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Gregg Cartage Co. v. U.S., 316 U.S. 74 (1942)

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Gregg Cartage Co. v. U.S., 316 U.S. 74 (1942)
United States Supreme Court

From the U.S. Government Printing Office via GPO Access
 
Case:   GREGG CARTAGE CO. V. U.S.

Case #: 316US74


NO. 535.  ARGUED MARCH 4, 1942.  - DECIDED APRIL 13, 1942.  - 42
F.SUPP.  266, AFFIRMED. 


1.  THE PROVISION OF SEC. 206(A) OF THE MOTOR CARRIER ACT, 1935,
GRANTING "GRANDFATHER" RIGHTS TO COMMON CARRIERS "IN BONA FIDE
OPERATION ON JUNE 1, 1935, AND SINCE THAT TIME," REQUIRES THAT THE
SERVICE SHALL HAVE BEEN CONTINUOUS (EXCEPT FOR INTERRUPTIONS OVER WHICH
THE CARRIER "HAD NO CONTROL") FROM JUNE 1, 1935, UNTIL THE TIME OF THE
HEARING BY THE COMMISSION ON THE APPLICATION.  P. 78. 

2.  THE COMMISSION WAS WARRANTED IN HOLDING AS A MATTER OF LAW THAT
AN INTERRUPTION OF SERVICE CAUSED BY THE CARRIER'S BANKRUPTCY WAS NOT
ONE OVER WHICH THE CARRIER "HAD NO CONTROL" WITHIN THE MEANING OF THE
ACT; AND IT WAS NOT REQUIRED TO GO BEHIND THE ADJUDICATION AND EXAMINE
INTO THE PARTICULAR CAUSES OF THE BANKRUPTCY.  P. 79. 

3.  THE GRANDFATHER CLAUSE OF THE MOTOR CARRIER ACT IS TO BE
CONSTRUED AS EXTENDING ONLY TO CARRIERS PLAINLY WITHIN ITS TERMS.  P.
83. 

4.  A PURCHASER OF THE GRANDFATHER RIGHTS OF A BANKRUPT CARRIER
STANDS IN NO BETTER POSITION WITH RESPECT TO SUCH RIGHTS THAN DID THE
BANKRUPT.  P. 82. 

5.  IN THIS CASE, THE INTERRUPTION OF SERVICE WAS OF SUFFICIENT
DURATION - AT LEAST 69 DAYS - TO ESTABLISH THAT THE CARRIER HAD NOT
BEEN IN OPERATION "SINCE" JUNE 1, 1935, WITHIN THE MEANING OF SEC.
206(A).  P. 83. 

6.  A CLAIM THAT THE DELAY OF THE COMMISSION IN ACTING UPON AN
APPLICATION UNDER SEC. 206(A) DEPRIVED THE APPLICANT OF AN ADVANTAGE
WHICH HE WOULD HAVE HAD UNDER SEC. 212(A) - WHERE SUCH DELAY IS NOT
SHOWN TO HAVE BEEN ARBITRARY OR DISCRIMINATORY, NOR, IN VIEW OF THE
MAGNITUDE OF THE COMMISSION'S TASK IN RESPECT TO APPLICATIONS UNDER
SEC. 206(A), UNREASONABLE - IS NO GROUND FOR RELIEF.  P. 83. 

GREGG CARTAGE & STORAGE CO. ET AL. V. UNITED STATES ET AL. 

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF OHIO. 

APPEAL FROM A DISTRICT COURT OF THREE JUDGES DISMISSING THE COMPLAINT
IN A SUIT TO SET ASIDE AN ORDER OF THE INTERSTATE COMMERCE COMMISSION
DENYING AN APPLICATION FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY UNDER SEC. 206(A) OF THE MOTOR CARRIER ACT, 1935. 

MR. JUSTICE JACKSON DELIVERED THE OPINION OF THE COURT. 

THIS APPEAL IS FROM A JUDGMENT OF A STATUTORY THREE-JUDGE COURT
DENYING APPELLANTS' PETITION TO SET ASIDE AN ORDER OF THE INTERSTATE
COMMERCE COMMISSION REFUSING THE GREGG CARTAGE & STORAGE COMPANY A
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY UNDER THE SO-CALLED
GRANDFATHER CLAUSE OF SEC. 206(A) OF THE MOTOR CARRIER ACT, 1935, 49
U.S.C. SEC. 306(A). 

THE GREGG COMPANY, AN OHIO CORPORATION, OPERATED IN 1935 AND EARLIER
AS A COMMON CARRIER OF GENERAL FREIGHT BETWEEN POINTS IN SEVERAL
NORTHEASTERN STATES.  IN A NUMBER OF IMPORTANT CITIES, IT MAINTAINED
TERMINALS AT WHICH FREIGHT WAS ASSEMBLED.  IT PERFORMED NO OVER-THE
ROAD CARRIER SERVICE WITH ITS OWN VEHICLES, BUT PROVIDED SUCH SERVICE
ENTIRELY BY THE USE OF SO-CALLED OWNER-OPERATOR VEHICLES.  SUCH
VEHICLES AS IT OWNED AND OPERATED DIRECTLY WERE USED IN CARTAGE IN AND
ABOUT CLEVELAND. 

ON FEBRUARY 12, 1936, THE GREGG COMPANY FILED AN APPLICATION WITH THE
INTERSTATE COMMERCE COMMISSION FOR A CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY AS A COMMON CARRIER UNDER THE GRANDFATHER CLAUSE OF SEC.
206(A) OF THE MOTOR CARRIER ACT.  A HEARING WAS HELD ON JUNE 8 AND 9,
1937, BEFORE AN EXAMINER WHO, ON DECEMBER 17, 1937, RECOMMENDED THAT
THE CERTIFICATE BE GRANTED. 

