Petition for Writ of Certiorari — Gray v. Powell

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PETITION FOR A WRIT OF ¢ PLORARI THE UNITED

STATES CIRCUIT COURT OF APPEAIS FO? TEE FOURTH

CIRCUIT

INDEN

Page

(dpoisatertis Leeder ¥ 4

Jurisdiction: 2

Questions presented 2

Statute involved 3

Statement 3

Specifications of errors to be urged 10

Reasons for granting the writ 10

Conelusion 20

CITATIONS

Cases

Carter v. Carter Coal Co., 248 U.S 238 16

Casement v. Brown, LAS U.S. 615 14

Chreage, Rock Island & Pacithe Ry Coos. Bond, 240 =

440 14

Commonwealth vo Wilkamsport Kari Company, 250 Pal 56,

95 Atl. 795 13

Dauton Brass Castings Co. v. Gilligan, 267 Fed. 872, aff'd,

277 Fed. 227, certiorari denied, 258 U.S. 619 1

Meicalf & Fddy vo Mitchell, 260 US. 514 14

Missrssipyn Valley Barge Line Coos Cyited States. ‘Ziv2

U. 8. 282 2)

National Labor Relations Board v. Farnblatt, 306 US. 601 Es

People er rel. Jewellers, Circular Pub. Co ov. Roberts, 155

N. ¥. 1, 49 N. E. 248 3

People \— Harn Silver Mining Co, Wes ree eS Se ee ee 2

155, «1! 43 1.8. Bo : 13

Rearicik ». Pennsylvania, 203 U.S. 507 1

Rochester Tel. Corp. v. United States, 307 eae 17. 38

Ho M. Rawe Co. 6) Tar Commission. 149 Md 251, 131

Atl. 500 12

Santa Cruz Fruit Packing Co. v. National Labor Relations

Board, 303 US. 453 1

Shields v. Utah [daha Central P €a S052 .S: ive 17. 18, 19

South Chicago Coal & Dock Cov. Bassett, 309 t*. S. 251 17

Standard Ou Co. v> Anderson, 212 U.S. 205

Sunshine Anthracte Coal Co. v. Adkins, 3°" ULS. 3881. 12, 15, 18, 10

Sunshine Anthracite Coal Co. vs. National Bituminous Coal

Commassion, 105 F. (2d) 559, certiorari denied, 308 ULS

604 M 19

Socayne & How. Ltd. v. United States, 300 I S. 207 ‘ 20

ed

276749 40- 1 I

Statutes p

Bituminous Coal Conservation Aer of £9433 ¢. $24, 40

Stat LOON | .

Bituminous Coal Aer of 1937. ¢.. 127. 56 Sturt 72 4]

V.8.C Supp. V, Title 15. See< SIR RS}

Sees. 1, 3 (a), 3 (b), 3 (dd), 4. 4 Ht ie), 5 (b). Bie

See. 4 A . 3,9

See. 4-11 (1) os 3.4.9, 10,12 ps.

See, 17 (e) : y 3

Miscelinneous

St Cong Ree. 3136

H.R. 4985, 75th Cong, lst Sess

H.R S429, 74th Cong . Ist Sess

Ho Rept. 208, Tah Cong, Ist Sess

He Re O78, 75th Cong. Ist Seas

Meetuem, Agency (2a ed. 1944 » Sees 40, ISTO IST]

Restetement of the Lav of Naeneg | American Law Tnstiture

Sec. 2. ; 13.

