author: MARIS, Circuit Judge.

text:
    SCHENLEY DISTILLERS CORPORATION et al. v. UNITED STATES.
    Civil Action No. 539.
    District Court, D. Delaware.
    Aug. 14, 1945.

      Charles F. Richards, of Wilmington, Del., and Charles E. Cotterill, of New York City, for plaintiffs.
    John J. Morris, Jr., U. S. Atty., of Wilmington, Del., and David O. Mathews, Sp. Asst. to Atty. Gen. (Wendell Berge, Asst. Atty. Gen., on the brief), for defendant.
    J. Stanley Payne, Asst. Chief Counsel, of Washington, D. C. (Daniel W. Knowl-ton, Chief Counsel, of Washington, D. C., on the brief, for the Interstate Commerce Commission, intervenor.
    Dale C. Dillon, of Mount Ranier, Md. (Tocker, Todd, Donoho & Dillon, of Washington, D. C., on the brief), for Contract Carriers Conference of American Trucking Associations, intervenor.
    Jack Garrett Scott and Robert J. McBride, both of Washington, D. C. (H. L. Lewis, of Washington, D. C., on the brief), for Regular Common Carriers Conference of the American Trucking Associations, in-tervenor.
    Before BIGGS and MARIS, Circuit Judges, and LEAHY, District Judge.
   MARIS, Circuit Judge.

This petition or complaint filed on March 22, 1945, by Schenley Distillers Corporation and Schenley Distilleries Motor Division, Inc., seeks to enjoin and set aside an order of the Interstate Commerce Commission entered November 25, 1944, denying Motor Division’s application for a contract carrier permit, holding that Motor Division may not continue to operate in interstate commerce without a' permit and directing that it immediately discontinue such operations. The plaintiffs seek a judgment directing the Commission to dismiss the application of Motor Division for a permit upon the ground that no permit is required to conduct the transportation business of Motor Division.

The case was heard by the court, constituted of three judges pursuant to the Urgent Deficiencies Act of October 22, 1913, 28 U.S.C.A. § 47, on May 4, 1945. The Interstate Commerce Commission, the Regular Common Carrier Conference .and the Contract Carrier Conference of the American Trucking Associations,, Inc., intervened as defendants. A certified copy of the evidence submitted to the Commission was received in evidence by the 'court. All parties stipulated that the hearing should be deemed the final hearing. From the admitted allegations of the petition or complaint and the evidence the court makes the following special

Findings of Fact

1. Plaintiff Schenley Distillers Corporation is a corporation organized and existing under the laws of the State of Delaware, with principal executive office in New York, N. Y. It was organized in 1933 as a holding company. On September 30, 1938, it also became an operating company engaging in the manufacture, sale and distribution of alcohol and alcoholic beverages.

2. Plaintiff Schenley Distilleries Motor Division, Inc., hereinafter called Motor Division or applicant, is a corporation organized and existing under the laws of the State of Delaware, having its principal executive office in New York, N.Y., and its principal operating office in Lawrence-burg, Ind.

3. On September 28, 1943, Motor Division filed an application with the Interstate Commerce Commission, under section 209 of the Interstate Commerce Act, 49 U.S.C.A. § 309, for a permit authorizing operation, in interstate and foreign commerce, as a contract carrier by motor vehicle, of alcoholic liquors and various other commodities between the following points, on the one hand: Jersey City, N. J., Philadelphia and Schenley, Pa., Cedarhurst, Md., Terre Haute and Law-renceburg, Ind., Covington, Frankfort, Lexington, Louisville, Stamping Ground, Lebanon, Limestone Springs, and Carrollton, Ky., and, on the other hand, all points in 19 States and the District of Columbia.

4. The application was referred to an examiner of the Commission and a hearing thereon was held at Brooklyn, N.Y., December 8, 1943. Various associations of motor and rail carriers and individual motor carriers appeared at the hearing as protestants against the granting of the application. Thereafter, briefs were filed, an examiner’s recommended report, together with a recommended order, issued and served, and exceptions thereto and replies to the exceptions were filed.

5. On November 25, 1944, the Commission, Division 5, issued a report, Schenley Distilleries Motor Division, Inc., Contract Carrier Application, 44 M.C.C. 171, and an order which denied the application. Applicant submitted a petition for reconsideration by the full Commission, which was denied February 12, 1945.

6. In the report of Division 5, which was made part of the order, it was stated that the truck operations of Motor Division should immediately be discontinued.

7. Although in form the application sought a permit authorizing operating as a contract carrier, its primary purpose was to secure a determination whether applicant’s operations are those of a contract carrier or of a private carrier. At the outset of the hearing, applicant requested dismissal of the application ■ on the ground that applicant’s operations are those of a private carrier, as defined in section 203(a) (17) of the Interstate Commerce Act, 49 U.S.C.A. § 303(a) (17), and therefore not subject to the permit requirements of section 209, 49 U.S.C.A. § 309. The evidence submitted by applicant related solely to the question of its status.

8. For the reasons given in the report the Commission found that applicant’s operations were not those of a private carrier nor those of a common carrier but that “in performing the described services applicant is engaged in operation as a contract carrier by motor vehicle for hire subject to the permit requirements of the Act.”

9. The Commission further found that “Applicant disclaims any desire or intention of operating other than as a private carrier, and there is no evidence tending to show that the operations here sought would be consistent with the public interest and the national transportation policy,” and that “Consequently the application must be denied,” but “If applicant elects to attempt to justify operation as a contract carrier, it should petition for further hearing in this matter for the purpose of introducing further proof.”

10. No petition for further hearing has been filed with the Commission. As the Commission found the described operations to be those of a contract carrier, and that applicant is performing said operations without a permit, in violation of section 209 of the Act, it directed in the report that “the described operations should immediately be discontinued.”

11. The ultimate findings of the Commission were: That operation by applicant in the transportation of property of the described corporations is that of a contract carrier by motor vehicle as defined in section 203(a) (15) ; that applicant has failed to show that the proposed operations will be consistent with the public interest and the national transportation policy, and that the application should be denied.