MEANWHILE, THE GREGG COMPANY HAD FAILED AND CEASED TO OPERATE.  IT
HAD ARRANGED THE FILING ON OCTOBER 4, 1937, OF A CREDITOR'S BILL IN A
STATE COURT OF OHIO, WHICH ON THE FOLLOWING DAY APPOINTED THE COMPANY'S
COUNSEL TO BE ITS RECEIVER WITH AUTHORITY TO CONTINUE THE BUSINESS.  ON
THE DAY OF THIS RECEIVER'S APPOINTMENT, OTHER CREDITORS FILED A
PETITION IN BANKRUPTCY IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OHIO, EASTERN DIVISION, WHICH ON OCTOBER 27
ADJUDICATED THE COMPANY A BANKRUPT, AND ON OCTOBER 30 APPOINTED A
RECEIVER TO PRESERVE THE ASSETS OF THE ESTATE PENDING THE ELECTION AND
QUALIFICATION OF A TRUSTEE.  FN1  IN OPERATING THE BUSINESS, THE STATE
COURT RECEIVER CONFINED HIMSELF TO THE COMPLETION OF SHIPMENTS EN
ROUTE, AND DID NOT SOLICIT OR ACCEPT NEW BUSINESS.  ON OCTOBER 14, HE
FILED WITH THE COMMISSION A PETITION FOR PERMISSION TO SUSPEND
OPERATIONS WITHOUT PREJUDICE TO RIGHTS UNDER THE GRANDFATHER CLAUSE. 
THE COMMISSION, OF THE OPINION THAT IT LACKED POWER TO AUTHORIZE SUCH A
SUSPENSION, DENIED THIS PETITION ON NOVEMBER 30, 1937.  THE RECEIVER IN
BANKRUPTCY TOOK OVER THE BUSINESS ON THE DAY OF HIS APPOINTMENT, AND
CONDUCTED NO OPERATIONS AT ANY TIME.  PURSUANT TO AN ORDER OF THE
BANKRUPTCY COURT, ON DECEMBER 6, 1937, HE SOLD THE TRADE NAMES AND GOOD
WILL OF THE BANKRUPT ESTATE, TOGETHER WITH ITS RIGHTS UNDER THE
GRANDFATHER CLAUSE APPLICATION, TO APPELLANT NORTHEASTERN
TRANSPORTATION COMPANY, FOR $850 AT PUBLIC AUCTION. 

ON JANUARY 7, 1938, NORTHEASTERN AND THE RECEIVER IN BANKRUPTCY FILED
A JOINT APPLICATION WITH THE COMMISSION ASKING THAT NORTHEASTERN BE
SUBSTITUTED AS APPLICANT IN LIEU OF GREGG.  THE COMMISSION WITHHELD
ACTION UNTIL IT HAD DETERMINED GREGG'S RIGHTS.  NORTHEASTERN CONSIDERED
A RESUMPTION OF OPERATIONS, BUT DECIDED AGAINST IT ON THE ADVICE OF
FIELD REPRESENTATIVES OF THE INTERSTATE COMMERCE COMMISSION. 

A FURTHER HEARING BEFORE ANOTHER EXAMINER, CONFINED TO THE
CIRCUMSTANCES OF THE INTERRUPTION OF GREGG'S SERVICE, RESULTED IN
ANOTHER RECOMMENDATION OF THE ISSUANCE OF A CERTIFICATE UNDER THE
GRANDFATHER CLAUSE.  THE COMMISSION, HOWEVER, DENIED THE APPLICATION
DECEMBER 12, 1939, AFTER A REHEARING FOLLOWING THE REPORT OF DIVISION
5, A MAJORITY OF WHICH HAD HELD SIMILARLY ON NOVEMBER 14, 1938.  10
M.C.C. 255, 21 M.C.C. 17.  THE COMMISSION RULED THAT AN INTERRUPTION OF
SERVICE WITHIN THE CONTROL OF THE APPLICANT HAD OCCURRED, THAT THE
PURCHASE BY NORTHEASTERN HAD CONFERRED NO OPERATING RIGHTS, AND THAT
THEREFORE NEITHER CORPORATION WAS ENTITLED TO A CERTIFICATE UNDER THE
GRANDFATHER CLAUSE.  FIVE COMMISSIONERS DISSENTED.  GREGG AND ITS
TRUSTEE IN BANKRUPTCY THEN FILED A COMPLAINT IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO, EASTERN DIVISION,
PRAYING THAT THE ORDER OF THE COMMISSION DENYING GREGG'S APPLICATION BE
ANNULLED AND SET ASIDE AND THAT THE COMMISSION BE DIRECTED TO ISSUE A
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO GREGG.  A STATUTORY
COURT OF THREE JUDGES WAS CONVENED, NORTHEASTERN WAS ALLOWED TO
INTERVENE, AND JUDGMENT WENT AGAINST THE COMPLAINANTS, WHO APPEALED TO
THIS COURT, WHICH NOTED PROBABLE JURISDICTION.  FN2  42 F.SUPP.  266. 

APPELLANTS CONTEND THAT THE COMMISSION AND THE COURT BELOW
ERRONEOUSLY CONSTRUED SEC. 206(A) FN3  OF THE MOTOR CARRIER ACT IN
HOLDING THAT, EXCEPTING THE SPECIFIED INTERRUPTIONS OF SERVICE, THE
STATUTE REQUIRED CONTINUOUS OPERATION FROM JUNE 1, 1935, UNTIL THE
HEARING BY THE COMMISSION ON THE APPLICATION.  WE HAVE, HOWEVER, HELD
TO THE CONTRARY.  UNITED STATES V. MAHER, 307 U.S. 148, PETITION FOR
LIMITED REHEARING DENIED, 307 U.S. 649.  HOEY V. UNITED STATES, 308
U.S. 510; LUBETICH V. UNITED STATES, 315 U.S. 57. 