See, 220

S. $668, Tith Cong. 2d Sess

= r, Toth Cong Ist Sess

eA Ante te . ee

1

16

Inthe Supreme Court of the United States

Ocrower Tena, 1940

Cee

H.A. Gray, as Dimecror oF THE RireMinous Coan

Division oF Gk DEPARTMENT OF THE ENT RIOR,

aND TEarnonp LL. Tenrvs as Skererary oF THE

INTERIOR, PETITIONERS

ue

Leah R. Power. Jk. anp Plexey We ANpERSON,

as RECEIVERS oF Sranoarnp AiR Pann Rateway

COMPANY

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CIRCUIT COURT OF APPEALS FOR THE FOURTH

CIRCUIT

The Sobeitor General ou behalf of the DBitums,

Hous Coal Division. of the Department of the Tn-

terion, pravs that a writof certiorari issue te re-

view the decree of the United States Cireuit Court

of Appeals for the Fourth Cireuit. entered in the

abeveocase on Seprember 26. Tb. reversing and

<etting aside an order of the Director of the Dive-

ston denying a petition of Leon R. Powell, Ja. and

Henry W. Anderson, Receivers of the Seaboard

1)

Air Line Railway Company, for exemption fromm

the regulatory provisions of the Bituminous Coa!

Act of 1927,

OPINIONS BELOW

The findings, conclusions, and opinion of the Di

rector of the Bituminous Coal Division may be

found at R. 1-32.00 Phe opinion of the United

States Circuit Court of Appeals for the Fourth

Cireuit is reported in d14 FB. (2d) 752.

JURISDICTION

The decree of the United States Circuit Court of

Appeals sought to be reviewed was entered on Sep-

tember 26, 1940. The jurisdiction of this Court is

invoked under Sections 239 and 240 of the Judicial

Code, as amended, and Sections 4—A and 6 ¢b) of

the Bituminous Coal Act of 1937.

QUESTIONS PRESENTED

1. Whether coal consumed by ao person whe

leases mineral rights to coal lands and simultane-

eusly, nna related agreement, contracts with a coal

producer to mine the coal, the latter assuming, and

indemnifying the consumer against, all the liabil-

ities, burdens, and risks attendant upon the coal-

mining business, is “consumed by the produeer”™

‘The typewritten transcript of the entire record is on file

with the Clerk of this Court. The parties have stipulated

that for purposes of this petition only the Appendix to peti-

tiener’s brief in the court below and the proceedings below

need be printed.

a

o

2

within the meaning of the exemption contaimed in

Section 4 IL (1) of the Bituminous Coal Act of

1937.

2. Whether the Director’s finding that coal pro-

duced under the above cireumstarices is not exempt

from the Net is supported by substantial evidence,

3. Whether the court below erred in treating the

issue as to Whether respondents were producers of

coal as a matter of law, and in failing to give any

weight to the Director's ultimate finding of fact

that respondents were not producers.

STATUTE INVOLVED

The statute involved is the Bituminous Coal Act

of 1937, e. 127, 50 Stat. 72-91, U.S. C. Supp. V,

Title 15, secs. 828-851. The provisions of the Act

primarily involved are:

Sec. + IT (1). The provisions of this see-

tion shall not apply to coal consumed by the

producer or te coal transported by the pro-

ducer to himself for consumption by him.

Sec. 17. As used in this Aet—

* * * * *

(¢) The term ‘S producer” includes all im-

dividuals, firms, associations, corporations,

trustees, and receivers engaged in the busi-

ness of nuning coal

STATEMENT

Pursuant to Section 4A of the Bituminous Coal

Act of 1937 respondents, the Receivers for the Sea-

board Air Line Railway Company, applied to the

4

Director ef the Bituminous Coal Divisio of the

Department of the Interier for exemption from

the regulatory provisions of the Act fer themselves

and for certain coal from three mines which they

claimed that they operated, on the ground that the

coal Was “‘consumed by the producer”? within the

meaning of Section 4 IT (1) OR. 33-388).

The facts are fully set forth im the Director's

findings and opinion (R. 1-382). Sinee the facts

as to each of the three mines are substantially the

same it will be necessary to describe here only the

erendistaaces relating to one of themi—the Chilton

Block No. 1 Mine.

In July 1935 the Chilton Bloek Coal Company

was the lessee of a tract of coal land in West Vir-

gina, known as the Chilton Block No. 1 Mine CR.