12. Schenley Distillers Corporation, hereinafter called the parent corporation, owns all of the capital stock of Motor Division, except directors’ qualifying shares. It also owns all but the qualifying shares of numerous other corporations engaged in operating distilleries, industrial alcohol plants and wineries and in the importation and exportation of wines and liquors, including:

Associated Kentucky Distillers Company, a Kentucky corporation, which operates a distillery and warehouse at Lebanon, Ky.

Bernheim Distilling Company, a Kentucky corporation, which operates two distilleries at Louisville, Ky.

Green River Distilling Company, a Maryland corporation, which operates a distillery at Stamping Ground, Ky.

New England Distilling Company, a Kentucky corporation, operating a distillery at Covington, Ky.

Joseph Finch & Company, a Pennsylvania corporation, operating a distillery and warehouse at Schenley, Pa.

Old Quaker Company, a Maryland corporation, which owns a distillery and bonded warehouse at Lawrenceburg, Ind. The operations of this distillery are now carried on by Schenley Distillers, Inc., a Maryland corporation.

James E. Pepper & Company, a Kentucky corporation, operating a distillery at Lexington, Ky.

George T. Stagg Company, a corporation, operating distilleries at Frankfort, Carroll-ton, and Limestone Springs, Ky.

Monticello Distillery Company, a corporation, operating a distillery and an industrial alcohol plant at Cedarhurst, Md.

Cresta Blanca Wine Company, a Delaware corporation, operating a winery at Livermore, Calif.

Roma Wine Company, a Delaware corporation, operating plants at Lodi, Healds-burg, and Kingsburg, Calif.

13. The parent corporation also owns all of the stock or a controlling interest in a number of other corporations, including the Three Feathers Distilling Company. It also owns in part the shares of the Dubon-net Corporation, a Pennsylvania corporation, with a plant at Philadelphia, Pa., and another at Lodi, Calif., and engaged principally in the bottling of Dubonnet aperitif wine and vermouth.

14. The parent corporation and its manufacturing and sales subsidiaries distribute and sell their products throughout the United States. Their net sales for the fiscal year ended August 31, 1943, were approximately $180,000,000.

15. The management of the parent corporation selects all of the officers and directors of its subsidiaries: and in most instances the directors of the subsidiaries are either directors or officers of the parent corporation. All policies affecting the operation of these subsidiaries are formulated or approved by the officers of the parent corporation, thereby giving it complete and direct control over the operations of the subsidiaries. The parent corporation makes available daily to each subsidiary sufficient funds to meet its cost of operation, which funds are handled as accounts payable to the parent corporation on the books of the subsidiary, and as accounts receivable on the books of the parent corporation. The finished products of these subsidiaries are bought by the parent corporation at a sum somewhat above the actual cost, thereby affording the subsidiary a margin of profit determined by the parent corporation.

16. In the conduct of their businesses the parent corporation and its subsidiaries cause to be transported inbound to their plants large quantities of grain, malt, barrels, bottles, and shipping cases. They ship outbound large quantities of alcoholic beverages and certain by-products. These products and by-products are shipped to wholesalers and to various states, including ■Ohio, Pennsylvania, Virginia, and 13 or 14 others, called “monopoly buyers,” which reserve to themselves the exclusive right to sell alcoholic beverages within their domains and purchase all alcoholic beverages at wholesale. There is also a movement of whiskeys and other products from one subsidiary distillery to another.

17. The Schenley group of corporations depends principally upon rail carriers for their transportation, although the services of both motor common and contract carriers are utilized to a considerable extent ■for outbound shipments and to a lesser extent on inbound shipments of raw materials and supplies. The aggregate transportation charges paid by them to public-carriers aggregate $3,000,000 annually, of which 85%, or $2,550,000, is paid to railroads, and 15%, or $450,000, to common or contract carriers by motor vehicle. In addition, they pay to Motor Division, for transportation of their materials and finished products, an aggregate amount of approximately $142,000 annually.

18. In the fall of 1941 the parent corporation ordered 75 motor vehicles of the tractor-trailer type, 50 of which were delivered at a cost of over $250,000. They were first registered under State motor vehicle laws in the name or names of the subsidiaries using them, principally in Indiana in the name of the Old Quaker Company. On February 19, 1942, Motor Division was formed and title to these vehicles was transferred to it. The vehicles are now registered in its name, some in Indiana, some in Pennsylvania, some in Kentucky, and five in California. The decision to create Motor Division was made after study of the motor transportation situation, which took into account, among other factors, the advantages to be gained by the creation of a separate transportation organization and the centralization of the management of the trucks and the supervision of their operation. •

19. In organizing Motor Division, 1,000 shares of stock were authorized and issued representing a paid-in capital of $50,000. Motor Division’s president is also vice president and a director of the parent corporation, as well as president and director of a number of other Schenley subsidiaries. As in the case of other subsidiaries, the parent corporation bears all the expense of operation.

20. The principal operating office of Motor Division is at Lawrenceburg, Ind.„ the location of the distillery of the Old Quaker Company. For purposes of compliance with the laws of Delaware, under which it was incorporated, Motor Division maintains an office at 100 West 10th St., Wilmington, Del.

21. Motor Division now transports and in the future, so far as it can predict, will transport, only commodities the title to which at the time of transportation is in the Schenley Distillers Corporation or one ■or another of its subsidiary corporations.

22. The operation of Motor Division’s vehicles is under the direction of a general manager, whose headquarters are at Cincinnati, Ohio. Said general manager also is transportation engineer of the parent corporation but he holds no position with any of the other subsidiaries. When merchandise is to be moved the matter is taken up with Motor Division’s general manager who determines how and when the movement should be made, the number of vehicles required, whether Motor Division’s trucks are available for the transportation, and whether, if he decides to use a Motor Division vehicle, the vehicle may be leased to a common or contract carrier by motor vehicle to avoid the necessity of Motor Division returning the truck empty to its starting point. He determines whether the merchandise is to be shipped by rail, by motor common carrier, by motor contract carrier (other than Motor Division), or by Motor Division. After making his decision he issues the necessary instructions to the plants involved.

