author: Mr. Chief Justice Burger Mr. Justice Douglas, Mr. Justice Stewart,

text:
    FIRST NATIONAL BANK IN PLANT CITY v. DICKINSON, COMPTROLLER OF FLORIDA, et al.
    No. 19.
    Argued October 16, 1969
    Decided December 9, 1969

      Robert S. Edwards argued the cause and filed briefs for petitioner in No. 19. Deputy Solicitor General Springer argued the cause for petitioner in No. 34. With him on the briefs were Solicitor General Griswold, Assistant Attorney General Ruckelshaus, Robert V. Zener, and Robert E. Kopp.

      William Reece Smith, Jr., argued the cause for respondents in both cases. With him on the brief was V. Carroll Webb.

      James F. Bell, by special leave of Court, argued the cause for the National Association of Supervisors of State Banks as amicus curiae urging affirmance in both cases. With him on the brief was Brian C. Elmer.

      E. Barrett Prettyman, Jr., filed a brief for the First National Bank of Cornelia, Georgia, et al. as amici curiae urging reversal in both cases.
    Briefs of amici curiae urging affirmance in both cases were filed by Arthur K. Bolton, Attorney General of Georgia, Harold N. Hill, Jr., Executive Assistant Attorney General, J. Robert Coleman and Robert J. Castellani, Assistant Attorneys General, Robert Morgan, Attorney General of North Carolina, and Millard R. Rich, Jr., Assistant Attorney General, for the States of Georgia and North Carolina, and by Horace R. Hansen for the Independent Bankers Association of America et al.

      Together with No. 34, Camp, Comptroller of the Currency v. Dickinson, Comptroller of Florida, et al., also on writ of certiorari to the same court.

   Mr. Chief Justice Burger

delivered the opinion of the Court.

In these cases we are called upon to construe § 7 of the McFadden Act of 1927, 44 Stat. 1228, as amended, 12 U. S. C. § 36, as it relates to the definition of a branch bank for the purpose of determining the scope of branch banking available to a national bank in a State that prohibits branches for state banks.

12 U. S. C. § 36 (f) provides in pertinent part:

“(f) The term ‘branch' as used in this section shall be held to include any branch bank, branch office, branch agency, additional office, or any branch place of business ... at which deposits are received, or checks paid, or money lent.”

Florida prohibits all branch banking by state chartered banks; by statute a Florida bank may “have only one place of doing business,” and all the business of the bank is to be carried on at that place “and not elsewhere.” The issue must be resolved by determining what constitutes a “branch” or “additional office”; there is a threshold question of the extent to which this is governed by federal law.

The First National Bank in Plant City, Florida, is a national banking association organized and operated pursuant to the National Bank Act, 12 U. S. C. § 21 et seq.; it sought and received from the United States Comptroller of the Currency permission to operate two services for the convenience of customers; one was an armored car messenger service and the other an off-premises receptacle for the receipt of packages containing cash or checks for deposit. The Comptroller’s letter authorizing the armored car messenger service relied upon paragraph 7490 of the Comptroller’s Manual for National Banks, a relatively recent ruling which specifically authorizes such a service. A second letter authorizing construction of an off-premises receptacle authorized such a service “as an incident to” the bank’s ordinary business. Both letters contained explicit instructions to First National designed to insure that deposits so received would not become bank liabilities until actually in the hands of the bank teller at the chartered office or regular “banking house”; and that checks cashed for customers would be deemed paid at the bank when the cash was handed to the messenger, not when the cash was delivered to the customer by the armored car teller.

Relying on these letters, First National offered an armored car service and a secured receptacle for receipt of monies intended as deposits. The bank advertised “Full Service Banking at your doorstep . . .” and a “mobile drive-in . . . where customers may be served . . . .” A more detailed examination of the services shows that customers having an account with First National could, upon signing a “Comprehensive Dual Control Contract,” arrange to have the armored car call at their place of business to pick up cash and checks for deposit, or to bring cash to them in exchange for checks delivered to the armored car teller. The contract provided that in each situation the bank’s armored car messenger would be the agent of the customer. Additionally, proffered deposits were accompanied by a transmittal slip upon which the customer itemized the funds being deposited in the same manner as with deposits made at the chartered office of the bank. The transmittal slip contained a “Contract” which provided that in this off-premises transaction the bank was the agent of the customer, and that “the transmittal of said currency, coin and checks, shall not be deemed to be a deposit until delivered into the hands of the bank’s tellers at the said banking house.” Sums of cash for transmission to the customer were accompanied by a charge slip indicating that the customer’s account had been charged for the amount of the order.

The armored car was owned and controlled by the bank; the teller and driver-guard in the car were bank employees. The bank paid the cost of armored car operations and assumed complete responsibility for the monies, checks, and deposits during transit by means of an insurance policy bought and paid for by it to protect the customer and the bank. The armored car service operated six days per week in Plant City and the surrounding trade area in Hillsborough and Polk Counties. The armored car had a plate glass window, a sliding drawer, and a counter on one side where customers might be served. The truck bore the name of the bank and had two-way radiophone communication with the bank. All movements and routing of the armored car were directed by the bank. First National handled about $1,000,000 per week through the armored car.

The stationary off-premises receptacle for receipt of monies intended for deposit was located in a shopping center one mile from First National’s banking house in a space leased by the bank. The facility consisted of a secured receptacle for monies and night bags, together with a writing table supplied with envelopes and transmittal slips identical to those used by the armored car messenger service. The envelopes recited that the funds transported were accepted in accordance with the contract printed on the transmittal slip. A sign at the receptacle recited that the messenger who collected the funds acted as agent for the customer, that funds would not be deemed to have been deposited until delivered at the bank’s premises, and that insurance on the funds was provided by the bank. Customers maintaining an account with the bank who had signed the Comprehensive Dual Control Contract were issued a key to open the off-premises depository to drop off the night pouches in the receptacle. The armored car serviced the receptacle daily. The armored car teller, upon making pickups of such night pouches, promptly identified all monies and other items placed in the depository and immediately recorded them by the depositor’s number. The driver-guard verified all items collected by the teller and signed the written bank record identifying the monies obtained at the stationary depository.

On September 28, 1966, the Comptroller of the State of Florida, respondent herein, addressed a letter to First National advising it that the proposed depository then under construction and the provision of an armored car messenger service would each violate the prohibition under Florida law against branch banking. The letter requested that First National cease and desist all such operations.

First National then sued in the United States District Court for the Northern District of Florida seeking declaratory and injunctive relief against respondent. The United States Comptroller intervened as plaintiff on the side of First National; several state banks intervened to support the Florida Comptroller. The District Court granted judgment for petitioners, 274 F. Supp. 449 (D. C. N. D. Fla. 1967). The Court of Appeals reversed, 400 F. 2d 548 (C. A. 5th Cir. 1968). We affirm the Court of Appeals.

Federal Statute and Policy

The conditions under which national banks may establish branches are embodied in § 7 of the McFadden Act, 44 Stat. 1228, as amended, codified in 12 U. S. C. § 36. One such condition is that a “branch” may be established only when, where, and how state law would authorize a state bank to establish and operate such a branch, 12 U. S. C. §36 (c). First National Bank of Logan v. Walker Bank & Trust Co., 385 U. S. 252 (1966).

We have noted that the State of Florida permits no branch banking under a statute providing that banks are to “have only one place of doing business”; the business of the bank may be transacted at that place “and not elsewhere.” The parties agree generally that the McFadden Act permits national banks to branch if and only if the host State would permit one of its own banks to branch; the Florida Bank Comptroller insists that the State of Florida unequivocally forbids off-premises banking of any kind. Thus the lines are clearly drawn; the question presented is whether the activities of First National authorized by the United States Comptroller are branch banking.

At the outset we note that, while Congress has absolute authority over national banks, the federal statute has incorporated by reference the limitations which state law places on branch banking activities by state banks. Congress has deliberately settled upon a policy intended to foster “competitive equality.” Walker Bank, 385 U. S., at 261. State law has been utilized by Congress to provide certain guidelines to implement its legislative policy.