APPELLANTS CONTEND ALTERNATIVELY THAT THE COMMISSION SHOULD BE
REVERSED FOR REFUSING TO HOLD THAT THE APPLICANT "HAD NO CONTROL" OVER
THE CESSATION OF OPERATIONS. 

FROM OCTOBER 15, 1935 TO DECEMBER 31, 1936, GREGG WAS INSURED AGAINST
PUBLIC LIABILITY AND PROPERTY DAMAGE BY AN INSURANCE COMPANY, WHICH IN
1936 FAILED EITHER TO DISPROVE OR SETTLE CERTAIN CLAIMS AGAINST GREGG
AND WAS RUMORED TO BE INSOLVENT.  FOR THESE REASONS GREGG CANCELLED ITS
CONTRACT WITH THIS COMPANY AND OBTAINED SIMILAR INSURANCE WITH ANOTHER
COMPANY, PAYING THE PREMIUMS IN ADVANCE.  THE FAILING INSURANCE COMPANY
WAS ADJUDGED A BANKRUPT IN JANUARY OF 1937, AND CEASED TO PAY ANY
CLAIMS.  GREGG, THEREBY LEFT WITH THE BURDEN OF SATISFYING CLAIMS FOR
PERSONAL INJURY AND PROPERTY DAMAGE ARISING DURING THE PERIOD WHEN IT
HAD CARRIED INSURANCE IN THE BANKRUPT COMPANY, PAID SOME OF THEM IN THE
LATER MONTHS OF 1937; BUT APPROXIMATELY 175, ESTIMATED TO AGGREGATE IN
THEIR FACE AMOUNT ABOUT $200,000, REMAINED UNPAID.  IT ALSO PAID ABOUT
$15,000 ON CLAIMS FOR CARGO LOSS AND DAMAGE, WHICH TWO OTHER INSURERS,
RELYING UPON "TECHNICAL" INSURERS' DEFENSES, REFUSED TO PAY.  ALL
POLICIES OF INSURANCE TAKEN OUT BY GREGG HAD THE REQUIRED APPROVAL OF
THE INTERSTATE COMMERCE COMMISSION. 

SOLVENT ON JUNE 30, 1937, GREGG HAD BECOME INSOLVENT BY OCTOBER 30,
1937.  WHEN IT APPEARED IMPOSSIBLE TO SATISFY ALL DEMANDS IN FULL,
RESORT WAS HAD TO THE FRIENDLY RECEIVERSHIP IN THE STATE COURT.  THIS
PRECIPITATED THE INVOLUNTARY BANKRUPTCY IN THE FEDERAL COURT, WHICH IN
TURN BROUGHT OPERATIONS TO A HALT. 

THE COMMISSION BASED ITS REFUSAL TO FIND THAT THE APPLICANT "HAD NO
CONTROL" OVER THE INTERRUPTION OF SERVICE UPON THE FACT THAT SUCH
INTERRUPTION FOLLOWED UPON AN ADJUDICATION OF BANKRUPTCY RESULTING FROM
THE UNSUCCESSFUL CONDUCT OF ITS BUSINESS AFFAIRS, AND DID NOT GO BACK
OF THE ADJUDICATION TO FIND AND GIVE DETAILED CONSIDERATION TO THE
PARTICULAR CAUSES OF THE FAILURE.  APPELLANTS CONTEND THAT THIS WAS
ERROR, AND FOR A RULE REQUIRING THAT IN EVERY CASE OF THIS SORT THE
COMMISSION MUST TRACE OUT THE CHAIN OF CAUSATION AND WEIGH THE
BANKRUPT'S JUDGMENT AGAINST THE PRESSURES OF CIRCUMSTANCE.  WE SUSTAIN
THE COMMISSION IN CONSTRUING THE STATUTE AS NOT REQUIRING IT TO GO BACK
OF THE BANKRUPTCY ADJUDICATION TO SEARCH FOR ULTIMATE CAUSES. 

HOW FAR ONE BY AN EXERCISE OF FREE WILL MAY DETERMINE HIS GENERAL
DESTINY OR HIS COURSE IN A PARTICULAR MATTER AND HOW FAR HE IS THE TOY
OF CIRCUMSTANCE HAS BEEN DEBATED THROUGH THE AGES BY THEOLOGIANS,
PHILOSOPHERS, AND SCIENTISTS.  WHATEVER DOUBTS THEY HAVE ENTERTAINED AS
TO THE MATTER, THE PRACTICAL BUSINESS OF GOVERNMENT AND ADMINISTRATION
OF THE LAW IS OBLIGED TO PROCEED ON MORE OR LESS ROUGH AND READY
JUDGMENTS BASED ON THE ASSUMPTION THAT MATURE AND RATIONAL PERSONS ARE
IN CONTROL OF THEIR OWN CONDUCT.  CERTAINLY THAT ASSUMPTION MUST BE
MADE IN REFERENCE TO A CORPORATION SUCH AS THE APPLICANT.  SOCIETY, IN
CREATING A CORPORATION, VESTING ITS MANAGEMENT IN A BOARD OF DIRECTORS,
GRANTING IT LARGE POWERS AND NOT INCONSIDERABLE IMMUNITIES, CAN HARDLY
ALLOW THAT ITS BUSINESS AFFAIRS ARE AT ANY TIME OUT OF THE CONTROL OF
THOSE WHOSE DUTY IT IS TO CONDUCT THEM.  THE BANKRUPTCY ACT STATES THAT
EVEN AN INVOLUNTARY ADJUDICATION RESULTS ONLY FROM SOME "ACT OF
BANKRUPTCY," DEFINED UPON THE CLEAR ASSUMPTION THAT IT IS WITHIN THE
BANKRUPT'S CONTROL.  FN4 WHETHER OR NOT THIS ASSUMPTION SQUARES WITH
PHILOSOPHICAL DOCTRINE, OR EVEN WITH REALITY,  FN5  IS NOT FOR OUR
DETERMINATION.  THE COMMISSION, AND THE COURTS TOO, MUST GET ON WITH
THE APPLICATION OF THE FEDERAL STATUTES WITHOUT WAITING TO SETTLE THE
VERITY OF THE PHILOSOPHICAL ASSUMPTIONS ON WHICH THEY REST. 