23. The whole area specified in the application to the Commission for a permit is actually or potentially the area of the use of Motor Division’s vehicles, that is to say, transportation has been or may be performed by Motor Division throughout the whole area described in the application, embracing 19 states and the District of Columbia.

24. Motor Division began operations in interstate commerce shortly after it was incorporated on February 19, 1942. At no time has it had a certificate, permit, or other operating authority issued under the provisions of the Interstate Commerce Act.

25. The Commission found that although contracts and agreements were entered into between Motor Division and the various other Schenley subsidiary corporations which purported to lease the Motor Division’s vehicles to said subsidiaries, such contracts and agreements were not in fact leases and that Motor Division retained control of the physical operation of the vehicles, and that it was in each instance of transportation the actual carrier. In this connection the Commission found that Motor Division, “in effect, disclaims the status of equipment lessor.” The record shows that Motor Division claimed that the system of leases and subleases was merely an “internal accounting arrangement,” but this characterization is inaccurate, as the purported leases and subleases in fact provide for and fix the compensation which the various subsidiary corporations pay to Motor Division for transportation services performed by it.

26. Although in the form of a “rental” charge, the Commission found that the payment, by the respective subsidiaries to Motor Division, of $50 per week per truck plus 10 cents per truck per mile, was in fact compensation paid to Motor Division for transportation performed for them by Motor Division. The Commission found that Motor Division’s primary, and in fact only, business is the transportation of property for compensation.

27. Motor Division’s income for transportation services performed by it for the various Schenley subsidiaries (spoken of as its “rental” income) was approximately $71,000 for the six-month period ended August 31, 1943. Its actual operating expense for that period was approximately $75,000.

28. The contracts between Motor Division and said subsidiary corporations obligate Motor Division to procure all required licenses, provide public-liability and property-damage insurance, maintain the vehicles in good mechanical condition, supply lubricating oil, gasoline, and tires, and display on the equipment the name of Motor Division as owner and the name of the subsidiary as lessee. Motor Division provides a driver for each unit; and the right to hire and discharge the drivers rests entirely with Motor Division.

29. On shipments transported by Motor Division the sale price is based f.o.b. destination, rather than f.o.b. the plant as is the practice where shipments are transported by public carriers. The difference between the f.o.b. price at the plant and that at destination is generally equivalent to the charges maintained by common carriers.

30. The transportation performed by Motor Division is of three types: First, transportation inbound to the distilleries of the various subsidiary corporations of bottling supplies, such as empty glass bottles, shipping containers, corks, labels, glue, repair and maintenance items, stationery, etc. Second, transportation of alcoholic liquors in barrels, bottles or cases on outbound distributions to wholesale liquor dealers and to the States known as monopoly buyers. Third, inter-company transportation of whiskeys and various other commodities between the plants of the various subsidiaries.

31. Several of the subsidiary distilling companies have been engaged exclusively and others have been engaged partly in producing alcohol under orders of the War Production Board for the Defense Supplies Corporation. This alcohol has been shipped by railroad in tank cars or by motor vehicle in tank trucks and none of it has been transported by Motor Division.

32. Although it was testified that the motor vehicles now owned by Motor Division were acquired in 1941 in anticipation of a shortage of public transportation facilities in the event of war, there is no showing that such a shortage developed nor is there anything to indicate an intention on the part of Motor Division or its parent corporation to dispose of said vehicles or to cease operations as a motor carrier in interstate commerce upon the termination of the war.

Discussion

As stated in our findings of fact, Schen-ley Distilleries Motor Division, Inc., which we have called Motor Division, is a wholly-owned subsidiary of Schenley Distillers Corporation, which we have called the parent corporation. On September 28, 1943, Motor Division filed an application with the Interstate Commerce Commission. The applicant’s ostensible purpose was to procure a permit authorizing it to operate as a contract carrier and to transport in interstate commerce by motor vehicle the property of the parent corporation and of many of its subsidiaries. However, since Motor Division at the same time requested that the application be dismissed on the ground that it was not a contract carrier it is clear that the applicant’s real objective was to secure a determination that Motor Division was a private carrier not subject to the permit provisions of the Interstate Commerce Act.

Division 5 of the Commission, to which the application was referred, did not pass upon the motion to dismiss. It found that Motor Division was not a common carrier but that it was a contract carrier requiring a permit to enable it to operate legally in interstate commerce. Upon the merits it found that Motor Division had failed to show that the proposed operations would be consistent with the public interest and the national transportation policy. It denied the application. Motor Division sought reconsideration by the full Commission but this was denied and the order of Division 5 was adopted as the Commission’s order.

Motor Division thereupon brought the present suit against the United States in this court and was joined as party plaintiff by the parent corporation. The latter had not been a party to the application nor an intervenor in the proceedings before the Commission. The plaintiffs seek to have the order of the Commission annulled and enjoined and to procure an order directing the Commission to dismiss the application on the ground that the trucking operations of Motor Division would not be carriage for compensation and consequently would not require a permit.

It is urged by the defendant that the order is not reviewable in a proceeding such as this instituted under the Urgent Deficiencies A,ct and that this court is without jurisdiction. In a prior proceeding this court had occasion to consider the identical issue and concluded that it had jurisdiction. Schenley Distillers Corporation v. United States, D.C.1943, 50 F.Supp. 491. We adhere to the views there expressed and for the reasons there fully stated conclude that this court has jurisdiction of the present suit. Compare Cornell Steamboat Company v. United States, 1944, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978, in which the reviewability of the Commission’s order was assumed by the Supreme Court.

