigantic size. and of the

greatest importance not only to the carriers, bit to the

shippers and consignees as well.) And what is most im-

portant from the standpoint of the anstant litigation is the

growing trend on the part of the consumers to prefer

agricultural ifems that lave been extensively processed.’

Since. the consumers are evidencing, a growjng preference

for proeessed agricultural items, it follows that the

amount of such items that enter the stream, of commerce

ix rapidly increasing. So, in this litigation, the: concern

ix not only with traffie that is presently valuable to these

Appellants, bat also with traffie that. in’ the furure ‘Should

he of increasing importance to them: :

> Pa Statistics, UL So Teept. of Mericulture," 1955, p. 42¢

’

* Transport Statistics for 1934—Interstate Commerce Commission, po 41.

7 Agricultural Statistics, U.S. Dept. of Agriculture, 1955, pp. 197, 250,

253

t The transportation by railrdad of agricultural’ pro-

duction regardless of whether such production is fresh,

processed, or manufactured is subject to complete regula-

tion, whereas the transportation of this segment of trafhe

by the railroads’ competitors is free of all economic: regu-

lation unless the agricultural production is **manufac-

tured’’. Since the railroads -have had @xeessive dif-

fieulty in successfully competing for’ traffic which: the

motor carriers can handle outside of regulation, the in-

terest of these-Appellants:in this litigation becomes clear.

And particularly is this so when it appears that the de-

terminations made by the Court below may have the effect

of creating: an exempt status for items of commerce which

have long been regarded as properly moving over the

highways only by regulated éarriers. <n summary, the ’

‘question here involved is a most. substantial one for if

the decision of the Court below rémains efféctive, the

result will be to free from regulation for movement over

the ‘highways an important sem. ent of traffic which until

now has been regarded as traffic of the regulated carriers,

and which when moved by railroads. will remain under

regulation. While it is true ‘that to some escent this is. an

inequity inherent in the legisiation, nevertheless, it is cer-

tainly a substantial matter if this inequity is improperly

broadened by court determinations which are excessively

generous in. favoring the exempt. status for commodities

which have undergone considerable processing. It is re-

spectfuliy submitted that with regard to the commodities

-here involved, namely, dried egg powder; dried egg yolks;

milk, powdered; buttermilk; ane fruits or vegetables

(quick frozen), the decision of the Court below has ex-

tended the exemption far beyond what was contemplated ~

by Congress largely because of a misunderstanding of the

purpart of the language of this Court | in the East Tv ras

Lines case. te:

This misunderstanding, these -Appellant Railroads

think, stems from a belief that this Court in utilizing the

e-

continuing sulstantial- identity test for determining the

line between merely processed and **manufactured”’ was

establishing a different and more liberal test in favor-of —

exemption than the Commission adopted. The test the

Commission used was that laid down by this Court. in

Fruit Growers, Inc. v. Brogdexr Co., 283 U.S. 1 (1981).