THE COMMISSION WAS WARRANTED IN HOLDING AS MATTER OF LAW THAT THE
INTERRUPTION BECAUSE OF BANKRUPTCY WAS NOT ONE OVER WHICH THE APPLICANT
HAD NO CONTROL WITHIN THE MEANING OF THE MOTOR CARRIER ACT.  THE
COMPLEXITY OF THE CHAIN OF CAUSATION SHOWN IN THIS CASE MAKES IT AN APT
ILLUSTRATION OF THE IMPRACTICABILITY OF ANY OTHER RULE. 

WHEN IT FOUND ITSELF UNABLE TO MEET ITS OBLIGATIONS, GREGG ARRANGED A
RECEIVERSHIP IN THE STATE COURT, SECURING THE APPOINTMENT OF ITS OWN
COUNSEL AS RECEIVER.  ONLY THE ONE CREDITOR WHICH FILED THE BILL
APPEARS TO HAVE BEEN CONSULTED.  THUS, THE PETITIONER NOT ONLY ARRANGED
DELIBERATELY TO COMMIT AN ACT OF BANKRUPTCY, BUT IT MANAGED THE AFFAIR
IN A MANNER NOT UNLIKELY TO PROVOKE THE UNCONSULTED CREDITORS TO FILE A
PETITION IN BANKRUPTCY - PRESUMABLY CONSIDERED THEIR BEST OR ONLY MEANS
OF OBTAINING THE DISINTERESTEDNESS IN THE ADMINISTRATION OF THE ESTATE
TO WHICH THEY WERE ENTITLED. 

THE CLAIMS WHICH, TOGETHER WITH THE ADVANCE PAYMENT OF PREMIUMS FOR
NEW INSURANCE, CONSTITUTED THE IMMEDIATE CAUSE OF GREGG'S FINANCIAL
DIFFICULTIES, WERE, AS WE HAVE SAID, OF VARIOUS SORTS.  BULKING LARGEST
WERE THOSE FOR PERSONAL INJURIES AND PROPERTY DAMAGE, WHICH NUMBERED
APPROXIMATELY 175 AND IN THEIR FACE AMOUNT AGGREGATED APPROXIMATELY
$200,000.  THEIR PRECISE NATURE IS NOT DISCLOSED BY THE RECORD, AND
CONJECTURE IN THIS REGARD IS MADE PARTICULARLY DIFFICULT BY GREGG'S
METHOD OF DOING BUSINESS - WHICH WAS TO AVAIL ITSELF ENTIRELY OF "OWNER
OPERATOR" VEHICLES FOR ITS "OVER-THE-ROAD" SERVICES.  DOUBTLESS THESE
CLAIMS WERE FOUNDED ALMOST ENTIRELY UPON THE NEGLIGENT OPERATION OF
VEHICLES FOR WHICH GREGG WAS IN SOME WAY HELD LEGALLY RESPONSIBLE.  WE
ARE NOT INFORMED WHETHER SUCH RESPONSIBILITY RESTED UPON THE PRINCIPLE
OF RESPONDEAT SUPERIOR, EXPRESS CONTRACTUAL ASSUMPTION, OR BOTH.  THE
REST OF THE CLAIMS, UPON WHICH ABOUT $15,000 WERE PAID, WERE FOR CARGO
LOSS AND DAMAGE.  THE RECORD DOES NOT SHOW WHETHER PAYMENT WAS MADE
SOLELY TO RETAIN THE GOOD WILL OF SHIPPERS, OR ALSO TO SATISFY THE
APPLICANT'S LEGAL LIABILITY - WHICH WOULD HAVE RESTED UPON ITS LEGAL
CONTROL OF THE CARGO. 

IT IS TRUE THAT GREGG WOULD NOT HAVE HAD TO BEAR THE BURDEN OF MOST,
IF NOT ALL, OF THE CLAIMS, HAD IT NOT BEEN FOR SOME UNFORTUNATE
EXPERIENCES WITH INSURANCE COMPANIES.  ITS MAJOR MISFORTUNE WAS THE
FAILURE OF THE COMPANY IN WHICH IT CARRIED ITS INSURANCE AGAINST
LIABILITY FOR PERSONAL INJURY AND PROPERTY DAMAGE.  WHAT CONSIDERATION
ACTUATED THE CHOICE OF THE PARTICULAR INSURANCE COMPANY, AND WHAT
CAUTION, IF ANY, WAS OBSERVED IN SELECTING IT, DO NOT APPEAR.  IT
EITHER MISUNDERSTOOD THE COVERAGE OF ITS OTHER POLICIES OR PURCHASED
POLICIES NOT SPECIFICALLY COMPREHENSIVE, AND FOUND ITSELF TAKING CARE
OF VERY SUBSTANTIAL CLAIMS FOR CARGO LOSS BECAUSE OF "TECHNICAL"
INSURERS' DEFENSES WHICH SEEM TO HAVE BEEN SUFFICIENT UNDER THE OHIO
LAW. 