It is also contended by the defendant that the parent corporation has no legal interest sufficient to entitle it to maintain this suit. The fact that the parent corporation was not a party to the application for the permit nor an intervenor in the proceedings before the Commission would not bar it from bringing suit to set aside the resulting order of the Commission if the order subjects it to such legal injury, actual or threatened, as would give it standing to sue. Edward Hines Yellow Pine Trustees v. United States, 1923, 263 U.S. 143, 147, 44 S.Ct. 72, 68 L.Ed. 216. Here, however, the parent corporation predicates its right to sue solely upon its ownership of Motor Division’s capital stock and control and management of its affairs. In Pittsburgh & W.Va. Ry. v. United States, 1930, 281 U.S. 479, 50 S.Ct. 378, 74 L.Ed. 980, the mere financial interest of a minority stockholder of a carrier corporation was held not to be sufficient to show a threat of the sort of legal injury necessary to entitle the stockholder to bring a suit to set aside a Commission order against the carrier corporation. The fact that the parent corporation here owns all the stock of Motor Division does not change the character of its interest. The injury feared is still the indirect harm which may result to any stockholder from harm to his corporation. The alleged interest arising from the parent corporation’s management and control of Motor Division is equally insufficient to give it standing to sue. The parent corporation is in this respect in no different position from any corporate board of directors or chief executive officer. We hold that the complaint must be dismissed as to the parent corporation.

We come then to the question which Motor Division raises upon the merits, which is whether the Commission erred in finding that Motor Division is a contract carrier and in refusing to find that it is a private carrier as defined in Section 203(a) of the Interstate Commerce Act.

Section 203(a) provides that as used in Part II of the Act, relating to motor vehicles

“(14) The term ‘common carrier by motor vehicle’ means any person which holds itself out to the general public to engage in the transportation by motor vehicle in interstate or foreign commerce of passengers or property or any class or classes thereof for compensation, whether over regular or irregular routes, except transportation by motor vehicle by an express company to the extent that such transportation has heretofore been subject to part I, to which extent such transportation shall continue to be considered to be and shall be regulated as transportation subject to part I.

“(15) The term ‘contract carrier by motor vehicle’ means any person which, trader individual contracts or agreements, engages in the transportation (other than transportation referred to in paragraph (14) and the exception therein) by motor vehicle of passengers or property in interstate or foreign commerce for compensation.

* * * * *

“(17) The term ‘private carrier of property by motor vehicle’ means any person not included in the terms ‘common carrier by motor vehicle’ or ‘contract carrier by motor vehicle’, who or which transports in interstate or foreign commerce by motor vehicle property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or in furtherance of any commercial enterprise.”

It will be observed that under these definitions a carrier which is a common carrier or a contract carrier cannot be a private carrier, since the definition of a private carrier in subparagraph (17) specifically excludes both common and contract carriers. Since it was found by the Commission and conceded by the parties that Motor Division is not a common carrier the issue is narrowed to whether Motor Division comes within the definition of a contract carrier in subparagraph (15) or of a private carrier in subpara-graph (17).

The Commission found that Motor Division engaged in the transportation by motor vehicle of property in interstate commerce for compensation. Thus all the elements entering into the definition of a contract carrier were found to exist in the operations of Motor Division. The contention is made that as to at least one of these fact findings the Commission was in error. The plaintiffs urge that Motor Division does not conduct its business “for compensation”; that implicit in “compensation” is a profit motive and that this is completely absent in the case of Motor Division. We do not agree that “compensation” as used in the statutory definition, necessarily involves an element of profit. On the contrary it may under some circumstances involve merely reimbursement for expenses of operation.

The plaintiffs next point to the fact that Motor Division is wholly owned and completely controlled by the parent corporation and argue that when Motor Division transports the property of its affiliates the operations are not carriage for compensation in any sense but are only incidental to the single commercial enterprise of the group of corporate entities comprising the Schenley liquor business. They argue that though Motor Division is a legal entity separate and distinct from that of the parent corporation and its subsidiaries, nevertheless for the purposes of this controversy the Commission and the court should look behind the form and determine that Motor Division is but a unit in the common enterprise.

This argument finds no support either in law or in equity. As the Supreme Court said in Gray v. Powell, 1941, 314 U.S. 402, 414, 62 S.Ct. 326, 334, 86 L.Ed. 301: “The choice of disregarding a deliberately chosen arrangement for conducting business affairs does not lie with the creator of the plan.” See to the same effect Moline Properties v. Commissioner, 1943, 319 U.S. 436, 63 S.Ct. 1132, 87 L.Ed. 1499. True it is that courts have many times disregarded the corporate form, when it was used to justify wrong, protect fraud, defend crime or evade statutory inhibitions. In Munson S. S. Line v. Commissioner, 2 Cir., 1935, 77 F.2d 849 for example, the court found that the legislative purpose of developing the merchant marine would be best served by disregarding the corporate entity. No one of these reasons is present here. Indeed, insofar as the legislative intent is disclosed in the Interstate Commerce Act it would seem best served by subjecting to the control of the Commission transporters which function as does Motor Division.

The refusal of the Commission to disregard the corporate status of Motor Division is consistent with prior decisions in .similar cases involving transportation by one subsidiary corporation for manufacturing or producing subsidiaries of the same parent company. See Enterprise Trucking Corp. Application, 1941, 27 M.C.C. 264; Lee Wilson & Co. Application, 1941, 29 M.C.C. 525; Lukens Steel Company Application, 1943, 42 M.C.C. 672.

We have been favored by the parties and intervenors with an exhaustive analysis of the opinions of the Commission upon applications, such as L. A. Woitishek Common Carrier Application, 42 M.C.C. 193, and Williams Brothers Corporation Contract Carrier Application, May 16, 1945, - M.C.C. -, and of cases such as Interstate Commerce Commission v. Clayton, 10 Cir., 1942, 127 F.2d 967, and A. W. Stickle Co. v. Interstate Commerce Commission, 10 Cir., 1942, 128 F.2d 155. In each of these as well as many others cited in which it was necessary to determine whether the carriage was for hire or was private carriage it was found helpful to determine whether the primary business was the supplying of transportation or whether the transportation was merely incidental. The problem there requiring solution does not concern us since in this case it i? undisputed that the primary and indeed sole business of Motor Division is that of transportation.