We need not review the legislative history of the McFadden Act and prior national bank legislation as it relates to this problem; that task was performed by Mr. Justice Clark in Walker Bank, supra, where a unanimous Court noted that the McFadden Act was a response to the competitive tensions inherent in a dual banking structure where state and national banks coexist in the same area. That Act reflects the congressional concern that neither system have advantages over the other in the use of branch banking. A House Report shows that in 1926 there was congressional concern to protect national banks from the unrestricted branch bank competition of state banks:

“The present situation is intolerable to the national banking system. The bill proposes the only practicable solution by stopping the further extension of state-wide branch banking in the Federal reserve system by State member banks and by permitting national banks to have branches in those cities where State banks are allowed to have them under State laws.” H. R. Rep. No. 83, 69th Cong., 1st Sess., 7 (1926).

The bill to which this report was addressed failed to pass in the Senate. In tracing the legislative history of the bill which passed the following year, this Court in Walker Bank, supra, observed:

“The intent of the Congress to leave the question of the desirability of branch banking up to the States is indicated by the fact that the Senate struck from the House bill the time limitation, thus permitting a subsequent change in state law to have a corresponding effect on the authority of national banks to engage in branching. The Senate Report concluded that the Act should permit ‘national banks to have branches in those cities where State banks are allowed to have them under State laws.’ ” 385 U. S., at 258, quoting from S. Rep. No. 473, 69th Cong., 1st Sess., 14 (1926).

At the time of its enactment into law, Representative McFadden stated that:

“As a result of the passage of this act, the national bank act has been so amended that national banks are able to meet the needs of modern industry and commerce and competitive equality has been established . . . .” 68 Cong. Rec. 5815 (1927). (Emphasis supplied.)

When the economic depression of the 1930’s brought on widespread bank failures, Congress responded by amending the McFadden Act with the passage of the Banking Act of 1933, which further strengthened the policy of competitive equality. Some Members argued that bank failures were due to the undercapitalization of small rural banks and sought to authorize national banks to engage in branch banking without regard to state law; but that approach was rejected. As finally passed, the Act was reported to the House by one of the members of the Conference Committee, Representative Luce, with this statement:

“In the controversy over the respective merits of what are known as ‘unit banking’ and ‘branch banking’ . . . branch banking has been steadily gaining in favor. It is not, however, here proposed to give the advocates of branch banking any advantage. We do not go an inch beyond saying that the two ideas shall compete on equal terms and only where the States make the competition possible by letting their oiun institutions have branches.’’ 385 U. S., at 260, quoting from 77 Cong. Rec. 5896 (1933). (Emphasis supplied.)

The policy of competitive equality is therefore firmly embedded in the statutes governing the national banking system. The mechanism of referring to state law is simply one designed to implement that congressional intent and build into the federal statute a self-executing provision to accommodate to changes in state regulation.

We reject the contention made by amicus curiae National Association of Supervisors of State Banks to the effect that state law definitions of what constitutes “branch banking” must control the content of the federal definition of § 36 (f). Admittedly, state law comes into play in deciding how, where, and when branch banks may be operated, Walker Bank, supra, for in § 36 (c) Congress entrusted to the States the regulation of branching as Congress then conceived it. But to allow the States to define the content of the term “branch” would make them the sole judges of their own powers. Congress did not intend such an improbable result, as appears from the inclusion in § 36 of a general definition of “branch.” On this point the language of the Court of Appeals perhaps overstated the relation of state law to the problem, since the threshold question is to be determined as a matter of federal law, having in mind the congressional intent that so far as branch banking is concerned “the two ideas shall compete on equal terms and only where the States [allow] their own institutions [to] have branches.” In short, the definition of “branch” in § 36 (f) must not be given a restrictive meaning which would frustrate the congressional intent this Court found to be plain in Walker Bank, supra

Federal Definition of Branch Bank

Against this background, we turn to the question whether the off-premises business activities conducted by First National amounted to “branch” banking within the meaning of the McFadden Act. Since national banks are “necessarily subject to the paramount authority of the United States,” First National Bank in St. Louis v. Missouri, 263 U. S. 640, 656 (1924), we consult that part of the McFadden Act that defines the term “branch.” 12 U. S. C. § 36 (f) provides:

“(f) The term ‘branch’ as used in this section shall be held to include any branch bank, branch office, branch agency, additional office, or any branch place of business ... at which deposits are received, or checks paid, or money lent.”

Although the definition may not be a model of precision, in part due to its circular aspect, it defines the minimum content of the term “branch”; by use of the word “include” the definition suggests a calculated indefiniteness with respect to the outer limits of the term. However, the term “branch bank” at the very least includes any place for receiving deposits or paying checks or lending money apart from the chartered premises; it may include more. It should be emphasized that, since § 36 (f) is phrased in the disjunctive, the offering of any one of the three services mentioned in that definition will provide the basis for finding that “branch” banking is taking place. Thus not only the taking of deposits but also the paying of checks or the lending of money could equally well provide the basis for such a finding. Although the District Court briefly discussed the possibility that checks were being paid, we confine ourselves to the question of whether deposits were received. Specifically, we must resolve the question whether the mobile armored car service and stationary deposit receptacle singly or together fall within the ambit of that section. As to the receiving of deposits, the functions of the two facilities are essentially the same, hence they may be considered together.

First National and the Comptroller of the Currency urge that the challenged activity does not amount to branch banking under § 36 (f). First National relies heavily, if indeed not entirely, upon carefully drawn contracts with its customers who use armored car or deposit receptacle services. The bank urges that, “deposit” being a word of art, the determination of when a deposit is made is not a casual one inasmuch as that determination fixes important legal relationships of the parties.

The bank also urges that creation of a deposit being purely a matter of intent, the issue is governed exclusively by the private contract. Since these contracts must be interpreted under state law, the argument runs, no “deposit” is actually received as such until monies delivered to the armored car or the receptacle are physically delivered into the hands of a bank teller at the chartered premises. Until such time the bank may not, under the contracts, be held to account for the customer’s funds.

We have no difficulty accepting the bank’s argument that the debtor-creditor relationship is a creature of contract and that the parties can agree that until monies are physically delivered to the bank no deposit will be credited to the customer’s account. We are satisfied, however, that the contracts have no significant purpose other than to remove the possibility that the monies received will become “deposits” in the technical and legal sense until actually delivered to the chartered premises of the bank.

We do not challenge the right of the contracting parties to fix rights and risks as between themselves; nothing in the law precludes the parties from agreeing, for example, that the bank does not assume the status of bailee, with liability for loss of money in transit. But while the contracting parties are free to arrange their private rights and liabilities as they see fit, it does not follow that private contractual arrangements, binding on the parties under state law, determine the meaning of the language or the reach of § 36 (f).

Because the purpose of the statute is to maintain competitive equality, it is relevant in construing “branch” to consider, not merely the contractual rights and liabilities created by the transaction, but all those aspects of the transaction that might give the bank an advantage in its competition for customers. Unquestionably, a competitive advantage accrues to a bank that provides the service of receiving money for deposit at a place away from its main office; the convenience to the customer is unrelated to whether the relationship of debtor and creditor is established at the moment of receipt or somewhat later.

We need not characterize the contracts as a sham or subterfuge in order to conclude that the conduct of the parties and the nature of their relations bring First National’s challenged activities within the federal definition ,of branch banking. Here, penetrating the form of the contracts to the underlying substance of the transaction, we are satisfied that at the time a customer delivers a sum of money either to the armored truck or the stationary receptacle, the bank has, for all purposes contemplated by Congress in § 36 (f), received a deposit. The money is given and received for deposit even though the parties have agreed that its technical status as a “deposit” which may be drawn on is to remain inchoate for the brief period of time it is in transit to the chartered bank premises. The intended deposits are delivered and received as part of a large-scale continuing mode of conducting the banking business designed to bring basic bank services to the customers.

Since the putative deposits are in fact “received” by a bank facility apart from its chartered place of business, we are compelled, in construing § 36 (f), to view the place of delivery of the customer’s cash and checks accompanied by a deposit slip as an “additional office, or . . . branch place of business ... at which deposits are received.”