There, Mr. Justice McReynolds relying on the definition

in the Century Dictionary. (288 U.S. 1, 11), held that

manufacture exists where natural products by .processing

are given ‘fnew forms, qualities, properties, or combina. .-

tions * *’*. In reaching this conclusion, this Court. in

the Fruit Growers case’ relied heavily upon ig earlier

‘Janguage in Hartranft v. Wiegmann, 121°U. S. 609, 615

“(1887), and Anheuser-Busch Assn. v. United States 207

U. S. 556, 562-(1908).

That the continuing, substantial identity test italy

enunciated in the East Tevas Liné case is a restatement

of the same test announced in the Fruit Growers case is

not only evident from comparison of, the language. used,

the latter test being the corollary of the earlier one, but

also from the fact that both were founded upon the earlier

statements of this Court in ‘the Hartranft and-Anheuser-

Busch eases. If this analysis is correect—and logie and rea-

soning strongly indicates that it is—the question in the

Court below was not whether under a new test the in-

volved commodities are manufactured, but rather whéther

the Commission with respect to the particular items here

hefore this Court reached:the proper conclusions by the

application of the test it used. a

The difficulty and uncertainty that must necessarily

exist in applying any test to determine the fine line be-

tween merely processed and ‘manufactured’? commodities

is compounded and magnified out of all proportion when

— there is confusion and doubt as to the test that should be

applied. If, the: transportation industry, particularly the

_regulated segnients thereof, is to expand and improve its

ficilities for handling processed agric ultyral items which

rill nec -ssitate vast expenditures of capital, there must be -

ertainty within: reasonable limits as to the’test to be ap-

lied to determine whether a particular item moves under

egulation or outside of it. Nxperience has demonstrated

eyond all doubt that when :t becomes established that a

articular processed item once believed to be the subject |

f regulation is definitely placed in the exempt category,

le transportation of such item in large. measure is di-

erted from the’ regulated carriers. This beinig)xo, if un-

ertainty exists about the status of particular items, wise

usiness judgment demands that the regulated carriers

ot waste their capital and energies in purchasing new

quipment and developing new techniques for transport-

ng a type of traffic that within the immediate future may

e lost to them. ‘Perhaps in an ideal business climate, it

ould be, étherwise, but. realistically, the state of affairs is

recisely. as here expressc '. The result of this is that

hippers and the nation as a while. must be satisfied with

transportation service which falls short of what it could

e if reasonable certainty existed. Particularly is this so

‘ith respect to the transportation of frozen fruits and

egetables.

Since the decision of ‘this Court in the } Fast Texas

ines case, Section 203 (b)(6) of the Interstate Comnierce

et has been the subject of litigation in four different

hree judge federal courts. In three of these cases,

‘sue_involved_the-establishment of the line e between proe-

ssed_ and manufactured. Frozen Food Express v. United

‘tates, 148 kK’. Supp. 099 (S. D. Texas, 1956); Consolidated -

‘ruck Service vy. United: States, 144 F. Supp. 814 (Dist:

J., 1956);. Home Transfer & Storage Co..v. Enited

‘fates, 141 F. Supp. 999.(W. D. Wash., 1956), aff. without

pinion, sub nom. “Interstote Commerce Commission v.

fomee Transfer & Storage Co., 852 U. S. 884 (1956). In

ie fourth case, this issue was not involved, the question

eing whether a substance found in the sub soil, namely —

cat moss is an agricultural commodity. Premier Peat

Moss Corp. vy. United States, 147. F. Supp. 169 (S. D.

N. Y., 1956).* : ..

“ each of the cases where the question. involved man-

ufacture, the. courts applied the continuing substantial

identity test to determine whether tke particular commodi-

ties were manufactured, totally without regard to whether

the Commission’s conclusions based on the application of -

- the test utilized by it were sound and cerrect. And from

- the language of the Court below, it appears quite evident

that the Court believed that the continuing substantial

identity test is a new, and inferentially a different, one.

For example, the Court below refers to this test. as ‘‘this

most recent test’’(148 F. Supp:-399, 402) indicating that it

supersedes earlier ‘versions. The disturbing and confusing

impact of this is accentuated by ce fact. that the Court

below in strong language conclude: that the new test re-

_quires a liberal ge tat of the exemption. hus, the

Court below says

‘*In holding frozen fruits and vegetables to be exempt,

the Home Transfer case has'gone far toward settling

the entire controversy in favor of the liberal inter-

pretation of the exemption urged by the | farming in-

terests, the Department of Agriculture, and those

motor carriers (as the Pla: intiff) who seek. to avoid

1LC€-control in ‘the ‘carriage of ‘these commodities.’