15). The president of the Company was Daniel

H. Pritchard (R. 20). On July 5, 1935, the Chilton

Block Company offered to grant respondents, in

return for « royalty of 10 cents per ton, the right

to extraci coal from the mine, conditional on aec-

ceptance by respondents of an offer simultaneousiy

made by Pritchard to mine the coal and deliver it

to respondents for a specitied compensation ~ (CR.

* The original contracts and leases for the William-Ann

and Glamorgan imines, the other two mines here involved,

were niide in May and July D4 OR. 3. 5. 11. 12). when

N. BR. A. code prices were in effect. The original contract

and lease for the Chilton Block mine were made in July

1935, after the invalidation of the National Industria!

Recovery Act. but while the bill which became the Bitumi-

IeH1T). The company offered to grant to Priteh-

ard, apparently without COMIPeHsad ian, the right to

Use all of its equipment and machinery in perform:

ance of the mining operations. ‘Phe offer to sub-

lease the mineral rights provided that the lease

should terminate simultaneously with the agree-

ment with Pritchard CR. 16).

Pritchard’s offer to mine the coal was di turn

conditional upon acquisitien by respondents of the

mineral rights (R.17). He offered to mine the

coal either on a cost-plus basis or ata fixed price

of $1.15 per ton, subject to modification mi case of

nevis Coal Conservation Net of 1935 CHL Ro s4vo. Tith Cong.

I~t Sess) was pending in Congress. During the entire

period in which the contracts were made and rene wed, price

Lininige legislation has either teea in effect: or pending in

Congress.

There was an express finding that the lease and contract

for the William-Ann mine, upon which the contracts for the

other mines were modeled, were entered into in order to

enable respondents to purchase below N. R.A. code prices

(R.115. The Wilham-An: lease and contract were extended

for periods of three weeks or less when the Carter Coal

decision was pending and also while new price legislation

was pending In Congress, so that respondents could decide

whether to renew them (R. 5).

The contract to operate the Wilham-Ann mine was also

made with Pritchard, who owned stock in the mine: the mine

was then being operated by his brother (R. 11). Pritchard

had leased the William-Aan mining property himself fer a

long term, to begin on the expiration of the lease to respond.

ent. (R11). The lease of the Glamorgan mine was from

(Hamergan Coal Lands Corporation: the contract to mine

Was originally made with Glamorgan Coals, Ine... and then

transferred to Peerless Coal Corporation (R. 11-15).

t)

Huctuation mm the cost of materials, waces, or taxes

(R17, 56, Oe iu). Pritchard was to deliver coal,

on cars at the mine, in the amounts respondents

ordered (CR. 21-22). He was te acquire at lis own

eXpense the mining machinery and equipment

CR. 17). An agreement was to be made embody-

ing, in addition to the above, principal terms and

conditions Whieh may be summerized as follows:

(a) The contractor (Pritehard) is) te

provide ail the labor, materials and supplies

and perform all the work necessary to the

nuning of the coal CR. 6).

(h) The contraetor will at his own expense

maintain and manage such organization as

is neeessary to the performance of the

contract (R. 6).

(e) The contractor will assume amd per-

form all of the obligations of the respond-

ents to the landowner except the payment of

royalties @R.7).’

(d) The contractor will maintain, at his

soie expense, all necessary kinds of insur-

ance on the property (R. 8).

(e) The contractor will bear. and in-

detmnify respondents against, all risks

incident to the work te be performed, imn-

‘The offer provided that the agreement should embody

tee same terms and conditions as were contained in an

agreement previously entered into between respondents and

Pritchard to operate the William-Ann Mine ¢R. 17).

* The contract made for the William-Ann Mine provided

that respondents were to pay taxes on the land (R. 7), but

the lease for the Chilton Block Mine expressly provided that

the contractors were to pay such taxes CR. 16),

clading particnberly losses fer rigury te

Pe rsotis and property, taxes on The retin anid

its equipment, fines, pensalites, jens. elaitiis

of other hability, and attorneys’ fees ¢ Rs

10).