Here we are confronted by a systematic attempt to secure for national banks branching privileges which Florida denies to competing state banks. The utility of the armored car service and deposit receptacle are obvious; many States permit state chartered banks to use this eminently sensible mode of operations, but Florida’s policy is not open to judicial review any more than is the congressional policy of “competitive equality.” Nor is the congressional policy of competitive equality with its deference to state standards open to modification by the Comptroller of the Currency.

Affirmed.

Mr. Justice Douglas,

dissenting.

It will come as a shock, where common sense is the guide, to learn that an armored car picking up merchants’ cash boxes and checks is a branch bank. Conceivably a bank could use an armored car as a place of business by stationing it at designated places during designated hours for opening accounts, receiving deposits, making loans, and the like. But no armored car was so used in these cases.

Federal law stated in the McFadden Act, 12 U. S. C, § 36 (f), defines “branch” as any facility “at which deposits are received, or checks paid, or money lent.” And Congress provided that national banks may establish “branches” whenever, wherever, and however state banks may do so. First National Bank of Logan v. Walker Bank & Trust Co., 385 U. S. 252, 261-262. The opinion of the Court leaves the impression that the McFadden Act created “competitive equality” between national and state banks across the board. But as we stated in the Walker Bank case, that Act “intended to place national and state banks on a basis of 'competitive equality’ insofar as branch banking was concerned.” Id., at 261. (Italics added.) There was no other or additional overriding principle of “competitive equality” that limited off-premises services of national banks to those that state banks could provide.

Among those off-premises activities of national banks was the furnishing of armored car messenger services, which, we are advised by the Comptroller of the Currency, antedated by many years the 1927 McFadden Act. One can read the legislative history of the Act without finding any hint that Congress was providing “competitive equality” as respects armored car messenger services.

As stated by the District Court, “If no branch is involved here, there is no requirement that the national bank’s practice must conform to that of the state banks.” 274 F. Supp. 449, 453.

The services rendered in these cases were undertaken only after approval by the Comptroller of the Currency who attached a condition that “the messenger is the agent of the customer rather than of the bank.” I thought it was elemental law that a bank deposit cannot arise without some unequivocal act whereby both parties express their consent to the creation of the status of debtor and creditor. The District Court, which is a more faithful exponent of local law than are we, so ruled. 274 F. Supp., at 454. Certainly the Comptroller, who is the supervisory agent for policing § 36, has some authority to define “deposits” as used in § 36 (f), and this case affords no excuse for disparaging him. This is not a government by administrative fiat; the exercise of administrative discretion is normally subject to judicial review. When it comes to an administrator’s construction of a statutory term in the law that he supervises, however, we have allowed his expertise great leeway in the definition, only rarely disturbing it.

The Comptroller’s definition of “deposits” should be honored here. For where the risk is on the customer that his cash and checks may never reach the bank, he cannot in good sense or in good law be deemed to have made a deposit while the funds are in transit.

By the standards of administrative law honored until today, the Comptroller was justified in defining “deposits” to make the armored cars messengers of the customers, not agents of the bank. So whether common sense or the law is our standard, the judgment of the Court of Appeals should be reversed. The Comptroller’s authorization of these armored car activities as being permissible under the National Bank Act was an interpretation of the Act which, as Mr. Justice Stewart says in his dissent, cannot be said to be “not a reasonable one.”

Mr. Justice Stewart,

dissenting.

I wholly agree with the Court that federal law is to be applied in determining whether the activities of a national bank constitute branch banking under the exclusive definition contained in the National Bank Act, 12 U. S. C. § 36 (f). Whether the activities here in question constitute branch banking under that standard seems to me an extremely close question. That being so, I would defer to the determination of the Comptroller of the Currency. He is the official charged with administering these provisions of the Act, and I cannot say his determination was not a reasonable one. See Udall v. Tollman, 380 U. S. 1, 16-18.

       Florida Stat. § 659.06 (1) (a) (1965) provides:
      “659.06 Place of transacting business; school savings; drive-in facilities.—
      “(1) (a) Any bank or trust company shall have only one place of doing business, which shall be located in the community specified in its original articles of incorporation, and the business of the bank or trust company shall be transacted at its banking house so located in said community specified, and not elsewhere. . . .
      “(2) With the prior written approval of the commissioner a bank may operate a drive-in facility or walk-up facility providing one or more tellers to serve patrons in vehicles and on foot. It shall not be necessary that such facility be a part of or physically connected to the main banking room or building of the bank if the facility is located on the property on which the main banking house is situated or on property contiguous thereto. Property which is separated from the property on which the main banking house is situated only by a street, walkway or alleyway shall, for the purposes of this subsection, be deemed contiguous to the property on which the main banking house is situated.
      “The operation of any drive-in or walk-up facility which is not located on the property on which the main banking house is situated or on property contiguous thereto shall constitute a violation of subsection (1); provided, however, subsection (2) shall not apply to any facilities existing on or prior to January 1, 1965.”

       Comptroller’s Manual for National Banks ¶ 7490.

        “Messenger Service

      “To meet the requirements of its customers, a national bank may provide messenger service by means of an armored car or otherwise, pursuant to an agreement wherein it is specified that the messenger is the agent of the customer rather than of the bank. Deposits collected under this arrangement are not considered as having been received by the bank until they are actually delivered to the teller at the bank’s premises. Similarly, a check is considered as having been paid at the bank when the money is handed to the messenger as agent for the customer.”

        “Comprehensive Dual Control Contract

      “As agent for the undersigned depositor, The First National Bank Messenger will transport monies of the depositor to and from the banking house.
      “Under the Comprehensive Dual Control Contract, all monies, transported solely in padlocked money bags furnished by bank, shall be opened only under the dual control of two bank’s tellers. For this purpose, bank will retain a pass key for depositor’s bag(s); a key for each bag will be furnished depositor. The depositor expressly authorizes the service described and agrees to accept the bank’s count of monies as final.
      “The First National Bank in Plant City maintains hazard insurance covering holdup, employee fidelity, etc., for the benefit of the depositor for all amounts delivered to bank’s messenger for delivery to bank and for all amounts requisitioned by depositor for delivery from bank to depositor. Unless otherwise authorized in writing, only the undersigned shall be permitted to receipt the bank’s messenger for monies delivered to depositor. . . .”

        “Contract

      “First National Bank, Plant City, Fla., as messenger and agent for Principal named on front side hereof, agrees to transmit the currency, coin and checks detailed on the front side hereof to the bank’s offices at 302 West Haines Street, Plant City, Fla. for deposit to Principal’s account. It is agreed and understood by Principal and the bank that in transmitting said currency, coin and checks, the bank is acting solely as agent for said Principal and that the transmittal of said currency, coin and checks, shall not be deemed to be a deposit until delivered into the hands of the bank’s tellers at the said banking house.
      “The bank maintains hazard insurance covering holdup, employee fidelity, etc. for the protection of the Principal for all amounts and items delivered to the bank’s messenger by said Principal.”

       The National Bank Act, 44 Stat. 1228, 12 U. S. C. §§ 36 (c) (1) and (2) provides:
      “(e) A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) Within the limits of the city, town or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks.”

       See n. 1, supra.

       In their briefs before this Court, the litigants are all in agreement that federal law alone applies to resolve the threshold question whether the challenged activity falls within the definition of “branch.” Reply Brief for the Comptroller of the Currency 2; Respondents’ Brief 41, 44.

       Representative McFadden described the definitional section of the Act as providing that:
      “Any place outside of or away from the main office where the bank carries on its business of receiving deposits, paying checks, lending money, or transacting any business carried on at the main office, is a branch.” 68 Cong. Rec. 5816 (1927).

       5A A. Michie on Banks and Banking §§ 4a, 5, 14, 15 and 17 (1950); 10 Am. Jur. 2d Banks § 358 (1963); 9 C. J. S. Banks and Banking §269 (1938).

       We need not here try to draw fine distinctions around relatively isolated, sporadic, and inconsequential transactions where a bank employee carries cash to a customer to cash a check, or secures a signature on a note in exchange for a check delivered off premises.