IN ANY EVENT, THE CHOICES OF INSURERS, AS WELL OF ITS SERVANTS AND
OPERATORS, WERE GREGG'S OWN - AS WAS THE JUDGMENT WHICH WAS EXERCISED
WITH REGARD TO THE NUMEROUS OTHER PHASES OF ITS BUSINESS BEARING UPON
ITS SOLVENCY - AND THE FINAL PRODUCT COULD NOT HAVE BEEN A MATTER OVER
WHICH IT HAD NO CONTROL. 

FURTHERMORE, THE INTERRUPTION OF SERVICE WAS THE DELIBERATE ACT OF
THOSE WHO FOR THE TIME BEING STOOD IN THE POSITION OF APPLICANT AND
OWNED ITS RIGHTS.  DURING THE INTERVAL BETWEEN RECEIVERSHIP AND SALE OF
THESE RIGHTS TO NORTHEASTERN, WE TAKE IT THAT THE BENEFICIAL INTEREST
THEREIN VESTED IN THE CREDITORS AND THE LEGAL TITLE IN THE RECEIVER OR
TRUSTEE.  THE FEDERAL RECEIVER OR TRUSTEE COULD HAVE BEEN AUTHORIZED TO
CONDUCT THE BUSINESS OF THE BANKRUPT FOR A LIMITED PERIOD, IF IN THE
BEST INTERESTS OF THE ESTATE.  SEC. 2 OF THE ACT OF JULY 1, 1898, AS
AMENDED, 11 U.S.C. SEC. 11.  THE CREDITORS AND THEIR REPRESENTATIVES,
HOWEVER, FAILED TO SEEK SUCH AUTHORITY, EVIDENTLY REGARDING THE RIGHTS,
WHICH LATER SOLD FOR $850, NOT WORTH THE EXPENSE AND RISK OF CONTINUING
BUSINESS.  IT IS THE PURCHASER NORTHEASTERN, ORGANIZED TO ACQUIRE THE
"GRANDFATHER" RIGHTS, AND TO AN UNDETERMINED EXTENT IDENTIFIED WITH THE
MANAGEMENT OF THE BANKRUPT,  FN6  WHICH, HAVING BOUGHT THESE RIGHTS IN
THIS STATE OF VOLUNTARILY SUSPENDED ANIMATION, SEEKS TO REVIVE THEM. 
BUT IT CANNOT SAY THAT IT TAKES THE RIGHTS FREE OF ANY IMPAIRMENT BY
THE VOLUNTARY SUSPENSION OF OPERATION BY THE THEN OWNER FROM WHOM IT
DERIVES TITLE.    THE APPLICANT FOR A CERTIFICATE UNDER THE GRANDFATHER
CLAUSE SEEKS TO EXEMPT HIS FURTHER OPERATIONS FROM SCRUTINY AS TO
PUBLIC CONVENIENCE AND NECESSITY.  IF HE IS ABLE TO MEET THOSE TESTS,
HE MAY BE AUTHORIZED TO OPERATE, EVEN IF HE NEVER HAD GRANDFATHER
RIGHTS, OR IF THOSE HE ONCE HAD HAVE BEEN LOST.  AS THE MOTOR CARRIER
ACT IS REMEDIAL, AND THE GRANDFATHER CLAUSE CONFERS A SPECIAL
PRIVILEGE, THE PROVISO DEFINING EXEMPTIONS IS TO BE HELD TO EXTEND ONLY
TO CARRIERS PLAINLY WITHIN ITS TERMS.  MCDONALD V. THOMPSON, 305 U.S.
263, 266. 

IN ITS OPINION THE COMMISSION STATED THAT "IT IS USELESS TO SPECULATE
UPON THE QUESTION WHETHER THE 'GRANDFATHER' RIGHT EXPIRED BEFORE OR
AFTER THE SALE."  THIS WE UNDERSTAND TO MEAN THAT, HAVING DETERMINED
THAT THE CESSATION OF OPERATIONS WAS NOT A MATTER OVER WHICH GREGG "HAD
NO CONTROL," THE COMMISSION WAS OF OPINION THAT BY THE TIME OF THE SALE
THE CESSATION OF OPERATIONS WAS OF SUFFICIENT DURATION - AT LEAST 69
DAYS - TO ESTABLISH THAT GREGG HAD NOT BEEN "IN  .. OPEERATION SINCE"
JUNE 1, 1935, WITHIN THE MEANING OF SEC. 206(A).  THIS WAS A REASONABLE
CONCLUSION, ESPECIALLY SINCE ANY SUBSTANTIAL INTERRUPTION OF ONE
CARRIER'S SERVICE TENDS TO RESULT IN EXPANSION OF OTHER FACILITIES TO
MEET THE CONTINUING NEEDS OF SHIPPERS, AND THUS TO CAUSE OVERCROWDING
IF THE SUSPENDED SERVICE IS RESUMED. 