The Commission found that Motor Division receives from each subsidiary fifty dollars a week as a rental charge and ten cents for each mile operated for each vehicle used by the subsidiary. It also, receives payments from the common carriers and! contract carriers to which it may lease vehicles from time to time. Thus-for the six months period ending August 31, 1943 Motor Division had an income from its transportation business of some $71,000. We think these facts, which are uncontradicted, prove conclusively that Motor Division transported “for compensation.” We conclude that the Commission did not err in finding that Motor Division is a contract carrier.

A contract carrier may not operate without a permit from the Commission. Since Motor Division has produced no evidence to show that its operations are consistent with the public interest and the national transportation policy, as required by Section 209 of the Act, it follows that the Commission properly denied Motor Division a permit to operate as a contract carrier. Accordingly, we reach the following

Conclusions of Law

1. Schenley Distillers Corporation has no legal interest sufficient to maintain this action.

2. The order of the Commission, entered November 25, 1944, although negative in form, is affirmative in its immediate consequences and is reviewable by this court.

3. Schenley Distilleries Motor Division, Inc., is not a common carrier, as it does nr t hold itself out to serve the general public.

4. It engages in the transportation by motor vehicle of property in interstate or foreign commerce, under individual contracts or agreements, for compensation, and is therefore a contract carrier within the meaning of section 203(a) (15) of the Interstate Commerce Act.

5. It does not own the property which it transports and it lias no legal interest in Such property either as lessee, bailee, or otherwise, except the temporary possession of the property as a carrier. The property which it transports is not for the purpose of sale, lease, rent, or bailment by it and is not transported in furtherance of any commercial enterprise, other than transportation, by it. It is not a private carrier within the meaning of section 203(a) (17) of the Interstate Commerce Act.

6. Under the facts in this case it cannot be held, without disregarding the corporate entities of Motor Division and of the corporations for which it transports, that Motor Division’s operations are incidental to and in furtherance of a commercial enterprise other than that of transportation for hire. In declining to ignore the legal entities which the parent corporation has found it desirable to set up, the Commission did not err as a matter of law. The law does not require that the Commission disregard corporate entities for the purpose of exempting from regulation under the Interstate Commerce Act transportation which would otherwise be subject to that Act.

7. In'finding that Motor Division is not a private carrier within the meaning of section 203(a) (17) of the Interstate Commerce Act but is a contract carrier as defined in section 203(a) (15) of that Act, the Commission did not err.

8. The Commission’s findings of fact and its conclusions of law are fully supported by the evidence.

9. The Commission’s order is not invalid for any of the reasons advanced by plaintiffs.

10. The relief sought by plaintiffs must be denied and their petition or complaint dismissed.

A judgment will be entered dismissing the petition or complaint.

       Schenley Distilleries Motor Division, Inc., Carrier Application, November 25, 1944, 44 M.C.C. 171.

       49 U.S.C.A. § 303(a).


source: Caselaw Access Project

author: KNOX, District Judge.

license: Public Domain

text:
    ABBOTT v. UNITED STATES.
    District Court, S. D. New York.
    May 24, 1945.

      George J. Engelman, of New York City, for libelant.
    John F. X. McGohey, U. S. Atty., of New York City (Edward J. Behrens and Charles H. Lawson, both of New York City, of counsel), for respondent.
   KNOX, District Judge.

Libelant, a seaman employed on board the steamer Beauregard, a vessel owned by the United States, here sues for damages, allegedly sustáined through negligence on the part of the ship.

On August 15, 1943, the day of libelant’s injury, the vessel lay at anchor near Meth-el, Scotland. She had crossed the Atlantic in convoy and was about to proceed to another port. Shortly before the hour of departure, and while libelant and another seaman, named Senecal, were standing the gangway watch from 12 m. to 4 p.m., the anchor, ball of the Beauregard, which had been suspended from a halyard attached to the vessel’s forestay by a pulley about 20 feet above the forward hatch, fell to the deck. The second officer, then in charge of the ship, ordered the libelant and Senecal to lift the anchor ball into its former position, or take it to the bridge. They immediately went to the forward deck, and there observed that the halyard to which the anchor ball had been attached, had parted, with one of its ends fastened on deck, and the other 'being snarled in the pulley rigged to the forestay. This latter appliance was a steel line having a diameter of three inches, and in good condition.

Libelant, after a futile endeavor to pull out the snarl at the pulley, and thus disengage the halyard, decided to shinny up the forestay in order to rig the line to which the ball had been secured. Having done so, and being an experienced seaman, he grasped the forestay with, his hands and feet, and in a semi-horizontal position on the under side of the line, attempted its ascent, shifting his position first with his hands and then with his legs. When his hands had passed a point on the forestay, and above the position of a steel clamp attached thereto, but which did not hold the pulley through which the halyard had been reaved, libelant’s feet slipped backwards, and one of his ankles came in contact with the clamp. The pain arising from the resulting cut was such that Abbott lost his hand grip, fell onto a hatch cover on deck and suffered severe and painful injuries. The use to which the clamp that allegedly caused libelant to fall had been put does not appear.

After his accident, Abbott received first aid treatment on board the vessel, and shortly thereafter, was taken in a launch to Cameron Hospital at Windygates, Fife. The following day he was transferred to Strachathro Hospital, Brechin, Angus, where he remained until January 1, 1944. He then embarked on the Queen Mary, arriving in New York nine days later, and was taken to the Marine Hospital, Staten Island, as an in-patient. Remaining there until March 27, 1944, he was transferred to the Seamens’ Rest Centre at Gladstone, New Jersey, and remained there for three weeks. On his discharge from that institution, he came to New York for a while, and then went to Boston. On August 1, 1944, he ¡became an in-patient at the Boston Marine Hospital, and was treated there until September 1, 1944. He received a final examination about three weeks thereafter, and was then discharged as fit for service in most kinds of shore work.