       In 1963 Comptroller Saxon, author of ¶ 7490 in the Comptroller’s Manual for National Banks, supra, n. 2, declared that “[t]he branching powers of National Banks should, in my judgment, not be limited according to those policies which the individual States find appropriate to meet their local needs through State-chartered banks.” Saxon, Branching Powers and the Dual Banking System, 101 Comp. Currency Ann. Rep. 316, 318 (1963).
      During the course of the congressional debates over what became the McFadden Act, Representative Stevenson remarked:
      “[Y]ou have branches in the Federal reserve system established by the dictum of the Comptroller of the Currency, who has assumed to say that he can allow a national bank to establish as many agencies for receiving deposits and paying checks as he sees fit. . . . I will show presently that we cut that out, root and branch.” 66 Cong. Rec. 1627.

       Par. 7490, Comptroller’s Manual for National Banks. This paragraph provides:
      “To meet the requirements of its customers, a national bank may provide messenger service by means of an armored car or otherwise, pursuant to an agreement wherein it is specified that the messenger is the agent of the customer rather than of the bank. Deposits collected under this arrangement are not considered as having been received by the bank until they are actually delivered to the teller at the bank’s premises. Similarly, a cheek is considered as having been paid at the bank when the money is handed to the messenger as agent for the customer.”

       See SEC v. New England Electric System, 384 U. S. 176, 185; Udall v. Tollman, 380 U. S. 1, 16; United States v. Drum, 368 U. S. 370, 371-376; NLRB v. Coca-Cola Bottling Co., 350 U. S. 264, 269; Unemployment Compensation Comm’n v. Aragon, 329 U. S. 143, 153-154; NLRB v. Hearst Publications, Inc., 322 U. S. 111, 130-131; Gray v. Powell, 314 U. S. 402, 411-413; Rochester Telephone Corp. v. United States, 307 U. S. 125, 145-146; Jaffe, Judicial Review: Question of Law, 69 Harv. L. Rev. 239, 261 (1955); Nathanson, Administrative Discretion in the Interpretation of Statutes, 3 Vand. L. Rev. 470, 490-491 (1950).


source: Caselaw Access Project

author: Mr. Justice Black Mr. Justice Harlan,

license: Public Domain

text:
    DETROIT & TOLEDO SHORE LINE RAILROAD CO. v. UNITED TRANSPORTATION UNION et al.
    No. 29.
    Argued October 20, 1969
    Decided December 9, 1969

      Francis M. Shea argued the cause for petitioner. With him on the briefs were Ralph J. Moore, Jr., David W. Miller, James A. Wilcox, and John M. Curphey.

      Richard R. Lyman argued the cause for respondents. With him on the brief was Clarence M. Mulholland.

      Milton Kramer filed a brief for the Railway-Labor Executives’ Association as amicus curiae urging affirmance.
   Mr. Justice Black

delivered the opinion of the Court.

This case raises a question concerning the extent to which the Railway Labor Act of 1926 imposes an obligation upon the parties to a railroad labor dispute to maintain the status quo while the “purposely long and drawn out” procedures of the Act are exhausted. Petitioner, a railroad, contends that the status quo which the Act requires be maintained consists only of the working conditions specifically covered in the parties’ existing collective-bargaining agreement. Respondent railroad brotherhood contends that what must be preserved as the status quo are the actual, objective working conditions out of which the dispute arose, irrespective of whether these conditions are covered in an existing collective agreement. For the reasons stated below, we think that only the union’s position is consistent with the language and purposes of the Railway Labor Act.

The facts involved in this case are these: The main line of the Detroit and Toledo Shore Line (Shore Line), petitioner’s railroad, runs from Lang Yard in Toledo, Ohio, 50 miles north to Dearoad Yard near Detroit, Michigan. For many years prior to 1961, Lang Yard was the terminal at which all train and engine crews reported for work and from which they left at the end of the day. As the occasions arose, the Shore Line transported crews from Lang Yard to perform switching and other operations at various points to the north, assuming the costs of transportation and overtime for the crew members. On February 21, 1961, the railroad advised respondent, the Brotherhood of Locomotive Firemen and Enginemen (BLF&E), of its intention to establish “outlying work assignments” at Trenton, Michigan, a point on the main line about 35 miles north of Lang Yard. These new assignments would have required many employees to report for work at Trenton rather than Lang Yard where they had been reporting. The BLF&E responded to this announcement by filing a notice under § 6 of the Railway Labor Act proposing an amendment to the collective-bargaining agreement to cover the changed working conditions of the employees who would work out of Trenton. Section 6 requires both the carrier and union to give the other party a 30-day notice of an “intended change in agreements affecting rates of pay, rules, or working conditions.” Since the union thus invoked the “major-dispute” settlement procedures of the Railway Labor Act, the dispute first went to conference and, when the parties failed to agree between themselves, then to the National Mediation Board.

While the case was pending before the National Mediation Board, the Shore Line announced two new outlying assignments at Dearoad, Michigan, at the northern end of the line. Because work crews could be taken by cab from Dearoad south to Trenton, the railroad concluded that it no longer needed to establish assignments at Trenton and so advised the Mediation Board. When the Dearoad assignments were announced, the union withdrew from the Mediation Board proceedings, and, before a Special Board of Adjustment convened under § 3 of the Act, challenged the railroad’s right under the parties’ collective agreement to establish outlying assignments. On November 30, 1965, the Special Board ruled that the Shore Line-BLF&E agreement did not prohibit the railroad from making the assignments.

Relying in part on the ruling of the Special Board, the railroad notified the union on January 24, 1966, that it was reviving its plan for work assignments at Trenton. Again the union responded by filing a § 6 notice of a proposed change in the parties’ collective agreement. This time the union sought to amend the agreement to forbid the railroad from making any outlying assignments at all. The parties were again unable to negotiate a settlement themselves, and on June 17, 1966, the union invoked the services of the National Mediation Board. While the Mediation Board proceedings were pending, the railroad posted a bulletin definitely creating the disputed work assignments at Trenton effective September 26, 1966. Faced with this unilateral change in working conditions, the union threatened a strike. The railroad then brought this action in the United States District Court to enjoin the BLF&E from calling and carrying out the allegedly illegal strike. The union counterclaimed for an injunction prohibiting the Shore Line from establishing outlying assignments on the ground that the status quo provision of § 6 of the Railway Labor Act forbids a carrier from taking unilateral action altering “rates of pay, rules, or working conditions” while the dispute is pending before the National Mediation Board. The pertinent part of § 6 provides:

“In every case where . . . the services of the Mediation Board have been requested by either party . . . , rates of pay, rules, or working conditions shall not be altered by the carrier until the controversy has been finally acted upon ... by the Mediation Board . . . .” 45 U. S. C. § 156.

The District Court dismissed the railroad’s complaint, from which no appeal has been taken, but it granted the injunction sought by the union restraining the railroad from establishing any new outlying assignments at Trenton or elsewhere. The United States Court of Appeals for the Sixth Circuit affirmed the issuance of the injunction against the railroad. 401 F. 2d 368 (1968). We granted certiorari, 393 U. S. 1116 (1969).

In granting the injunction the District Court held that the status quo requirement of § 6 prohibited the Shore Line from making outlying assignments even though there was nothing in the parties’ collective agreement which prohibited such assignments. The Shore Line vigorously challenges this holding. It contends that the purpose of the status quo provisions of the Act is to guarantee only that existing collective agreements continue to govern the parties’ rights and duties during efforts to change those agreements. Therefore, the railroad argues, what Congress intended by writing in § 6 that “rates of pay, rules, or working conditions shall not be altered” was that rates of pay, rules, or working conditions as expressed in an agreement shall not be altered. And since nothing in the railroad’s agreement with the union precluded the railroad from altering the location of work assignments, this working condition was not “expressed in an agreement.” Thus, the argument runs, the railroad could make outlying assignments without violating the status quo provision of § 6, and the judgments below must be reversed.

We note at the outset that the language of § 6 simply does not say what the railroad would have it say. Instead, the section speaks plainly of “rates of pay, rules, or working conditions” without any limitation to those obligations already embodied in collective agreements. More important, wTe are persuaded that the railroad’s interpretation of this section is sharply at variance with the overall design and purpose of the Railway Labor Act.