FINALLY, APPELLANTS CLAIM TO BE ENTITLED TO RELIEF FROM PREJUDICE
SAID TO HAVE RESULTED FROM DELAY OF THE COMMISSION IN ACTING ON GREGG'S
APPLICATION MADE UNDER SEC. 206(A) ON FEBRUARY 12, 1936.  THEY POINT
OUT THAT, HAD THE COMMISSION ACTED AT ONCE, A CERTIFICATE WOULD HAVE
ISSUED, THUS CONFERRING THE BENEFITS OF SEC. 212(A).  FN7  BUT BY ITS
TERMS SEC. 212(A) IS APPLICABLE ONLY WHERE A CERTIFICATE HAS ALREADY
ISSUED; AND, BEING A SECTION OF GENERAL APPLICABILITY, AT LEAST FOR
PRESENT PURPOSES, IT HAS NO ANALOGICAL BEARING UPON THE CONSTRUCTION OF
THE SPECIFIC PROVISION RELATING TO INTERRUPTIONS OF SERVICE MADE IN
SEC. 206(A).  THE DELAY IN PASSING UPON THE APPLICATION WAS
CONSIDERABLE AND REGRETTABLE, AS THE COMMISSION ACKNOWLEDGED, BUT IT
DOES NOT SEEM TO HAVE BEEN ARBITRARY OR THE RESULT OF ANY DELIBERATE
DISCRIMINATION, NOR, IN VIEW OF THE MAGNITUDE OF THE COMMISSION'S TASK,
UNREASONABLE.  THE COMMISSION HAD NEARLY 90,000 APPLICATIONS TO PASS
UPON UNDER SEC. 206(A), AND OF COURSE COULD NOT HAVE BEEN EXPECTED TO
PASS UPON THEM SIMULTANEOUSLY.  IT IS NOT WITHIN OUR PROVINCE TO REMEDY
INEQUALITIES NECESSARILY INCIDENT TO THE ADMINISTRATION OF THE
STATUTE.  AFFIRMED. 

FN1  THE TRUSTEE IN BANKRUPTCY, AN APPELLANT HERE, WAS APPOINTED NEAR
THE END OF DECEMBER, 1937. 

FN2  URGENT DEFICIENCIES ACT OF OCTOBER 22, 1913, 28 U.S.C. SEC. 47A. 

FN3  THIS PROVIDES IN PERTINENT PART THAT:  "IF ANY SUCH CARRIER OR
PREDECESSOR IN INTEREST WAS IN BONA FIDE OPERATION AS A COMMON CARRIER
BY MOTOR VEHICLE ON JUNE 1, 1935, OVER THE ROUTE OR ROUTES OR WITHIN
THE TERRITORY FOR WHICH APPLICATION IS MADE AND HAS SO OPERATED SINCE
THAT TIME, ..  EXXCEPT  ..  ASS TO INTERRUPTIONS OF SERVICE OVER WHICH
THE APPLICANT OR ITS PREDECESSOR IN INTEREST HAD NO CONTROL, THE
COMMISSION SHALL ISSUE SUCH CERTIFICATE WITHOUT REQUIRING FURTHER PROOF
THAT PUBLIC CONVENIENCE AND NECESSITY WILL BE SERVED BY SUCH
OPERATION."  49 U.S.C., SEC. 306(A). 

FN4  THE FOLLOWING ARE DEFINED AS ACTS OF BANKRUPTCY:  (1) FRAUDULENT
CONVEYANCES OR CONCEALMENTS OF PROPERTY, (2) TRANSFERS WHILE INSOLVENT,
(3) PERMITTING, WHILE INSOLVENT, A CREDITOR'S LIEN TO ATTACH TO
PROPERTY THROUGH LEGAL PROCEEDINGS, (4) ASSIGNMENTS FOR THE BENEFIT OF
CREDITORS, (5) PERMITTING OR PROCURING, WHILE INSOLVENT IN EITHER THE
BANKRUPTCY OR EQUITY SENSE, A RECEIVER TO BE APPOINTED TO TAKE CHARGE
OF THE BANKRUPT'S PROPERTY, (6) ADMISSIONS IN WRITING OF INABILITY TO
PAY DEBTS AND OF WILLINGNESS TO BE ADJUDGED A BANKRUPT.  SEC. 3A OF THE
ACT OF JULY 1, 1898, AS AMENDED, 11 U.S.C. SEC. 21(A). 

FN5  TREIMAN, ACTS OF BANKRUPTCY:  A MEDIEVAL CONCEPT IN MODERN
BANKRUPTCY LAW, 52 HARVARD LAW REVIEW 189. 

FN6  THE COMMISSION FOUND THAT NORTHEASTERN WAS INCORPORATED TO TAKE
OVER THE BANKRUPT'S RIGHTS AND BUSINESS, THAT THE FORMER PRESIDENT OF
GREGG IS THE NEW COMPANY'S GENERAL FREIGHT AGENT, AND THE FORMER
SUPERINTENDENT OF TRANSPORTATION IS A STOCKHOLDER OF THE NEW COMPANY;
AND THAT "OTHER CONNECTIONS, IF ANY, BETWEEN THE COMPANIES THROUGH
THEIR RESPECTIVE OFFICIALS AND EMPLOYEES CANNOT BE DETERMINED FROM THE
RECORDS." 

FN7  THIS READS IN PART AS FOLLOWS:  "THAT NO SUCH CERTIFICATE,
PERMIT, OR LICENSE SHALL BE REVOKED (EXCEPT UPON APPLICATION OF THE
HOLDER) UNLESS THE HOLDER THEREOF WILLFULLY FAILS TO COMPLY, WITHIN A
REASONABLE TIME, NOT LESS THAN THIRTY DAYS, TO BE FIXED BY THE
COMMISSION, WITH A LAWFUL ORDER OF THE COMMISSION, MADE AS PROVIDED IN
TO THE RULE OR REGULATION OF THE COMMISSION THEREUNDER, OR TO THE TERM,
CONDITION, OR LIMITATION OF SUCH CERTIFICATE, PERMIT, OR LICENSE, FOUND
BY THE COMMISSION TO HAVE BEEN VIOLATED BY SUCH HOLDER."  49 U.S.C.
SEC. 312(A). 