The main allegation of fault on the part of respondent is that it failed to provide li-belant with a safe place in which to work and “in ordering and permitting. (him) to ascend the forestay hand over hand; in maintaining the forestay, its appurtenances and attachments in such a defective and un-seaworthy condition that the anchor ball fell to the deck, and in failing and neglecting to take the customary steps to protect the libelant’s person.”

In addition to asking that he be indemnified for his injuries, libelant also seeks a recovery for his maintenance and cure.

The United States made a general denial of the allegations in the libel, and then pleaded that Abbott’s own negligence, and the assumption of the risks of his employment, bar his claim for indemnity. It also avers that when the libel was filed, the Beauregard was not within the territorial jurisdiction of the United States. For this reason, it is urged that this court is without authority to pass upon the merits of the li-belant’s claims. As respects this contention, it is to be noted that the libel was filed April 3, 1944, and its fourth paragraph alleged that:

“The said S. S. Beauregard at the time of serving and filing of this libel is within or is about to come within the territorial jurisdiction of the United States and of this Honorable Court.”

It contained, however, no allegation as to libelant’s place of residence.

On June 9, 1944, respondent answered the libel. In addition to its denials of fault, it set forth as a first, separate and complete defense:

“That the Court is without jurisdiction in the matter.”

On June 20, 1944, pursuant to stipulation of the parties, an order was entered permitting the libel to be amended so as to allege that:

“The libelant resides within the jurisdiction of this court.”

Respondent thereupon denied any knowledge or information sufficient to form a belief as to such allegation. Trial was had on March 26 and 27, 1945.

From the outset of the litigation, respondent has insisted, and continues to insist, that the court is without jurisdiction to proceed to a decision on the factual issues of the case. As a result, the matter of jurisdiction must be determined.

In the course of the trial, libelant’s advocate conceded that libelant “is not — he was not, in my judgment, and I have so stipulated, a resident of this district.”

On hearing this statement, I inquired, “Where was he living at the time?” and Mr. Engelman replied:

“Well, here were the facts your Honor. He was over at the Marine Hospital at Sta-pleton, as you know, when he came over, from January 10 (1944) to March 27; he was then out at Gladstone (New Jersey) for approximately * * * three weeks. There was some notation that he was to take or would take some treatment at Hudson and Jay Streets. And it was thought that he would take up his residence here, in view of the fact that he couldn’t go to his children anyway, they were up in Nova Scotia; but he did finally decide to go back to Boston, and he has been in Boston ever since. Those are the facts.”

Mr. Behrens, representing respondent, then added:

“I might say that every record I have ever seen gives his address as 32 Highland Court, Malden, Massachusetts. He has never described any other address, so far as I know.”

When libelant signed on the Beauregard, he gave Nova Scotia as his place of residence, and on October 4, 1944, he represented to the Merchant Marine Hearing Unit of the United States Coast Gaurd, located at Boston, that he resided at Malden, Massachusetts.

As has been seen, during most of his stay in this locality, he was confined in a hospital. Aside from this, his sojourn in New York can be ascribed to his interest in the trial of this action. There is, therefore, no basis on which to find that at the time of suit he was, or ever became, a resident of this district.

It is argued, nevertheless, that his non-residence here is, at most a mere matter of venue, and that respondent, by pleading to the merits, has waived objection thereto. Commercial Trust Company v. United States Shipping Board, 2 Cir., 48 F.2d 113; Kunglig Jarnvagsstyrelsen v. United States, 2 Cir., 19 F.2d 761. The general rule that I am thus asked to follow is, I think, inapplicable here. Respondent’s response to libelant’s averment of residence in this district was a material fact in issue, and it, if libelant is to prevail, like other affirmative and material allegations of the libel, must be proved.

In other words, the fact that libel-ant did not reside within this district did not appear on the face of his libel, and respondent was thus in no position to raise the question before the date of trial. See Roberts v. Lewis, 144 U.S. 653, 12 S.Ct. 781, 36 L.Ed. 579.

Furthermore, libelant has failed to show that on the date his libel was filed, the Beauregard was within the territorial jurisdiction of the United States. The proof indicates that following libelant’s accident, the ship first came to this country som,( time about June, 1944. On the 17th day oí that month, she signed on a crew at this port. But, there is no evidence that she was then in this district. Apparently, she did not come here until November 25, 1944-, when she docked at Pier 7, North River. She sailed again on December 12th.

On this state of facts, this case falls squarely within the ruling of the Appellate Court of this Circuit in Carroll v. United States et al., 133 F.2d 690, where following Blamberg Bros. v. United States, 260 U.S. 452, 43 S.Ct. 179, 67 L.Ed. 346, it was held that a condition of substantive jurisdiction in suits under the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq. is that the vessel should be within this country when a libel seeking to hold the United States is filed. If it be, as the Court intimated, that this difficulty might possibly be overcome by dispensing with a new libel if the ship were within the country at the time of trial, it appears that the Beauregard was not then here. But, assuming that the ship’s presence at some other port during the pendency of the libel conferred substantive jurisdiction on this court, the venue of the suit is wrong, and the libel must be dismissed for lack of jurisdiction. Libelant’s argument that Carroll v. United States was erroneously decided falls upon ears that necessarily must be deaf. The conclusions of my own Appellate Court, when they deal with a subject matter that is judicially before me, cannot be disregarded; and, in saying this, I do not, in any sense, imply that the Circuit Court of Appeals was in error in its decision of the Carroll case.


author: WARING, District Judge.

text:
    WALLING, Adm’r of Wage and Hour Division, U. S. Dept. of Labor, v. ATLANTIC GREYHOUND CORPORATION et al.
    Civil Action No. 1312.
    District Court, E. D. South Carolina, Charleston Division.
    Aug. 3, 1945.

      Dakyns B. Stover, of Atlanta, for plaintiff.
    Waring & Brockinton, of Charleston, S. C., for defendant Atlantic Greyhound Corporation.
    Thomas P. Bussey, of Charleston, S. C., for defendant Emmett Pitts.
   WARING, District Judge.