(f) Respondents may tertimate the

contract at any tirte that they are able te

purchase coal on the open market ata price

lower than the ameunt to he paid the ean:

tractor plus the rovalties to the lessor. un

less the contractor reduces the amount le

Is to receive so as to ehable the respondents

to buy at the market price (CR. 20).

(g) The coal may be inspeeted at) the

mine by respondents’ inspectors, and re.

spondents are required to pax onky for eos!

of the requisite quality and grade CR. 49).

(h) All the coal produced Is to he con

sumed by respondences except a stall portion

sold to the contractor's eriplovees & Me 93

(1) The agreement specifically provides

that (R. 63):

“The relation of the Contractor te the

Receivers under oor by virtue of this

eererment ds solely the velation of ai in

dependent contractor, and the Contracter,

as suen Independent contractor. shall be

solely responsible for all the aets, mech

venee or olnissions of the Contract, lis

agents, servants, employ ees ob pebresenta

° tives."

The offers tree Hy the C}ajten ies CTeorrrapectnis

and Pritchard were accepted hy respotdents

Jude 1985 OR Peds). The original agreements

46

8

were to run for a year with option to renew, and

With minor modineations the agreements have been

continued in effect since that time (2. 18-19).

In the operations under the contract, the re-

spondents advise the contractor pertodically as to

how much coal is desired and the contractor loads

the coal into ears and orders the cars shipped to anv

point respondents request (R. 21-22). Invoices

are submitted to respendents and payments made

to the lessor and contractor on a monthly basis CR.

23, 59-60). The shipments from the mines to

pomnts of destination are generally made across

state lines (R, 23).

On the basis of the above facets (similar tindines

heing made as to the other mines), the Director

found that respondents were not the producers of

the coal mined from the vhree leased properties CR.

24). and that the contractual arrangements “were

mitended as a flexible contrivance by meas of

Which the Receivers hoped to establish themselves

as nondnat producers of the coal cousumed by them

and thereby escape the price provisions of coal

legislation, cluding the Act.” Tis opinion states

(i. 29):

“8 8 "Phe transaction has the aspects of

an ordinary commercial sale and, madeed, it

appears that Applicants stand in a position

het materially different from that of any

large consumer who dominates a small

source of supply or who has contracted for

the total product of a given manutacturing

q

enterprise or tract of land. In every real

sense, with respect to the supply of coal ob-

tained from these contractors, Applicants

have not become a ‘‘producer’” but have

rather left their ‘‘consumer”™ position and

mobility unchanged. This mobility is dem-

onstrated quite pointedly by the contract

provisions permitting Applicants to termi-

nate the contract if they can obtain coal in

the open market at a lower price than under

the present arrangement, provided that the

contractors do not reduce their ecompensa-

tion sufficient to meet the market price. The

Jeases are termimable upon termination of

the contracts.

He concluded that the transactions bi coal covered

by the appheation for exemption are subject to the

regulatory provisions of the Act aid that the ex-

emption sought should be denied.”

*The Cirenit Court of Appeals, overlooking the fact that

respondents had appled for exemption for the coal pro-

duced and the “transactions and commerce in said coal”

(R. 38). as well as for themselves -personally., thought it

“anomalous” for the Division te hold that respondents were

not a producer for purposes of exemption, and vet still sub-

ject to the Act. But Sections 4 IT (1) and #A_ pro-

vide only for the exemption of “coal” and “commerce in

coal,” not of producers personally, and it is clear from the

Director's opinion that he held only the “transactions” in

the coal involved to be subject to the Act. not the respond-

ents (R. 32). The Director’s position. as set forth in the

brief below (p. 23), was and is “that petitioners are not the

‘producer’ of the cowl for any purpose of the Act. whether it

be the taxine, pricing, or other provisions.”