ORIGINALLY THE PERIOD WAS 90 DAYS.  BY AN AMENDMENT OF JUNE 29, 1938,
52 STAT. 1239, IT WAS REDUCED TO THE PRESENT 30 DAYS. 

MR. JUSTICE DOUGLAS, DISSENTING: 

I CANNOT BELIEVE THAT EXPERTS OF THE SUBJECT - SAY, REFEREES CHARGED
WITH THE DUTIES OF ADMINISTERING THE BANKRUPTCY LAW - WOULD CONCLUDE
THAT EVERY BANKRUPTCY AROSE WITHOUT EXCEPTION FROM CONDITIONS WHICH
WERE WITHIN IN THE "CONTROL" OF THE BANKRUPT IN ANY ACCEPTED MEANING OF
THE WORD.  NOR DO I THINK THAT THAT VIEW WOULD BE TAKEN IN CASE OF
RECEIVERSHIPS.  YET THAT IS THE IRREBUTTABLE PRESUMPTION WHICH THE
COMMISSION HAS CREATED IN THIS TYPE OF CASE.  CONGRESS DID NOT CREATE
IT.  CONGRESS MERELY PROVIDED THAT THIS CLASS OF CARRIER HAD A RIGHT TO
THE STATUTORY GRANT ON A SHOWING, INTER ALIA, THAT IT WAS IN "BONA FIDE
OPERATION AS A COMMON CARRIER BY MOTOR VEHICLE ON JUNE 1, 1935" AND
"HAS SO OPERATED SINCE THAT TIME" EXCEPT AS TO "INTERRUPTIONS OF
SERVICE OVER WHICH THE APPLICANT OR ITS PREDECESSOR IN INTEREST HAD NO
CONTROL."  MOTOR CARRIER ACT OF 1935, SEC. 206(A); 49 U.S.C. SEC.
306(A).  I WOULD HAVE SUPPOSED THAT THE QUESTION OF "CONTROL" WAS "AN
ISSUE OF FACT TO BE DETERMINED BY THE SPECIAL CIRCUMSTANCES OF EACH
CASE."  ROCHESTER TELEPHONE CORP. V. UNITED STATES, 307 U.S. 125, 145. 
THAT WOULD MEAN THAT "SO LONG AS THERE IS WARRANT IN THE RECORD FOR THE
JUDGMENT OF THE EXPERT BODY IT MUST STAND."  ID. PP. 145-146.  BUT THAT
IS QUITE DIFFERENT FROM GIVING THE WORD "CONTROL" A CONSTRUCTION WHICH
PREVENTS A PERSON FROM SHOWING UNDER ANY CIRCUMSTANCES THAT THE EVENTS
WHICH LED TO HIS BUSINESS DISASTER WERE NOT SUBJECT TO HIS "CONTROL." 
ON THE ONE HAND, THE COMMISSION RULES THAT INTERRUPTIONS OF SERVICE
OWING TO FLOODS, FN1  SNOW,  FN2  UNSAFE  FN3  OR IMPASSABLE  FN4
ROADS, HIGHWAY CONSTRUCTION,  FN5  DROUGHTS WHICH DESTROY A CARRIER'S
CHIEF SOURCE OF BUSINESS,  FN6  ILL HEALTH,  FN7  STRIKES,  FN8  OR THE
ILLEGAL ACTION OF GOVERNMENTAL AUTHORITIES  FN9  CONSTITUTE GROUNDS FOR
HOLDING THAT AN INTERRUPTION OF SERVICE IS BEYOND AN APPLICANT'S
"CONTROL."  BUT SIMILAR MISFORTUNES OF A PURELY ACCIDENTAL CHARACTER
WHICH AFFECT FINANCIAL STABILITY AND END IN BANKRUPTCY OR RECEIVERSHIP
ARE HELD AS A MATTER OF LAW TO BE SUBJECT TO THE CARRIER'S "CONTROL." 

THE DISTORTION WHICH THAT INTERPRETATION INVOLVES IS WELL ILLUSTRATED
BY THIS CASE.  THERE WAS EVIDENCE TENDING TO SHOW THE FOLLOWING:
DURING THE YEAR 1936 THE APPLICANT WAS INSURED AGAINST PUBLIC LIABILITY
AND PROPERTY DAMAGE BY THE CENTRAL MUTUAL INSURANCE CO. HEARING RUMORS
THAT CENTRAL MUTUAL WAS IN FINANCIAL DIFFICULTIES AND WAS NOT PAYING
CLAIMS, APPLICANT DROPPED ITS POLICY IN DECEMBER 1936 AND PLACED ITS
INSURANCE WITH ANOTHER COMPANY.  ON JANUARY 11, 1937, CENTRAL MUTUAL
WAS ADJUDGED A BANKRUPT AND CEASED PAYMENT OF ALL CLAIMS.  IN THE FALL
OF 1937, APPLICANT WAS FORCED TO PAY SEVERAL SUBSTANTIAL DAMAGE CLAIMS
ARISING FROM ACCIDENTS DURING THE PERIOD WHEN ITS INSURANCE POLICY WAS
IN EFFECT WITH CENTRAL MUTUAL.  THESE PAYMENTS SERIOUSLY IMPAIRED ITS
WORKING CAPITAL.  FURTHERMORE, APPLICANT WAS CONFRONTED WITH
APPROXIMATELY 175 ADDITIONAL CLAIMS FOR PERSONAL INJURY AND PROPERTY
DAMAGE.  THESE WERE ESTIMATED AT ABOUT $200,000 AND AROSE DURING THE
PERIOD WHEN APPLICANT WAS INSURED BY CENTRAL MUTUAL.  APPLICANT SETTLED
SOME OF THESE CLAIMS.  IT WAS IMPOSSIBLE, HOWEVER, TO SATISFY THE
DEMANDS OF ALL OF THESE CLAIMANTS.  RECEIVERSHIP FOLLOWED AND ON ITS
HEELS CAME BANKRUPTCY.  THERE IS NOT THE SLIGHTEST EVIDENCE IN THIS
RECORD OF ANY NEGLIGENCE, DERELICTION, OR MISMANAGEMENT ON THE PART OF
APPLICANT.  IT IS UNDISPUTED THAT ITS FAILURE WAS DUE TO THE FAILURE OF
ITS INSURER.  AND THERE IS NO EVIDENCE IN THIS RECORD THAT IT DID NOT
EXERCISE DUE CARE IN THE SELECTION OF THAT INSURER.  IT WOULD INDEED BE
IRONICAL TO CAST A PRESUMPTION AGAINST THE APPLICANT ON THAT SCORE WHEN
THE INSURANCE POLICY PRESUMABLY WAS ACCEPTED BY THE COMMISSION, AND
UNDER ITS REGULATIONS PROMULGATED PURSUANT TO SECS. 211(C) AND 215 OF
THE ACT (49 U.S.C. SECS. 311(C) AND 315) HAD TO BE "APPROVED" BY IT.
FN10 FEDERAL REGISTER (1936) VOL. 1, P. 1163, RULE 1.  AND SEE 49 CODE
OF FEDERAL REGULATIONS, PT. 174, SEC. 174.1. 