“There is acai i the opinion of this Court in the

Rast Teras Lines case to support the eenclusion that the

continuing substantial identity test is either a new or a

more liberal one in-faver of exemption than that used by

the Commission. At most, the Last Terds Lines case.

stands for the proposition that this Court was convinced

that the Commission had erred im concluding that by the

application of the test it used, fresh and frozen dressed

‘This case ts on appeal to the Supreme Court, Baltunoge & Ohio R¢ Co

\. Premier Peat Moss Corp, No 1042, Oc ctober Term, 1956.

9.148 F Supp, 399, 402 Sal

poultry were manufactured. The language of this Court

establishes this. At page O4, Mr. Justice Douglas said:

-“The Commission is the expert in the field of —

transportation. And its judginent is entitled to great —

deference because of its familiarity in. the industry

which it regulates * °. But Congress has placed

‘limits on its statutory powers; and our duty on judi-

cial review is to determine those limits. * * Those

limits would be passed here if the Commission were

permitted to expand ‘manufactured’ te include such

incideatal processing as is involved in dressing and

- freezing a chicken.’

This Court in the Rast Texas Lones case was not cor-

demning the entire course of the’ Commission's reasoning’

which is so fully spe [led out in the Determiiation- case, but

rather, it would appear, expressing the view. that on the —

difficult juestion of the status of the particular-thorde: line

commodities, namely fresh* and, frozen dressed poultry,

the Commission had reached the wrong @sult. The five to

four decision of this Court is an indication of this.

The Court helow taking-the language of this Court to

create a new and more liberal test has not only completely

disregarded the Commission's solution to the problem with -

respectto the particular items before this Court, but has

alxo reached conclusions ecmpletely beyond the limits rea-

sonably outlined by the East Texas Lives case;

In the proceedings leading-to the Commission's order

in the Deter ition case, a large number of scientists

and others having broad knowledge of agriculture and the

processing of agricultural commodities - testified, as did, ,

representatives of many transportation companies, Others

who did. not testify submitted pleadings presenting their

views, and there were unlimited opportunities .for artyone-

to ao likewise, Throughout -the proceedings no one. eon-.

tended that any of the commodities here involved were. in

G ° a Sige ee ‘

the exempt category, All were‘in agreement that they are

manufactured,'® and the Commission by applying the’ test

that manufacture exists where. the ‘items when processed

take on new forms, properties or combinations, so ¢con-

cluded. It-would seem applying the restated version of the

test, namely that the exempt-status is retained so long as

continuing?substantial identity, rémains, would also compel

the conclusion that each of the items here involved is man-

ufactureds Certainly, dried egg powder, dried egg yolks,

powdered milk, buttermilk, through extensive processing

have, become as different from the products from whch’

‘they are derived as any admittedly manufactured .produets

are. If there is any deubt of this, it could be resolved by

asking any of the millions of American soldiers and sailors

who were subjected to powdered eggs and powdered milk

during the last World War whether there is any similarity

_—hetWeen those products and fresh eggs and milk.- Were: a

restaurant to offer any of these items as a product having

_ substantially. the same identity as those from which they

are derived, a-custemer’s complaint of fraud would be

more than justified and the restaurant’s loss of pytronage®

for. deceit inevitable, If powdered milk and eggs are not

tnanufactured, it texts imagination beyond limit to conceive

of a manufactured food product. - a

“Frozen fruits: and vegetables are likewise something

different from fresh fruits and végetables. As the. Com-

mission stated (52°M. C. C. dhl, 534):

‘Although no,one questions the examiner’s con-

clusion that frozen or quick-frozen fruits and vege-

tables are manufactured products, in view of certain

IS See Dete rmination of E: rempted . rae ultyral Cwiedities a dl

S11, S34, S47, 550 (1951). It is to be noted that while none of the parties

contended. that frozen fruits and vegetables were not manufactured, that

Commissioner Lee alone was of the view that such trozen items were in the

exempt egregory unless “substantially changed in character and, appearance.”