The Railway Labor Act was passed in 1926 to encourage collective bargaining by railroads and their employees in order to prevent, if possible, wasteful strikes and interruptions of interstate commerce. The problem of strikes was considered to be particularly acute in the area of “major disputes,” those disputes involving the formation of collective agreements and efforts to change them. Elgin, J. & E. R. Co. v. Burley, 325 U. S. 711, 722-726 (1945). Rather than rely upon compulsory arbitration, to which both sides were bitterly opposed, the railroad and union representatives who drafted the Act chose to leave the settlement of major disputes entirely to the processes of noncompulsory adjustment. Id., at 724. To this end, the Act established rather elaborate machinery for negotiation, mediation, voluntary arbitration, and conciliation. General Committee, B. L. E. v. Missouri-K.-T. R. Co., 320 U. S. 323, 328-333 (1943). It imposed upon the parties an obligation to make every reasonable effort to negotiate a settlement and to refrain from altering the status quo by resorting to self-help while the Act’s remedies were being exhausted. Railroad Trainmen v. Terminal Co., 394 U. S. 369, 378 (1969); Elgin, J. & E. R. Co. v. Burley, supra, at 721-731; Texas & N. O. R. Co. v. Railway Clerks, 281 U. S. 548, 565-566 (1930). A final and crucial aspect of the Act was the power given to the parties and to representatives of the public to make the exhaustion of the Act’s remedies an almost interminable process. As we noted in Railway Clerks v. Florida E. C. R. Co., 384 U. S. 238, 246 (1966), “the procedures of the Act are purposely long and drawn out, based on the hope that reason and practical considerations will provide in time an agreement that resolves the dispute.”

The Act’s status quo requirement is central to its design. Its immediate effect is to prevent the union from striking and management from doing anything that would justify a strike.' In the long run, delaying the time when the parties can resort to self-help provides time for tempers to cool; helps create an atmosphere in which rational bargaining can occur, and permits the forces of public opinion to be mobilized in favor of a settlement without a strike or lockout. Moreover, since disputes usually arise when one party wants to change the status quo without undue delay, the power which the Act gives the other party to preserve the status quo for a prolonged period will frequently make it worthwhile for the moving party to compromise with the interests of the other side and thus reach agreement without interruption to commerce.

There are three status quo provisions in the Act, each covering a different stage of the major dispute settlement procedures. Section 6, the section of immediate concern in this case, provides that “rates of pay, rules, or working conditions shall not be altered” during the period from the first notice of a proposed change in agreements up to and through any proceedings before the National Mediation Board. Section 5 First provides that for 30 days following the closing of Mediation Board proceedings “no change shall be made in the rates of pay, rules, or working conditions or established practices in effect prior to the time the dispute arose,” unless the parties agree to arbitration or a Presidential Emergency Board is created during the 30 days. Finally, § 10 provides that after the creation of an Emergency Board and for 30 days after the Board has made its report to the President, “no change, except by agreement, shall be made by the parties to the controversy in the conditions ont of which the dispute arose.” These provisions must be read in conjunction with the implicit status quo requirement in the obligation imposed upon both parties by § 2 First, “to exert every reasonable effort” to settle disputes without interruption to interstate commerce.

While the quoted language of §§ 5, 6, and 10 is not identical in each case, we believe that these provisions, together with § 2 First, form an integrated, harmonious scheme for preserving the status quo from the beginning of the major dispute through the final 30-day “cooling-off” period. Although these three provisions are applicable to different stages of the Act’s procedures, the intent and effect of each is identical so far as defining and preserving the status quo is concerned. The obligation of both parties during a period in which any of these status quo provisions is properly invoked is to preserve and maintain unchanged those actual, objective working conditions and practices, broadly conceived, which were in effect prior to the time the pending dispute arose and which are involved in or related to that dispute.

It is quite apparent that under our interpretation of the status quo requirement, the argument advanced by the Shore Line has little merit. The railroad contends that a party is bound to preserve the status quo in only those working conditions covered in the parties’ existing collective agreement, but nothing in the status quo provisions of §§ 5, 6, or 10 suggests this restriction. We have stressed that the status quo extends to those actual, objective working conditions out of which the dispute arose, and clearly these conditions need not be covered in an existing agreement. Thus, the mere fact that the collective agreement before us does not expressly prohibit outlying assignments would not have barred the railroad from ordering the assignments that gave rise to the present dispute if, apart from the agreement, such assignments had occurred for a sufficient period of time with the knowledge and acquiescence of the employees to become in reality a part of the actual working conditions. Here, however, the dispute over the railroad’s establishment of the Trenton assignments arose at a time when actual working conditions did not include such assignments. It was therefore incumbent upon the railroad by virtue of § 6 to refrain from making outlying assignments at Trenton or any other place in which there had previously been none, regardless of the fact that the railroad was not precluded from making these assignments under the existing agreement.

The Shore Line’s interpretation of the status quo requirement is also fundamentally at odds with the Act’s primary objective — the prevention of strikes. This case provides a good illustration of why that is so. The goal of the BLF&E was to prevent the Shore Line from making outlying assignments, a matter not covered in their existing collective agreement. To achieve its goal, the union invoked the procedures of the Act. The railroad, however, refused to maintain the status quo and, instead, proceeded to make the disputed outlying assignments. It could hardly be expected that the union would sit idly by as the railroad rushed to accomplish the very result the union was seeking to prohibit by agreement. The union undoubtedly felt it could resort to self-help if the railroad could, and, not unreasonably, it threatened to strike. Because the railroad prematurely resorted to self-help, the primary goal of the Act came very close to being defeated. The example of this case could no doubt be multiplied many times. It would be virtually impossible to include all working conditions in a collective-bargaining agreement. Where a condition is satisfactorily tolerable to both sides, it is often omitted from the agreement, and it has been suggested that this practice is more frequent in the railroad industry than in most others. When the union moves to bring such a previously uncovered condition within the agreement, it is absolutely essential that the status quo provisions of the Act apply to that working condition if the purpose of the Act is to be fulfilled. If the railroad is free at this stage to take advantage of the agreement’s silence and resort to self-help, the union cannot be expected to hold back its own economic weapons, including the strike. Only if both sides are equally restrained can the Act’s remedies work effectively.

We now turn to answer some of the arguments advanced by the Shore Line in support of its position. The first of these involves § 2 Seventh of the Act. That section forbids a carrier from changing “the rates of pay, rules, or working conditions of its employees, as a class as embodied in agreements except in the manner prescribed in such agreements or in section 6 of this Act.” (Emphasis added.) The Shore Line argues that this section is a status quo provision and that the “as embodied in agreements” restriction it contains should be read into the status quo provisions of §§ 5, 6, and 10. We find no merit in this argument. Section 2 Seventh, which was added to the Act in 1934, does not impose any status quo dutiés attendant upon major dispute procedures. It simply states one category of cases in which those procedures must be invoked. The purpose of § 2 Seventh is twofold: it operates to give legal and binding effect to collective agreements, and it lays down the requirement that collective agreements can be changed only by the statutory procedures. The violation of this section is a criminal offense punishable by imprisonment or fine or both. Violations of the status quo provisions of §§ 5, 6, and 10 are only civil wrongs.

Second, the Shore Line contends that the interpretation of § 6 which we adopt today is at variance with the position we have taken on two previous occasions, citing Order of Conductors v. Pitney, 326 U. S. 561 (1946), and Williams v. Terminal Co., 315 U. S. 386 (1942). Although these cases do contain statements which out of context tend to support petitioner’s position, neither dealt with the question we have before us today. Pitney involved a suit brought by a union to enjoin the reorganization trustees of a bankrupt railroad from transferring certain job assignments to another union. The plaintiff’s contention was that the disputed jobs belonged to its members by both custom and agreement. The trustees were therefore prohibited from reassigning the jobs, the union argued, since they had never filed the appropriate notice of “intended change in agreements” required by § 6. The railroad disputed that the reassignments of the jobs would require a “change in agreements” and thus put the meaning of the parties’ agreements in issue. We held that the proper forum for interpreting the agreements was the Adjustment Board provided by Congress in the Railway Labor Act, § 3 First (i), for that purpose, and directed the District Court to stay its proceedings accordingly. 326 U. S., at 567-568. Thus, Pitney, at most, involved a question of the necessity of filing a § 6 notice and was not at all concerned with the status quo provision of that section.