AN APPLICANT CARRIES THE BURDEN OF ESTABLISHING HIS RIGHT TO THE
STATUTORY GRANT WHICH IS CONTAINED IN THE "GRANDFATHER" CLAUSE.  ALTON
R. CO. V. UNITED STATES, 315 U.S. 15.  BUT HE SHOULD NOT BE MET AT THE
THRESHOLD WITH A CONCLUSIVE PRESUMPTION AGAINST HIM, UNLESS CONGRESS
HAS CLEARLY INDICATED THAT IN THE CIRCUMSTANCES OF HIS CASE HE HAS NO
RIGHT EVEN TO UNDERTAKE THE BURDEN OF PROOF.  IF CONGRESS HAD DESIRED
TO ELIMINATE ALL APPLICANTS WHOSE CONTINUOUS SERVICE WAS INTERRUPTED BY
BANKRUPTCY OR RECEIVERSHIP, I BELIEVE IT WOULD HAVE SAID SO.  AS STATED
BY COMMISSIONER LEE IN HIS DISSENTING OPINION (10 M.C.C. P. 263):  "IF
SUCH INTERRUPTIONS IN SERVICE ARE TO BE CONSTRUED AS PUTTING AN END TO
'GRANDFATHER' RIGHTS OF CARRIERS, WHOSE APPLICATIONS THEREFOR HAVE NOT
BEEN DETERMINED, THEN, WHERE SUCH A CARRIER GOES INTO RECEIVERSHIP OR
BANKRUPTCY, AND SUCH AN INTERRUPTION OCCURS, IT WOULD BE IMPOSSIBLE FOR
THE CARRIER TO COME OUT OF RECEIVERSHIP AND RESUME OPERATIONS; IT COULD
NOT EFFECT A COMPOSITION OR AN ARRANGEMENT WITH ITS CREDITORS AND
RESUME OPERATIONS; IF A CORPORATION, IT COULD NOT BE REORGANIZED UNDER
THE CORPORATE REORGANIZATION PROVISIONS OF THE BANKRUPTCY ACT, AND
CREDITORS COULD REALIZE NOTHING FROM 'GRANDFATHER' RIGHTS, HOWEVER
VALUABLE."  SUCH A WHOLESALE DESTRUCTION OF OPERATING RIGHTS SHOULD NOT
BE READILY OR LIGHTLY INFERRED.  OPERATING RIGHTS ARE THE VERY LIFE OF
ANY BUSINESS.  WITHOUT THEM THIS BUSINESS CERTAINLY HAS NO MORE THAN
SCRAP VALUE.  NO FINDINGS ON THAT ISSUE BUT INVOKED AN IRREBUTTABLE
PRESUMPTION WHICH WOULD AUTOMATICALLY FORECLOSE IN ALL CASES AN
OPPORTUNITY TO BE HEARD ON THE REAL CAUSE OF THE BANKRUPTCY OR
RECEIVERSHIP. 

FN1  WALTZ TRANSPORTATION, INC., 10 M.C.C. 30, 33. 

FN2  LEWIS MCKAY, 4 M.C.C. 93, 94. 

FN3  EDWARDS MOTOR TRANSIT CO., INC., 2 M.C.C. 73, 74. 

FN4  INTER-CAROLINAS MOTOR BUS CO., 21 M.C.C. 633, 635; WALTER
STAGES, INC., 24 M.C.C. 451, 454. 

FN5  MAGEE TRUCK LINES, INC., 28 M.C.C. 386, 389. 

FN6  BARNES TRUCK CO., INC., 24 M.C.C. 465, 467. 

FN7  H. BRUCE BLACKBURN, 20 M.C.C. 747, 748-749. 

FN8  MOTOR FREIGHT EXPRESS, 26 M.C.C. 374, 375; TRANSAMERICAN FREIGHT
LINES, INC., 28 M.C.C. 493, 502. 

FN9  W.H. TOMPKINS CO., 29 M.C.C. 359, 362. 

FN10  AND SEE FEDERAL REGISTER, OP. CIT., RULE IX; 49 CODE OF FEDERAL
REGULATIONS, PT. 174, SEC. 174.9. 

MR. JUSTICE BLACK AND MR. JUSTICE BYRNES JOIN IN THIS DISSENT. 



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