<M, tC. SU, ee

questions raised respecting. other frozen commodities,

some discussion of these items will be helpful. The

quick freezing of fruits involves the ‘addition of other

ingredients, principally sugar or sirup. Since a ‘com-

bination” results, it. follows in light of ‘the foregoing

definition of ‘inanufacture’ that quick-frozen, fruits

are manukactured products, In the quick freezing of

vege ‘tables, the “commodities are customarily blanched

or scalded prior to freezing, and sometimes ascorbic ”

acid is added, thus enabling the product to be held —

in that conditfon until. ready ‘for use. In. the -eir~

cunstanees, the frozen vegetables cannot be said to

be in their natural state: We conclude that they, too,

are manufactured products.” aan a ant

=)

Frozen fruits and vegetables are as different from

fresh’ as canned fruits-and vegetables are, as everyone

knows, But as: to canned fruits and -vegetables, the Court

helow said (148 BF. Su pp. 399, 408) 50° |

g

“We likewise hold non-exempt * * “fruits ancl

vegetables canned; milk’ conde nsed. Bach of these

products dias acquired a new identity, with new prep-

erties, and ix devoted to new. and different uses than

its original principai ingredient.’ As result’ of eom-

* bination with other constituents, of treatment: and

processing by varied types of machinery and equip-

-ment,'a new product has emerged, ‘If ‘the&emanticist

urges that a can of peaches . of condensed milk nav

not properly be deseribed asca ‘manufactured prod-

_ net’, it mayewell. be that thoes items illustrate the

point at. ‘whic h processing inerges with mannufae-.

turing.”’ .

Essentially, both’ frozen fruits and vegetables. and

eanned fruits and vegetables are preserved manufactured —

food products which result frem agricultural commodities |

=a,

eee |) |

‘having been y- sibjected to heat treatinent; Shelled, pitted

“or pared; « ivided or reduced in size; mixed with chemicals

including ‘salt, sugar: ete., and finally packaged and sold

as different articles. Everyone would feel deceived and:

cheated if he were offered frozen stfawberries or: peaches |

as fresh, and equally ‘so if offered frozen potatoes or lima -

beans as fresh: He would ‘be just as indignant with such

a substitution as he would be with. canned fruits or vege-

tables for fresh:

The conclusion of the Court below that frozen, fruits

and vegetables are not manufactured—unlike ‘its holding

respecting buttermilk, powdered milk and powdered eggs

és o??

—was not rested solely upon its application.of the ‘new

continuing substantial identity, test, for such conclusion .

- was in accord with the opinion of the three judge court

in Home Transfer. & Storage-Co: v. United States, 141 F.

Supp.. 599 (W. D. We ash. 1956). But the decision there

also was based onthe feeling that the Fast Texas Lines

cise created a new test."

It is the belief of these Appellant Railroads that the

extremely liberal. interpretations® of the exemption eon-

tained in Section, 203 (b)(6) of the Interstate Commerce

Xct that have’ resulted ‘in such heldings as are here pre-

sented, namely that powdered eggs, powdered milk and

frozen fruits and vegetables are riot substantially differ-

ent items tham fresh eggs, milk, fruits and vegetables by

-réason of manufacture, indicate the urgent need for this

Court to review the entire matter . ‘Unless this is done, the

‘path of liberal interpretdtion in favor of exemption will

become so broad that it wif} destroy. fair and sensible

regulation of the mofor carrier industry. :

i Some point may he made that the decision in the //ome Transfer case

was affirmed by this Court in a ‘state Commerce Commission v. Home

Transfer & Storage Co , 352 U. 5S. 884 (195). While this. may: be teghnically

true, such aflirmance was ious opinion and upon prese ntations made only

in jurisdictional statements. The affirmance under such circumstances is, of

course, regarded as no different from the denial of certiorari in a non-appeal

case.

ci ¢

What is ; needed: is a reeqnsideration of the test laid

down in the East. Texas Lines case in the light of the.