The Williams case is equally inapposite. In that case “redcaps” brought suit through their union representative against the Dallas railroad terminal to recover wages allegedly owed them and retained by the terminal in violation of the Fair Labor Standards Act and the Railway Labor Act. The redcaps’ argument under the Fair Labor Standards Act was that Congress had not intended that tips be included in their wages for purposes of satisfying minimum wage requirements. Yet, that is what the terminal had done under its “accounting and guarantee” plan from October 1938, when the F. L. S. A. became effective, until March 1940. The majority of the Court rejected the redcaps’ argument, holding that the F. L. S. A. neither prohibited nor required the inclusion of tips within wages. The question was held to be one for contract between the parties. 315 U. S., at 407-408. The redcaps’ claim under the Railway Labor Act was that the terminal’s “accounting and guarantee” plan under which tips were considered as part of wages was put into operation unilaterally by the terminal on the effective date of the F. L. S. A., despite the fact that the redcaps had two weeks earlier asked for a conference to negotiate an agreement which would include the subject of wages. This, the redcaps argued, violated the status quo provisions of § 6 since prior to the F. L. S. A. tips had not been included in wages. The Court concluded, however, that § 6 was not applicable to the dispute between the parties. The Court reasoned that when the redcaps continued to work after being individually notified of the “accounting and guarantee” plan, new and independent contracts were formed between each redcap and the terminal. The Court held that these contracts were not affected by the pending request for collective bargaining under the Railway Labor Act. The decision rested partially on the ground that “[independent individual contracts are not affected by the Act.” 315 U. S., at 399. And the Court also said more narrowly that the status quo requirements of § 6 were inapplicable since that section applies only when a “change in agreements” is involved. 315 U. S., at 400. In Williams there was absolutely no prior history of any collective bargaining or agreement between the parties on any matter. Without pausing to comment upon the present vitality of either of these grounds for dismissing the redcaps’ Railway Labor Act claim, it is readily apparent that Williams involved only the question of whether the status quo requirement of § 6 applied at all. The Court in Williams therefore never reached the question of the scope of the status quo requirement in a dispute, such as the one before the Court today, to which that requirement concededly applies.

Finally, the Shore Line points out, quite correctly, that its position on § 6 is identical to that taken by the National Mediation Board in several of its Annual Reports. However, the Mediation Board has no adjudicatory authority with regard to major disputes, nor has it a mandate to issue regulations construing the Act generally. Certainly there is nothing in the Act which can be interpreted as giving the Mediation Board the power to change the plain, literal meaning of the statute, which would be the result were we to adopt its interpretation of § 6.

The judgment is

Affirmed.

Mr. Justice Harlan,

with whom The Chief Justice joins,

concurring in part and dissenting in part.

I fully agree that the application of § 6 should not be restricted to only those terms of employment that the parties have seen fit to embody in a written agreement. Section 6 may properly, in some circumstances, be extended to “freeze” de facto conditions of employment. I cannot, however, accept what appears to be the majority’s test for determining when a § 6 freeze is appropriate. Any work practice is, in the words of the majority, an “actual, objective working condition.” However, the practice of today may not be the accepted condition of yesterday, but rather a temporary expedient in which neither party acquiesces. I find it difficult to think that Congress intended that either party, by serving a § 6 notice, should be able to shackle his adversary and tie him to a condition that has been historically and consistently controverted.

Rather, what persuades me to countenance the extension of § 6 beyond the terms of a written collective-bargaining agreement is the fact, observed by the Court, that “[w]here a condition is satisfactorily tolerable to both sides, it is often omitted from the agreement . . . ,” ante, at 155. Taking this observation as a point of departure, I favor a more subjective approach than the objective and mechanical one implicit in the majority’s language. The question that should be asked is whether in the context of the relationship between the principals, taken as a whole, there is a basis for implying an understanding on the particular practice involved. To this end it is necessary to consider not only the duration of the practice but also all the dealings between the parties, as for example, whether the particular condition has been the subject of prior negotiations.

While I recognize, of course, that any subjective test is not easily applied, I cannot subscribe to a rule that may have the incongruous effect of perpetuating what both parties in fact view as a disputed practice, simply because neither party, for reasons of convenience, has exercised a recognized option of resorting to self-help.

Under this standard I consider that the proper disposition of the case before us is to remand to the District Court for additional findings. While the District Court found that “[f]or many years prior to 1961” Lang Yard was the established terminal point for reporting to duty, that finding alone would not satisfy a subjective test in light of subsequent events that may have negatived any understanding that might have existed prior to 1961. In 1961 the Shore Line advised the union of a contemplated shifting of reporting to its Trenton terminal some 30 miles north. The proposal apparently met with employee resistance and the union served a § 6 notice seeking to modify the agreement with the railroad. By 1963 the parties had exhausted the statutory mediation route without reconciling their differences and the Mediation Board recommended arbitration to break the impasse. This proposal was rejected by the company which declared the dispute moot since, by that time, it had abandoned its Trenton project. Meanwhile, the company embarked on a practice of transporting employees at its own expense and on company time from its Dearoad terminal, 11 miles north of Trenton, a practice which is the subject of a separate § 6 notice.

In my opinion a remand is called for to determine whether the company’s voluntary abandonment of its Trenton project, coupled with its undertaking to transport employees from Dearoad at its own cost and the long-established practice prior to 1961, amounted to acceptance in principle of Lang Yard as the reporting location.

For that reason I respectfully dissent from the Court’s affirmance of the Court of Appeals.

       44 Stat. 577, as amended, 45 U. S. C. § 151 et seq.

        Railway Clerks v. Florida E. C. R. Co., 384 U. S. 238, 246 (1966).

       The United Transportation Union, the successor organization to the Brotherhood of Locomotive Firemen and Enginemen, was substituted as party respondent by order of the Court, March 3, 1969. Respondents also include two officers of the BLF&E named in the original complaint.

         The parties treat the term “outlying work assignment” as meaning a work assignment with a reporting point for going on and off duty located elsewhere than at the Shore Line’s principal yard, Lang Yard in Toledo, Ohio. We adopt that usage here.

       44 Stat. 582, as amended, 45 U. S. C. § 156. Section 6, in its entirety, provides:
      “Carriers and representatives of the employees shall give at least thirty days’ written notice of an intended change in agreements affecting rates of pay, rules, or working conditions, and the time and place for the beginning of conference between the representatives of the parties interested in such intended changes shall be agreed upon within ten days after the receipt of said notice, and said time shall be within the thirty days provided in the notice. In every case where such notice of intended change has been given, or conferences are being held with reference thereto, or the services of the Mediation Board have been requested by either party, or said Board has proffered its services, rates of pay, rules, or working conditions shall not be altered by the carrier until the controversy has been finally acted upon as required by section 5 of this Act, by the Mediation Board, unless a period of ten days has elapsed after termination of conferences without request for or proffer of the services of the Mediation Board.”

       See n. 5, supra.

       A “major dispute” is one arising out of the formation or change of collective agreements covering rates of pay, rules, or working conditions. Elgin, J. & E. R. Co. v. Burley, 325 U. S. 711, 722-727 (1945).

       44 Stat. 578, as amended, 45 U. S. C. § 153. At this point, the BLF&E was considering the controversy as a “minor dispute,” i. e., a dispute arising out of the interpretation or application of collective agreements. Under § 3 of the Railway Labor Act such disputes are settled by an Adjustment Board whose interpretation of the collective agreement is binding on the parties. See Elgin, J. & E. R. Co. v. Burley, supra, at 722-727.

       The Special Board of Adjustment found:
      “What took place here was not a change in the recognized terminal, but simply amounted to an outlying assignment. There is nothing in the rules of agreement which precludes this carrier from establishing an outside assignment.” App. 110.

       The Brotherhood of Railroad Trainmen was also named a defendant, as were several officers of both unions. The causes of action against the two brotherhoods were completely different, however, and the cases were treated as distinct at trial and on appeal. The Brotherhood of Railroad Trainmen is not involved in the present litigation at this stage.

       The full section is set out in n. 5, supra.