W)

Respondents nled a petition to review mi the Cre:

enit Court of Appeals tor the Fourth Circuit. “That

court reversed the Direetor’s decision. holding that

i} Was unsupported by substantial evidence and

based upon error ii law,

SPECIFICATION OF ERRORS TO BE USED

The court below erred: ,

lh. In holding that the Director's order denying

exemption is based upon error of law and is nes

sHpported hy substantial evidence

2 In holding that respondents are the ‘proe-

dnueer of the coal in question and that sueh coal is

exempt under Seetion 4 EP ol) of the Bitununous

Coal Act of 1987; |

3. Tn holding that the issue whether petitioners

are producers within the meaning of the exemption

provision tn Seetion 4 TD ob) of the Act presents a

question of law for the court to decide for itself.

ated im falling to olive any welght to the Direetor’s

determination that respondents ere not the

“produeer of the coal,

REASONS FOR GRANTING THE WRIT

i

The case is impertant to the administration of

the Bitumimous Coal Act because the decision be-

low approves a device through which any large

eonstmer can purchase coal at prices below those

established under the Aet.

The contracts nivelved here were all entered mite

and renewed during a period when federal maint

ona price regulations were my effect or when legis-

lation te reestablish such regulation was pending

csupra, pp. 4-9). Dnorder te escape from such reg-

Wlation (R.5. 11, 24-25). respondents arranged to

pay Vor cents a ton revalty. under a contract of

lease, te the owner of the land or mineral rights.

and the remaimider of the price of the coal te amine

operatar engaged under a contract as au inde-

pendent contractor, Respondents were to exer-

cise he mere control over the operatlous of the

mine than would any large consumer. They

merely told the contractor-producer how miueh coal

to produce and where to send it, inspected it for

quality, and paid an amount speeitied by contract.

The contractor assumed all the risks of the enter-

prise: respondents could rejecec coal which did uot

meet ther specifications: and the lease as well as

the contract to operate the mine could be termi-

nated whenever respondents could purchase coal

mere cheaply elsewhere. This method of aequir-

’ The contracter even assumed ell ef respondents’ obliga:

tions to the landowner except for che pavinent of royalties,

andsas te one of the three mines. the payinent of taxes on the

land,

Respondents vasert that they bear certain risks Inasmuch

as the amount paid the contractor fluctuates with the cost of

materitls, labor and taxes. Since similar provisions are fre-

quently contammed in ordinary contracts of sale. the assumip-

tion of “risk” to this extent does notedistinguish respond.

ents from ordinary purchasers,

12

ing coal differs from the usual practice only in that

the purchaser pays the royalty to the landowner

directly instead of indirectly through the mine

operator,

Clearly this arrangement differs only in form,

and not in substance, from the ordinary purchase

of coal, It can be availed of by any produeing com-

pany with counsel astete enough to shuffle royalty

and nining contracts so as to make one corpora-

thon, or corporate official, the party to a lease of

the eoal rights, and an affiliated corporation, or

different official, a party to the contract to mine

the coal. If the decision below is not reversed, any

consumer large enough to purchase the entire out-

pnt of a nine will be able, without assuming any

of the additional responsibilities or burdens imei-

dent to entry into the coal mining business, to pro-

cure coal at prices lower than those established under

the Act. Such a result would, of course, be ineon-

sistent with the underlying purpose of Congress

to establish an effective means of diséouraging

competitive abuses in the industry. Cf. Sunshine

Anthracite Coal Co. v. Adkins, 310 U.S. 381, 395.

The language of the Act permits of no such con-

struction. Section 4 II (i) exempts coal ‘*¢on-

sumed by the producer’. **Producer”’ is defined

in Section 17 (¢) as inchaiding all individuals, cor-

porations, ete., “engaged in the business of mining

coal,” The facts outlined above demonstrate that

not respondents but the independent contractors

13

here are engaged im the business of mining coal.

Respondents are not producers unless any owner

of property who permits an independent contractor

to perform work and services on his property i.

himself to be regarded as engaged in the same

business as the contractor. But a landowner who

engages a contractor to build a house on Ins land

is not from that fact alone engaged in the building

business.”