The complaint filed by the Administrator of the Wage and Hour Division, United States Department of Labor, requests this Court to enjoin and restrain the defendants and all persons acting under them from violating the provisions of Section 15(a) (2) and 15(a) (5) of the Fair Labor Standards Act, 29 U.S.C.A. § 215(a) (2) and (5). The defendants asked that the plaintiff furnish them with bills of particulars to clarify certain of the allegations of the complaint and such bills were furnished. Thereafter the defendants moved to dismiss the complaint, as supplemented by the bills of particulars, by reason of the failure to state therein a claim upon which relief can be granted.

The defendant, Atlantic Greyhound Corporation, bases its motion upon two general grounds: (1) That the complaint as implemented by the bill of particulars does not sufficiently allege that it is employer of the employees who it is claimed were underpaid; and (2) that such employees were not engaged in commerce or in the production of goods for commerce within the meaning of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq.

The defendant, Emmett Pitts, bases his motion upon the second ground above set forth. The two motions may be considered together.

It is of course admitted that the defendant, Atlantic Greyhound Corporation, is engaged in the transportation of passengers for hire between different states, and hence is engaged in interstate commerce. The employees are alleged to be engaged in janitorial service, pertinent parts of the pleadings being as follows:

“ * * * all janitorial services necessary to the maintenance of the enclosed portion of the bus terminal of the defendant Corporation in the City of Charleston, Charleston County, State of South Carolina, including, but without limitation, the cleaning and other care of floors, windows, furniture, and equipment, the cleaning, sanitation, and other care of rest room facilities, and the operation of the heating equipment, all of which services are necessary and essential to the operation of the said bus terminal. Subject to the general supervision and approval of the defendant Corporation, defendant, Emmett Pitts, has supervised and directed, and does supervise and direct, all employees engaged in the furnishing of such janitorial services, in the performance of their duties, and has acted, and does act both directly and indirectly in the interest of the defendant Corporation in relation to such employees.”
“ * * * such employees being designated as janitor-cleaners, maid-cleaners, shoe shine boys, and cleaners.”

It will be noted that Pitts is alleged to be in charge and supervision of these employees.

I. We now turn to the Act and find in Section 3, Title 29 U.S.C.A. § 203, certain definitions. Section 3(e) states that “ ‘employee’ includes any individual employed by an employer” and subsection (g) states “ ‘employ’ includes to suffer or permit to work.” Subsection (d) provides that “ ‘employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” It is thus seen that the term “employer” is not limited to the narrow conception of principal and agent, or master and servant, but is given a broad meaning so as to carry out the declared purpose of the Act. The term “employer” is defined in the National Labor Relations Act, Title 29 U.S. C.A. § 152(2), in substantially the same language as that used above in the Fair Labor Standards Act, and the Supreme Court in discussing the definition says:

“In this light, the broad language of the Act’s definitions, which in terms rej ect conventional limitations on such conceptions as ‘employee,’ ‘employer,’ and ‘labor dispute,’ leaves no doubt that its applicability is to be determined broadly, in doubtful situations, by underlying economic facts rather than technically and exclusively by previously established legal classifications. # £
“Hence ‘technical concepts pertinent to an employer’s legal responsibility to third persons for acts of his servants’ have been rejected in various applications of this Act both here * * * and in other federal courts * * *. There is no good reason for invoking them to restrict the scope of the term ‘employee’ sought to be done in this case. That term, like other provisions, must be understood with reference to the purpose of the Act and the facts involved in the economic relationship. ‘Where all the conditions of the relation require protection, protection ought to be given.’ ”

National Labor Relations Board v. Hearst Publications, 322 U.S. 111-129, 64 S.Ct. 851, 859, 88 L.Ed. 1170.

Porters in railroad stations, commonly called “Red Caps,” have been held to be employees of the company even though they are not paid by the railroad company. Southern Ry. Co. v. Black, 4 Cir., 127 F.2d 280, and Williams v. Jacksonville Terminal Co., 315 U.S. 386, 62 S.Ct. 659, 86 L.Ed. 914. As to employers of office building employees see Greenberg v. Arsenal Building Corporation, 2 Cir., 144 F.2d 292; Walling v. American Needlecrafts, 6 Cir., 139 F.2d 60.

Of course this opinion is on a motion to dismiss based upon the allegations of the Complaint and Bills of Particulars. Additional facts affecting or modifying the views herein expressed may appear when this case is tried. As at present advised, however, it appears to me that the allegations of the plaintiff are ample to bring the defendant, Atlantic Greyhound Corporation, within the purview of the Act as an “employer” of the “employees” referred to.

II. We now come to the second ground of the motions made by both the Atlantic Greyhound Corporation and Emmett Pitts, namely, that the employees involved were not engaged in commerce or in the production of goods for commerce and are, therefore, not subject to the Act. In argument considerable attention was given to the difference between the term “in commerce” and “in the production of goods for commerce.” Undoubtedly there is a clear distinction between these terms. In the case of Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638, the Supreme Court held that elevator operators engaged in an office building were covered by the Act in view of the fact that a large number of the occupants of the office building were engaged in the production of goods for commerce. This holding appeared later to be modified by the decision of the same court in the case of McLeod v. Threlkeld, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538, in which it was held that the employees of an operator of an eating house established for the use and benefit of the employees of an interstate railroad were not covered by the Act. There have been a large number of cases, most of which are cited and relied upon by the defendants in this case clearly demarking the difference between being engaged “in commerce” and being engaged in “production of goods for commerce.” The defendants cited and relied upon a number of these cases coming from various Circuit Courts of Appeal, namely: Blumenthal v. Girard Trust Co., 3 Cir., 141 F.2d 849; Johnson v. Dallas Downtown Development Co. 5 Cir., 132 F.2d 287; Lofther v. First Nat. Bank of Chicago, 7 Cir., 138 F.2d 299; Convey v. Omaha Nat. Bank, 8 Cir., 140 F.2d 640; Rosenberg v. Semeria, 9 Cir., 137 F.2d 742; and also Hinkler v. Eighty-Three Maiden Lane Corporation, D.C.N.Y., 50 F.Supp. 263, and especially a decision by the Court of Appeals of the State of New York, which has been cited in many of the foregoing, namely, Stoike v. First Nat. Bank of City of New York, 290 N.Y. 195, 48 N.E.2d 482.