       The order of the District Court is unreported. Detroit & Toledo Shore Line R. Co. v. Brotherhood of Locomotive Firemen & Enginemen, No. C 66-207 (D. C. N. D. Ohio, filed Nov. 15, 1966). The opinion of the District Court on motion to vacate the judgment is reported at 267 F. Supp. 572 (1967).

       In Texas & N. O. R. Co. v. Railway Clerks, 281 U. S. 648, 565 (1930), the Court said: “The Brotherhood insists, and we think rightly, that the major purpose of Congress in passing the Railway Labor Act was 'to provide á machinery to prevent strikes.’ ”

       The Act’s major-dispute procedures and status quo requirement were concisely stated in an opinion by Mr. Justice Harlan only last Term, Railroad Trainmen v. Terminal Co., 394 U. S. 369, 378 (1969):
      “The Act provides a detailed framework to facilitate the voluntary settlement of major disputes. A party desiring to effect a change of rates of pay, rules, or working conditions must give advance written notice. § 6. The parties must confer, § 2 Second, and if conference fails to resolve the dispute, either or both may invoke the services of the National Mediation Board, which may also proffer its services sua sponte if it finds a labor emergency to exist. § 5 First. If mediation fails, the Board must endeavor to induce the parties to submit the controversy to binding arbitration, which can take place, however, only if both consent. §§ 5 First, 7. If arbitration is rejected and the dispute threatens ‘substantially to interrupt interstate commerce to a degree such as to deprive any section of the country of essential transportation service, the Mediation Board shall notify the President,’ who may create an emergency board to investigate and report on the dispute. § 10. While the dispute is working its way through these stages, neither party may unilaterally alter the status quo. §§ 2 Seventh, 5 First, 6, 10.”

       Section 6 is set out in its entirety in n. 5, supra.

       Section 5 First, 44 Stat. 580, as amended, 45 U. S. C. § 155 First, provides in part:
      “If arbitration at the request of the Board shall be refused by one or both parties, the Board shall at once notify both parties in writing that its mediatory efforts have failed and for thirty days thereafter, unless in the intervening period the parties agree to arbitration, or an emergency board shall be created under section 10 of this Act, no change shall be made in the rates of pay, rules, or working conditions or established practices in effect prior to the time the dispute arose.”

       Section 10, 44 Stat. 586, as amended, 45 U. S. C. § 160, provides in part:
      “After the creation of such board and for thirty days after such board has made its report to the President, no change, except by agreement, shall be made by the parties to the controversy in the conditions out of which the dispute arose.”

       Section 2 First, 44 Stat. 577, as amended, 45 U. S. C. § 152 First, provides:
      “It shall be the duty of all carriers, their officers, agents, and employees to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or otherwise, in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees thereof.”
      The relationship between the status quo provisions and §2 First, was made explicit in the testimony of Donald Richberg who spoke as the unions’ representative when the proposed railroad legislation was presented to Congress jointly by the railroads and the unions:
      “As to maintaining the status quo from the time that a dispute is engendered, it is a violation of the duties imposed by this law for either party to take any action to arbitrarily change the conditions until that dispute has been adjusted in accordance with the law. Their primary duty is to exert every reasonable effort to avoid interruptions of commerce through disputes. The ‘reasonable efforts’ are set forth here that all disputes shall be considered and decided in conference, if possible; that, second, if conference fails a certain type of disputes shall be carried to the board of adjustment; the other type of disputes, or those not decided by the board of adjustment, may be carried to the board of mediators, and it shall be the duty of the board of mediators to act.” Hearings on H. R. 7180 before the House Committee on Interstate and Foreign Commerce, 69th Cong., 1st Sess., 92-93 (1926).

       This interpretation of the status quo provisions is supported by the legislative history of the Act. See, e. g., the testimony of Donald Richberg set out in n. 18, supra. Mr. Richberg also testified:
      “[T]he only thing that can provoke an arbitrary action [referring to strikes] is the power to arbitrarily change the rates of pay or rules of working conditions before the controversy is settled, and it is provided that they shall not be altered during the entire period of utilization of this law.” Hearings on H. R. 7180 before the House Committee on Interstate and Foreign Commerce, 69th Cong., 1st Sess., 93 (1926).
      Moreover, when the status quo provision of § 5 was added to that section in 1934, its purpose was to provide continuity between §§ 6 and 10 by preserving the status quo for 30 days following the end of proceedings before the Mediation Board. Joseph B. Eastman, Federal Co-ordinator of Transportation, the principal draftsman and proponent of the 1934 amendments, testified:
      “As the present act reads, a railroad, by rejecting the Board of Mediation’s final recommendation to arbitrate the dispute, is enabled to change the rates of pay, rules, or working conditions arbitrarily, prior to the issuance of an order by the President appointing a fact-finding board and maintaining the status quo for 60 days. . . . The railroads have taken advantage of this unintentional hiatus in the present law in several instances. The change now proposed is designed to plug this hole.” Hearings on S. 3266 before the Senate Committee on Interstate Commerce, 73d Cong., 2d Sess., 21 (1934).

       The status quo provision of § 10 was the only one discussed in any depth at the 1926 congressional hearings on the bill. Donald Richberg, n. 19, supra, testified as follows when questioned about the intended scope of the status quo provision:
      “The thought was to include in the broadest way all the factors which contributed to what is commonly called the status quo. In other words, the conditions may depend upon the dispute, whether it is with regard to rules or with regard to wages.” Hearings on H. R. 7180 before the House Committee on Interstate and Foreign Commerce, 69th Cong., 1st Sess., 44 (1926).
      “What broader phrase could be used than 'conditions out of which the dispute arose’ which comprehends all the elements affecting the controversy? It is intended to make it clear that the parties are going to wait and give the Government full opportunity to adjust the controversy.” Hearings on S. 2306 before the Senate Committee on Interstate Commerce, 69th Cong., 1st Sess., 88-89 (1926).

       See n. 9, supra.

       Brief of Railway Labor Executives’ Association as amicus curiae 17.

       Respondent BLF&E has urged in its brief that we also consider the question whether the Shore Line violated a duty to bargain in good faith, citing Fibreboard Corp. v. NLRB, 379 U. S. 203 (1964), and NLRB v. Katz, 369 U. S. 736 (1962). Deciding the case as we do under the status quo provisions of the Act, we find it unnecessary to reach this argument.

       Section 2 Seventh, 48 Stat. 1188, 45 U. S. C. §152 Seventh, provides as follows:
      “No carrier, its officers or agents shall change the rates of pay, rules, or working conditions of its employees, as a class as embodied in agreements except in the manner prescribed in such agreements or in section 6 of this Act.”

       Railway Labor Act, § 2 Tenth, 48 Stat. 1189, 45 U. S. C. § 152 Tenth.

       The 34th Annual Report of the National Mediation Board stated:
      "Section 6 states that where notice of intended change in an agreement has been given, rates of pay, rules, and working conditions as expressed in the agreement shall not be altered by the carrier until the controversy has been finally acted upon in accordance with specified procedures.” NMB, 34th Ann. Rep. 23 (fiscal year ended June 30, 1968). (Emphasis added.) See also NMB, 33d Ann. Rep. 36 (fiscal year ended June 30, 1967); NMB, 31st Ann. Rep. 25 (fiscal year ended June 30, 1965).

       The majority first announces a test looking to “actual, objective working conditions,” ante, at 153. This is later qualified by a dura-tional requirement, but no general principle of decision is set forth.

       While the District Court and the Court of Appeals both properly rejected petitioner's theory, restricting § 6 to terms embodied in a written agreement, it is by no means clear to me precisely what standard they followed in concluding that the Act was applicable.

       The District Court, as I read its findings, does not appear to have considered the possible impact of the train of events revealed by the record in connection with 1961-1963 proceedings before the Board.


author: Mr. Justice Douglas

text:
    CITY OF CHICAGO et al. v. UNITED STATES et al.
    No. 101.
    Argued November 20, 1969
    Decided December 9, 1969

      Gordon P. MacDougall argued the cause for appellants in both cases. With him on the brief were Raymond F. Simon, Charles E. Griffith III, Robert E. Kendrick, Arthur K. Bolton, Harold N. Hill, Jr., J. Robert Coleman, Edward J. Hickey, Jr., William G. Mahoney, Bernard Rane, Mark Goldstein, Eugene W. Ward, Chester L. Rigsby, Weldon A. Cousins, and Leon M. Despres. Howard E. Shapiro argued the cause for the United States et al. urging reversal in both cases. With him on the brief were Solicitor General Griswold, Assistant Attorney General McLaren, and Robert W. Ginnane.