The court below rejected the argument that

‘*producer”’ in the statute meant only the contrac-

tor “engaged in the business of moaning coal” on

the theory that the maxim qui facit por alium, facil

per se made the act of the contractor the aet of

respondents. That familiar maxim is intended to

“It is the Government's position that the contractors, not

respondents, are the “producers” subject to the Act. The

royalty paid directly to the lessors would. however, be a

part of the price paid for the coal for purposes of compli

ance with the minimum price orders.

"The Restatement of the Law of Agency (American Law

Institute), Section 2, Comment b. p. 15. declares:

* * * Thus, one whe contracts fora stipulated

price to build a house for another who reserves ne

direction over the condnet of the work is an inde-

pendent contractor: but he is not an agent since he is

net a fiduciary, has no power te make the one em-

ploving him a party to a transaction. and is subject

to ne control as to his conduct.

See. also. //7. VM. Rowe Co. vv. Tear Commission, 549 Md. 251,

261, 131 Atl. 509, 512-513: People v. Tlorn Silver Mining

(ol N.Y. 76.1 N. EL 155, affirmed, 145 UL. 305: Com-

monmwealth ¥. Wiliams port Rail Com pany. YO Pal S96, OD

Ath 793: People er vel. Jewellers Circular Pub. Co. vv. Rob-

erts ABS N.Y. 1, 40 .N. E, 248,

is 3

14

deseribe the relation of prmepal and agent or

nyaster and servant. A contractor is an agent only

if acting ina fidiciary capacity and subject to the

control ef the principal in matters of some detail.

But the contract im the instant case, expressly and

designedly, negatives the existence of any such

relationship or lability. Respondents, mdenimi-

fied against all habilty. only give directions as te

the end te be achieved. diot as to the means by

whieh that end is accomplished. The relation-

ship between the parties is obviously not fiduciary.

Under these ciredumstances the acts of the con-

tractor are not the aets of respondents, and

respondents are net engaged in the business of

Mining coal.

Phe court below alse held that the Aet was in

tended to apply only te sales and transfers of title.

and that. stnee there was ne formal sale here. the

Conmnent), 220: Mechemn olaency. Sections 40, ISTO-1STE:

2 WS.. L0vT-1088: Casement vy. Brown, ote S. 615, O22:

fee strife guent ofr the Lae of Lae wee, Sections 2 (ane

Ntanmdard 67) tn, wa Anderson, 2] 2 ie s Lo, ae | ya de Chi.

1. Lear }. Vshirnel «te Dar ite I “4, ( oS. ¥. ve wl, Yt) Ai. s. f4or:

M. foalf «A heddy ¥; Mitchell, von .. s ol. nt ow),

Mechemiy lyeney C2 ed. 1914), Secilon 40. states that

ihoagentoas “te be distinguished from: the independent con

tractors who is ome whe exercises some independent em

ployment. an the course of whieh he undertakes. supplying

is awn tiatertals, servants and equipment, to accomplish

a certain result, not being subject while doing so to the

direction and control of his employer, but betmige responsible

te him for the end to be achieved rather than for the mean-

bry Which he accomplishes ie

15

Act could not be operative. But the Aet is not

limited to sales. It expressly applies to coal “sold

or delivered’’ (Section 4 11 (e)). Code member-

ship may be revoked if coal is *tsold or otherwise

disposed of" in violation of the code. Similar ex-

pressions showing that the Act is not restricted m

its scope to technical sales are found throughout

the statute.’ In Sunshine Anthracite Coal Co. \

Adkins, 310 U.S. 381, 393, this Court noted that

the regulatory provisions of the Act are applicable

to ‘sales or transactions” in or affecting interstate

commeree, Presumably the word ‘sale’’ was sup-

plemented by more general language in order to

prevent evasion of the Act by Just such devices as

are here employed."