pattern of decisions of the lower courts applying ‘it to

determine whether the test-ought to be redefined, or more

definite directions given for its application. “If. this is not

done,. the erosion of regulation will continue until the line_

between agricultural commodities and manufactured prod-

ucts thereof will be totally obliterated. If this be the in-

evitable’ result of the trend of the lower courts’ decisions: |

based on. tlie East Texas Lines case, and this Court does” _

not deem it appropriate to divert the flow im this direction,

. then the regulated :transportation industry is entitled to

know this so that its future plans and’ policies can be

plotted and®mappeéd. Similarly, if this .Cexrt has envi-

sioned the trend of decisions as otherwise developing,

this too: is of v##l concern to the regulated transportation

industry, for then future plans can be drawn pn the basis —

of reasonable certainty in this field. In either event, until

this Court reviews the matter, the present state of affairs,

is unsatisfaetory not only .to. those providing for-hire |

interstate transportation, but also to thos in the nation’.

_ dependent upon sach- transportation ‘for marketing - the

products of their labor.

; CONCLUSION.

. sf ° .

The specific question here is whether the Court below

was right in holding that dried egg powder; dried egg,

yolks; milk, powdered; buttermilk; and fruits and vege-—

, tables (quick frozen) are agricultural commodities. as that

‘term is uséd in Section.203 (b)(6) of the Interstate Com-.

merce Act. But while the question as thus. posed would

seem to be a fairly limited one, its ramifications , are |

most extensive and important, for involved in this ques-

tion is the test to be used, anckits method to being applied,

‘

ein determining, where: the line sheuld be drawn in. elassi-

fying an ‘almost limitless number of processed agricultural .

items as-either ‘‘agricultural commodities’? and thus per-

mitted to be handled by interstate motor carriers outside”

of regulation, or ‘‘manufactured’’ products and thus per-

mitted to be transported only by motor common. carriers

having’ certificates or perinits issued by the Interstate

7 Commeree Commission. From a long range standpoint,

the question before this Court is, bee ‘ause of its extensive

ramifications, of the greatest importance to the entire

regulated transportation industry for the answer to it will

determine the amount.of capital and efforts which will: be.

/expended to improve and develop new transportation

‘/ facilities for the movement. of the Nation’s agricultural

production. This, of course, is not only a concern ‘of the

regulated transportation industry, but as well of the vast

segment of the public dependent upon such industry for

moving the products of its labors in interstate commerce.

It is therefore respectfully submitted that the question

here is a most substantial one.

Respectfully submitted,

Cart Heumetae, JR.,

JAMES W. NIsBet,

_CHaARLEs P. ReEYNOLDs,

Counsel for Appellant Railroads.

* CERTIFICATE OF SERVICE.

t, ‘Carl. Helmetag, Jr., attorney for the. Appellant

Railroads herein, and a member of the Bar of the Supreme

Court of the. United States, hereby. certify that I’ have

served copies of the foregoing Statenient of Jurisdiction

on Nom several parties to this action as follows:

“1. On the Appellee, Frozen. Food Express, by mailing

copies. in duly addressed-envelopes, with air mail postage

prepaid, té its attorneys of-record, Carl L. Phinney, Esq.,

and Leroy Hallman, Esq., First National Bank Building.

. Dallas, Texas; , ‘ 7

2. On. the Seeretary of Agriculture, by mailing copies

in a duly addressed envelope, with postage prepaid, to his _

attorney of record, Charles W. Bucy, Esq., Office. of .the

Solicitor, United States Department of Agriculture, Wash.

ington 25, D. C.;,

3 On the United States of America, by mailing copies

in dn ddressed- envelopes, with postage prepaid, to its

attor » the Honorable Herbert Brownell, Attorney Gen

ral; ond. James BE. Kilday, Esq., and Charles S. Nitllivan,

"Jr., Esq., United States Department. ot Justice, Washing-

ton 25,-D. C.; by mailing.a copy in a.duly addressed

envelope, with air mail postage prepaid, to ‘its attorney

of record, Maleolm R: Wilkey, Esq., United States At-.