These distinctions appear to be recognized in two cases decided on June 11th of this year by the Supreme Court. See Borden Co. v. Borella, 323 U.S. -, 65 S.Ct. 1223; 10 East 40th Street Building, Inc. v. Callus, 323 U.S.-, 65 S.Ct. 1227.

And so the defendants relying upon this differentiation claim that the Kirschbaum case does not apply and that the employees in question are in like plight with those in the McLeod case. On behalf of the plaintiff it is admitted that the employees in this case are not engaged in the production of goods for commerce, but it is claimed that they are engaged “in commerce” and come within that classification of the Act and that they are in a very different plight from the employees in the McLeod case and in the various cases above cited. I am of the opinion that this view is sound. The employees at the bus terminal are not engaged in work similar to that in an office building devoted to different uses and occupied by tenants engaged in various occupations. In the long line of cases cited by defendants, janitors and office building employees are held not to be engaged in commerce merely because of the fact that some of the tenants of the buildings are so engaged. An office building is a separate entity and its employees have specific things to do which may be useful or helpful to the others engaged in commerce, but which are not a part of the actual business of engaging in interstate commerce. In the instant case the sole business of the Atlantic Greyhound Corporation is “commerce” and it does not establish and maintain a bus terminal for the use of other businesses or other parties. The terminal is an integral, and I should say necessary, part of its business. I can not agree that a terminal is not a necessary adjunct to the bus business. It is as much needed as a railroad depot. In all cities of any size bus lines have terminal facilities and have established them even in small towns and villages. The furnishing of a place where busses may come in from the street, park, load and unload their passengers, is quite important and necessary in the conduct of the business. It is necessary to provide waiting rooms, lavatories, ticket offices and all other incidental services connected with the arrival and departure of busses. To maintain such facilities it is absolutely necessary that janitors and other employees be engaged to service and make habitable and useful the terminal facilities, and I am of the opinion that the maintenance and operation of a bus terminal such as the one alleged to be operated in Charleston is a part of the business of the defendant corporation and, it being engaged in commerce, this is a part of such commerce. The defendant, Pitts, is alleged to be an employee and co-employer and if such be the fact, would likewise be engaged in a necessary part of the transactions in commerce.

The defendants have cited and presented with considerable ability views of our courts in connection with the Federal Employers’ Liability Act, 45 U.S.C.A. § 5i et seq. Great stress has been laid upon the decision of the Supreme Court in the case of Chicago & N. W. Ry. Co. v. Bolle, 284 U.S. 74, 52 S.Ct. 59, 76 L.Ed. 173. This case was decided in 1931. The complexion of the Supreme Court was quite different on that date and the Fair Labor Standards Act had not even been thought of at that time and was not adopted until 1938. The whole legislative history of this last named Act and its purposes and intents as construed by the Supreme Court and inferior courts, show it was never intended that a narrow construction, such as that laid down in the Bolle case, should ever be applied to the decision of questions affecting wages and hours as governed by this Act.

I have reached the conclusion that the allegations of the Complaint as enlarged by the Bills of Particulars are sufficient and that the motions to dismiss should be refused.

III. The plaintiff takes the position that the matter should not be entirely foreclosed upon this motion, but that the case should go to trial so that all facts may be developed. I adopt this suggestion and limit the foregoing views to the situation as set forth in the pleadings and in the motion. In other words, the order in this case will refuse to grant the motion to dismiss and will allow the defendants an opportunity to answer and all parties to present such evidence as may be relevant. It is possible, when all facts are disclosed and the exact terms of employment more clearly brought forth, that the defendants may be able to show that the employees in question are not covered by the Act. The order will, therefore, provide that a similar motion may be presented after the testimony is taken, provided of course the facts warrant it.

An order will be entered carrying out the foregoing views.


author: ST. SURE, District Judge.

text:
    PRICE v. JOHNSTON, Warden.
    No. 25040-S.
    District Court, N. D. California, S. D.
    Aug. 22, 1945.

      Homer C. Price, in pro. per.
    No appearance for respondent.
   ST. SURE, District Judge.

Petitioner seeks his release from Alcatraz Penitentiary on his third petition for writ of habeas corpus. The first, No. 23268-W, was heard and denied on January 14, 1941, by Judge Martin I. Welsh. On appeal, with the entire record of the matter before it, and after lengthy discussion, the judgment of the District Court was affirmed. Price v. Johnston, 9 Cir., 125 F.2d 806. Certiorari was denied by the United States Supreme Court, 316 U.S. 677, 62 S.Ct. 1106, 86 L.Ed. 1750. The second petition, No. 23721-R, was heard by Judge Michael J. Roche, petitioner being present in court, and was denied by Judge Roche on September 8, 1943. On appeal the order of the District Court was affirmed. Price v. Johnston, 9 Cir., 144 F.2d 260.

Petitioner alleges “that the questions now raised was not raised in the prior petitions No. 23268-W and 10.671.R.” However, these matters were known to petitioner when he filed the petitions in 23268-W and 23721 — R. If petitioner intended to rely on these matters he should have urged them in 23268-W. “To reserve them for use in a later proceeding ‘was to make an abusive use of the writ of habeas corpus.’ ” Swihart v. Johnston, 9 Cir., 1945, 150 F.2d 721.

Since upon the face of the petition petitioner is not entitled to the writ, Walker v. Johnston, 312 U.S. 275, 284, 61 S.Ct. 574, 85 L.Ed. 830, the petition for writ of habeas corpus is denied.