2 Section 1 (“regulation of the sale and distribution”):

Section 3 4a) (“sale or other disposal”); Section 3° (b)

(“sale or other disposal,” “disposed of by sale.” Sze tay of

otherwise than by sale” “sale or disposal” ): Section 3 (d)

(“disposed of otherwise than by sale”); Section oF (“the code

* * * shall be applicable only to matters and transac-

tions in or directly affecting interstate commerce”): Sec-

tion 4 Il ¢e) (vsold or delivered or offered for sale”) :

Section 4-40 -"iransactions in coal,” “sold. delivered) or

offered for sale): Section 5 (Bb) (“sold or otherwise dis-

ie ee “if disposed of otherwise than by sale.” “sale or

other@disposal™) ; Section 5 (¢) ("if disposed of otherwise

than by sale.” “sold or disposed of”).

See Dayton Brass Castings Cov. sigh -e 267 Fed. S72.

STT-STS OS. DD. Ohio). a gig Fed. 227 (C. C. AL 6th).

certiorari denied, 2 258 U. 619. Cf. Sea v. Pennsy!-

vania, 2045 UL S. 507, 512. Sauna Wenz Fruit Packing Cov.

Notional Lahoer Relations Board, 3803 U.S. 453. 463: Va-

tional Lahor Relations Board v. Fainblatt, 306 U.S. 601, 605.

It

The court below assumed the existence of a gen-

eral congressional intention te exclude all ‘teap-

tive nines from the operation of the Aet. and also

that one mimes in question are captive mines. In

support of this assumed congressional mtention,

the court quoted testimony of the Chairman of the

former Coal Commission before a Senate com-

mettee, indieating his opinion that the bill then

under consideration did not embrace captive coal

Within its pricing provisions. © Captive coal is a

geueral term which is not found in the 1937 Coal

Act, although it was defined in the earlier bill be-

fore the Senate committees and in the 1935 Aet.”

The ceart below asstined that there could be ne Price Upon

Which the Net could operate if there were no sale. But the

Actcan epply to the consideration paid the contractor and

lessor, regardless of what isccalled,

‘The hearines quoted by the court betow retaied to an

earher diaft of the bill which contained neither Section 4

TT (1) itself nor any similar provision. They were held in

June. 1936. in connection with S. 4668, 74th Cong.. 2d Sess,

Which was substantially the same. in so far as provision

relevant here are concerned. as the Bittuninons Coal Con-

servation Net of 1935. invalidated the previews month.

Carter Vv. Carter Coal Co 298 US. 288.) ‘Thais bill failed to

}ass the T4th Congress. Bills on the same subject, thotigh

shaehtly changed. were introduced in the Tath Congress (S.

bE Roush). Section FED cb) tit appeared in HL R.

Hess. Toth Cong. See TT. Rept. Yb, Toth Cong... Ist Sess.

pp. e.

The Bitintnous Coal Conservation Met of 1985 did con

tain a detinition of “eaptive™ coal, but this was net for

purposes of exemption. but in order te provide a basis for

determining the amornt of tax pavable under Section 3 of

that Net (49 Stet, L008) Section 19). That detinition wonid

net have dnehtded the present arrangement,

17

Section 411 (1) itself, is the only manifestation of

a legislative imtention to exempt any captive coal

from the 1937 Act, and its legislative history de-

moustrates clearly that it Was not designed to ap-

ply to all captive situations.” That section applies

only to coal consumed by the producer,” as defined

mm the Aet, and as we have shown, supra, pp. 12 et

seqg., respondent's coal does not come within that

calegory,

I]

The court below exercised its own independent

Judgment as to whether or net respondents were a

producer” within the meaning of the Act. without

giving any weight to the Director's fineings and

decision. This treatment of the question pre-

sented as one of law fer the court to determine with-

out reference to the administrative decision con-

flicts in principle with the decisions of this Court im

Shiclds vy. Utah Idaho Central R. Co., 305 U.S.

177; Rochester Tel. Corp. ve United States, 30%

U.S. 125, and South Chicago Coal & Dock Co.

The 1935 Act defined captive mianes as including coal

produced by “a subsidiary or affiliate’ (49 Stat. L008). An

amendment, Which would have extended Section 4 IT (1) te

such relationships. passed the Senate (St Cong. Ree. 3136),

but was eliminated from the Coal Act of 1937 in conference

CH. Rept. STs. Toth Cong. Ist Se-s.. pp. 1s).