torney, Houston, Texas; and by mailing a copy in a duly

addressed envelope,. with postage prepaid, to the Honor-

able J. Lee Rankin, Solicitor General, Department of

Justice, Washington 25, D. c. ee

4.-On the Interstate Commeree Commission by mail-

ing copies in a duly addressed envelope, with postage pre-

paid to the Honorable Robert W. -Ginnane, General Coun-

sel, W ishington, ee ee .

~

wo

ad , . .

5. On the several other partfes by mailing copies im

duly addressed envelopes, With postage prepaid, to their

respective attorneys of record, to wit: David G2 Maeadnald,

Esq., and. Francis W: Melnerny, Esq... Conumonweatlth

Building, 1625 K St., N.W.. Washington 6; D. Cop Peter T.

Beardsley, Esq.. and\ Fritz Kahn, Esq. c/o) American

Trucking Associations, Inc. 1424 Sixteenth “Street, NW.

Washington 6,°D..C.s'Dale C.Dillon, Esq. and Clarence D.

Todd, Esq. 944 Washington Building, Washington J.D. C.:

and by mailing copies in‘duly addressed @nyelopes, with

air mail postage prepaid to Rollo bk. iNidwell, Mesq.y 501

~ Empire Bank Building, Dallas, Texas; and Lee Reeder,

Ksy., 1012 Baitimore Avenue, Kansas City 5, Missouri,

CG

Dated, this the 10th day of July, 1957.”

Ls

.

Carl, Helmetag, Jr

APPENDIX ‘‘A.”’

LIST OF APPELLANT RAILROADS.

The below listed Railroads are the individual carriers

whieh, together, comprise the Appellant Railroads. When

used. the terms ‘*Appellant Railroads’’ or ‘*Railroads”’

include each of: these named Railroads:

Akron, Canton and: Youngstown Railroad‘ vane

The Ann Arbor Railroad Company

The Atchison, Topeka & Santa Fe Railway Coeeaae”

Atlantic Coast Line Railroad Company

The Baltimore & Ohio Railroad Company

Bangor and Aroostook Railroad Company |

Boston and Maine Railroad |

Central of Georgia Railway Company

The Central Railroad Company of New Jersey

Chicago & Ilinvis Midland Railway Company

Chicago and Northwestern Railway Company

Chicago, Burlington & Quincy Railroad Company

Chicago, Great Western Railway Company ~

Chicago, Indianapolis and Louisville Railway Company

Chicago, Milwaukee, St. Paul and. Pacific Railroad

Company

-Chieago, Rock Island, and Pacific Railroad Comal

The Delaware and Hudson Railroad

The Delaware, Lackawanna and Western. Railroad

Company

The Denver and Rio Grande Western. Railroad (om.

pany

The Detroit and Toledo Shore Line Raiiroad Com-

pany .

Detroit, Toie@lo and -ronton Railroad Company

Duluth, South Shore and Atlantic, Railway Company

Klgin, Joliet and: astern Railway Compan y }

Krie Railroad

Florida Bast Coast Railway Company

Fort Dodge, Des Moine & Southern Railway Company

~Grand Trunk’ Railway System

Gireat Nort}ern, Railway Company +

Green Bay & Western Railroad Company

Gulf, Mobile and Ohio Railroad Company®

Ilinois Centr: Railroad Company

The Kansas City’ Southere Railway Company

Lehigh and New. England Railroad Company

Lehigh Valley Railroad Company

‘Maine Central Railroad Company

fidland Valley Railroad Company

The Minneapolis & St. Louis Railway Company

Minne: polis, St. Paul & Sault Ste. Marie Railroad

Company 2s

Missouri- Kansas-Texas Railroad C ompany:

Missouri Pacifie Ratlroad Company

The Nashville, Chattanooga & St. Louis Railway

New York Central System is casted

‘The New York, Chicago & St. Louis Railroad Com-

pany. ee noe |

The New York, New Haven & icicle Railroad

Company

New York, Susquehanna and W estern Railroad Com-

pany

Norfolk and Western Railway

Northern Pacifie Railway Company

The Pennsylvania Railroad Company

The Pittsburgh and West Virginia Railway Company

Reading Company

St. Louis-San Francisco Railway Company

St. Louis Seuthern Railway Company

Seaboard Air Line Railroad Company

Southern Railway Company -

Southern Pacifie Company |

The Texas and Pacifie Railway Company

Toledo, Peoria & Western Railroad

~ Union Pacifie Railroad Company

Th Virginian Railway ¢ ‘ompanty

Wabash Railroad Company —

. Western Marylaad Railway,

Tie Western Pacitié Raitroad C ompany .¢

. . .

py » ‘ ‘ :

\ >.

APPENDIX ‘‘B.”’

IN. THE

Distrier Courr or. tue Uxirep STATES

For the Sovruern Disrricy or Texas

Houstrox Division —

Civil, Action’ No, S285

% =

rozen Food E rpres 7.

° mn *

$

United States of America pee | lnierstate Commerce’

. Commission

FINAL JUDGMENT

This action, to enjoin and set aside an order of the

Interstate Commerce Commission, having come on. for,

final hearing on the 13th-day of September 1956, before a

duly constituted Three-Judge District Court, convened pur-

suant to Sections 2284 and 2521-2525, Title 28, United

States Code, consisting of the undersigned judges; and the *

Court having considered the pleadings and evidence and

the briefs and argument of counsel for the respective par-

ties, and being fully advised in the premises; and having

on the 3ist day of December, 1956, filed herein its opinion,

containing it» findings of faet and_conclusions 6f law; now,

in accordance with the said opinion, findings and conclu-

sions, it is hereby :

OrperRep, ApscpGEep, and Drecreep as follows:

(1) The decision and order of the: Interstate Com-

merce Commission entered April 13, 1951, in a proceeding

locketed by the Commission as No. MC -C-968, Determina--

tion of Exempted qammegs Commodities, is- enjoined,

suspended, annulled, ‘ated and set aside insofar as the

Commission found and concluded that frozen whole eggs:

dried egg ponder; dried egg yolks; clean rice; rice bean;

rice polish: gastéurized milk; fresh cut up vegetables in

cellophane bags; fresh vegetables, washed, cleaned and

packaged in cellophane bags or -boxes; fruits or vegetables |

(quick. frozen); shelled peanuts: peanuts shelled ground;

killed and picked poultry (although not drawn); rolled:

barley; cottonseed hulls; beans (packaged, dried artifi-

cially or packed in small containers for retail trade) ; dried

fruits (dried mechanically or artificially); peaches peeled,

pitted and placed in coll storage in unsealed, containers ;

strawberries canned in syrup in unsealed containers and

placed in cold storage; milk, skimmed, vitamin D; milk,

powdered? buttermilk; feathers; frozen milk and cream;

cotton linters; chopped hay seeds, deawned or searified ;

and redried tobacco leaves ‘are not agricultural commodi-

ties within the meaning of Section 208(b).(6) of the

Interstate Commerce Act (49 U.S.C. 303(b) (6) ]: and.

(2) -All other relief sought ‘by the plaintiffs herein, tu-

cluding the Secretary of Agriculture as Intervening Plain-

tiff, be and the same is hereby denied.

This the 14th day of Mareh, 1957.

J. C. Hutcheson, -

‘Chief Judge, United States Court of

Appeals for the Fifth Circunt. .

Ben C. Connally,

United States District Judge.

T ON. “Sennerly,

United States District Iudac