      James W. Hoeland argued the cause for appellees Chicago & Eastern Illinois Railroad Co. et al. in both cases. With him on the brief were Clifford T. Coomes, Joseph L. Lenihan, Harry R. Begley, and P. C. Mullen.

      Paul Rodgers filed a brief for the National Association of Regulatory Utility Commissioners as amicus curiae urging reversal in both cases.

       Together with No. 102, City of Chicago et al. v. United States et al., also on appeal from the same court.

   Mr. Justice Douglas

delivered the opinion of the Court.

The question in these cases is whether orders of the Interstate Commerce Commission discontinuing investigations respecting the notice of rail carriers to terminate or change the operation or services of interstate passenger trains are judicially reviewable on the. complaint of aggrieved persons.

Section 13a (1) of the Interstate Commerce Act, as amended, 72 Stat. 571, 49 U. S. C. § 13a (1), provides, with details not important here, that a rail carrier may file notice of such discontinuance or change with the Commission and that within 30 days the Commission may make an investigation of the proposed discontinuance or change. Apart from interim relief, the Commission may order continuance of the operation and service for a period not to exceed one year. One of the present cases involves two interstate passenger trains between Chicago and Evansville, Indiana, discontinued by the Chicago & Eastern Illinois Railroad Co., 331 I. C. C. 447, and the other involves two interstate passenger trains between New Orleans and Cincinnati discontinued by the Louisville & Nashville Railroad Co., 333 I. C. C. 720.

In each case the Commission, addressing itself to the standards in § 13a (1), found that continued operation of the trains was not required by public convenience and necessity and that. continued operation would unduly burden interstate commerce. It thereupon entered in each case an order terminating its investigation of the proposed discontinuance.

Appellants in each case — cities, state regulatory agencies, and other interested parties — brought these suits before the same three-judge court to review the Commission’s decisions. It is provided by 28 U. S. C. § 1336 (a):

“Except as otherwise provided by Act of Congress, the district courts shall have jurisdiction of any civil action to enforce, enjoin, set aside, annul or suspend, in whole or in any part, any order of the Interstate Commerce Commission.”

The District Court held that decisions terminating investigations under § 13a (1) are not “orders” within the meaning of 28 U. S. C. § 1336 (a). 294 F. Supp. 1103, 1106. The cases are here on direct appeal, 28 U. S. C. §§ 1253, 2325, and we noted probable jurisdiction. 395 U. S. 957.

As stated in Abbott Laboratories v. Gardner, 387 U. S. 136, 140, we start with the presumption that aggrieved persons may obtain review of administrative decisions unless there is “persuasive reason to believe” that Congress had no such purpose. Certainly under § 13a (1) the carrier, if overruled by the Commission, could obtain review. We can find no talismanic sign indicating that Congress desired to deny review to opponents of interstate discontinuances alone.

Section 13a in its present form came into the Act in 1958 and was designed to supersede the prior confused and time-consuming procedure under which the States supervised the discontinuance of passenger trains. Accordingly, Congress provided a uniform federal scheme to take the place of the former procedure. A single federal standard was to govern train discontinuances whether interstate or intrastate, though the procedure of § 13a (1) for discontinuance of an interstate train was made somewhat different from the procedure for discontinuance of intrastate trains. But the Commission is to have the final say in each case and “precisely the same substantive standard” now governs discontinuance of either interstate or intrastate operations. Southern R. Co. v. North Carolina, 376 U. S. 93, 103.

Whether the Commission should make an investigation of a § 13a (1) discontinuance is of course within its discretion, a matter which is not reviewable. New Jersey v. United States, 168 F. Supp. 324, aff’d, 359 U. S. 27. But when the Commission undertakes to investigate, it is under a statutory mandate:

“Whenever an investigation shall be made by said Commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclusions of the Commission, together w;ith its decision, order, or requirement in the premises . . . .” 49 TJ. S. C. §14(1).

A decision to investigate indicates that a substantial question exists under the statutory standards. The Commission’s report therefore deals with the merits. We cannot say that an answer that discontinuance should not be allowed is agency “action,” while an answer saying the reverse is agency “inaction.” The technical form of the order is irrelevant. In each case the Commission is deciding the merits. The present cases are kin to the “negative orders” which we dealt with in Rochester Telephone Corp. v. United States, 307 U. S. 125, 142-143:

“An order of the Commission dismissing a complaint on the merits and maintaining the status quo is an exercise of administrative function, no more and no less, than an order directing some change in status. The nature of the issues foreclosed by the Commission’s action and the nature of the issues left open, so far as the reviewing power of courts is concerned, are the same. . . . We conclude, therefore, that any distinction, as such, between ‘negative’ and ‘affirmative’ orders, as a touchstone of jurisdiction to review the Commission’s orders, serves no useful purpose, and insofar as earlier decisions have been controlled by this distinction, they can no longer be guiding.”

The District Court reasoned that since “the statute is self-implementing,” only an “order” requiring action is reviewable. 294 F. Supp., at 1106. But that theory is of the vintage we discarded in Rochester Telephone.

Reversed.

       Section 13a (2), applicable to discontinuance of intrastate trains, provides that where a State bars discontinuance or change in operation or service of a train, or where the state authority has not acted on a carrier’s application for such discontinuance or change within 120 days, the carrier may petition the Commission for a grant of such authority.

       There is a conflict among the District Courts. Minnesota v. United States, 238 F. Supp. 107 (D. C. Minn.), and New Hampshire v. Boston & Maine Corp., 251 F. Supp. 421 (D. C. N. H.), are in accord with the District Court in the instant cases. Opposed to that view are Vermont v. Boston & Maine Corp., 269 F. Supp. 80 (D. C. Vt.), and New York v. United States, 299 F. Supp. 989 (D. C. N. D. N. Y.). And see City of Williamsport v. United States, 273 F. Supp. 899, 282 F. Supp. 46 (D. C. M. D. Pa.), aff’d, 392 U. S. 642.

       “Without reciting individual cases the subcommittee is satisfied that State regulatory bodies all too often have been excessively conservative and unduly repressive in requiring the maintenance of uneconomic and unnecessary services and facilities. Even when allowing the discontinuance or change of a service or facility, these groups have frequently delayed decisions beyond a reasonable time limit. In many such cases, State regulatory commissions have shown a definite lack of appreciation for the serious impact on a railroad’s financial condition resulting from prolonged loss-producing operations.
      “To improve this situation, the subcommittee proposes to give the Interstate Commerce Commission jurisdiction in the field of discontinuance or change of rail services and facilities similar to the jurisdiction it now has over intrastate rates under section 13 of the Interstate Commerce Act so that when called upon to do so it may deal with such matters that impose an undue burden on interstate commerce. This, the subcommittee believes, would protect and further the broad public interest in a sound transportation system and would prevent undue importance being attached to matters of a local nature.” S. Rep. No. 1647, 85th Cong., 2d Sess., 22. For a review of the legislative history of § 13a (2), see Southern R. Co. v. North Carolina, 376 U. S. 93, 100-103.

       See n. 1, supra.

       The Administrative Procedure Act, 5 U. S. C. §551 (6) (1964 ed., Supp IV), defines “order” as including a “negative” form of “a final. disposition” by agency action. And that kind of “order” is subject to judicial review. 5 U. S. C. §§551 (13), 701 (b)(2), 702 (1964 ed., Supp. IV).
      When carriers file new rates, the Commission has authority on its own initiative or on complaint to make an investigation either with or without suspension of the new rates. 49 U. S. C. § 15 (7). Where the Commission finds the proposed rates lawful, its order reads: “[T]he investigation proceedings [are] discontinued.” See Eastern Central Motor Carriers Assn. v. Baltimore & O. R. Co., 314 I. C. C. 5, 51. Such orders are reviewable. Cooper-Jarrett, Inc. v. United States, 226 F. Supp. 318, aff’d, 379 U. S. 6.