Where the same person is beth producer and consamer,

regulation of transactions (whether or not “sales”) between

“them” would be both imipossibie and meaningless. Section

411 (1) was intended to cover that type of situation. and

there is no indication in legislative history that it had any

broader PUP peose,

IS

v. Bassett, 309 U.S. 251. See also Sunshine An-

thracite Coal Co. v. Adkins, 310 U.S. 381, 400.

In this case, as in the Shields and South Chicago

eases, there was uo dispute as to the primary

facts. The issue in the Shields case was whether

on undisputed facts a railroad was an ‘interur-

ban’? within the meaning of the Railway Labor

Act, and in the South Chieage case whether an

employee was a ‘‘member of a crew"? within the

meaning of the Longshoremen and Harbor Work-

ers Compensation Act. Here the question is

whether a person is a“ producer™’ within the mean-

ing of the Bituminous Coal Act. In the Sricids

ease this Court declared that the ‘‘determination”’

as to whether the carrier was an interurban ‘was

one of fact” (305 U.S., at 181). Tn the South

Chicago case the Court concluded that whether an

eliployee was a member of a crew was not ‘a ques:

tion of law’ (3809 U. S., at 258). And in the

Rochester Telephone ease the Court declared that

whether one company obtained ‘teontrol’” of an-

other within the meaning of the Comruaimications

Act presented ‘fan issue of facet’? (307 UL S., at

145).

In each of the cases cited it was recognized, what-

ever might be the classification of comparable

issues as between judge and jury, that the question

of ultimate fact as to whether a person came within

particular statutory language was a matter of

Judgment on whieh the decision of the adminis:

1

trative official was to be accepted, if supported by

evidence in the record, and that such questions of

administrative judgment were not to be treated as

pure matters of law for purposes of judicial re-

view. This Court has already indicated that this

principle applies to proceedings for exemptions

under the Bituminous Coal Act, and that view was

adopted by the Cireuit Court of Appeals for the

Eighth Cireuit, in the Sunshine Anthracite litiga-

tion.” In its opinion in the Sunshine ease this

Court, citing the Shields ease, referred to ‘‘the de-

termination of the question of fact whether a par-

ticular coal producer fell within the Act’? (210

U.S.. at 400). (Italies supplied. ;

It is apparent from the opinion below that the

Circuit Court of Appeals in this case, regarding the

issue presented as one of law.” failed to give

the slightest weight to the decision of the Director,

The court completely disregarded the prineiple

that “*The judicial function is exhausted when

there is found to be a rational basis for the con-

® Sunshine Anthracite Coal Cov. Adkins, 310 U.S. 3851:

NSuushine Anthracite Coal Co. v. National Bituminous Coal

Commission, WS FL (2d) 550. certiorari dened, 308 UL Ss.

titrt.

* The court below also stated that the Directors finding

Was “not supported by substantial evidence.” Tt is clear

from the statement at the beginning of the opinion that

“there is no question as to the facts of the case” as well as

from the entire discussion, that this was merely a fornia!

finding. and that the court, regarding the issue as one of liw,

gave no weight to the Director’s conclusion and judgment.

)

clusions approved by the adminisffative body.”’

Pochester Tel. Corp, vy. United States, supra, at

146; Mississippi Valley Barge Line Co. v. United

States, 292 U.S. 282, 286-287; Swayne & Hoyt,

Lid. v. United States, 300 U.S. 297, 303.

CONCLOSION

For the reasons stated, it is respectfully sub-

mitted that this petition for a writ of certiorari to

review the judgment of the Cireuit Court of Ap-

peals for the Fourth Cireuit should be granted.

FRANCIS BIDDLE,

Solicitor General,

Apr FortTAs,

Geieral Counsel,

Bituminous Coal Division,

De partment of the Luterior.

NOVEMBER 1940,