47 Although from the declaration of policy included in the Transportation Act of 1940, no essentially different purpose would be indicated, the legislative history shows a further intention to restrict the term "contract carrier." When the conference report on the bill, which subsequently became the Transportation Act of 1940, was introduced in the Senate, it was specifically stated by Senator Truman, who was in charge of the legislation: "It is intended by the definition of contract carriers to limit that group to those who operate under individual contracts and who render a specialized service which is required by the peculiar needs of the particular shipper and that would not come within the definition of common carriers. [Italics added.] "It is intended that all-over-the-road truckers shall whenever possible fall within the description of common carriers." 48 B. Statutory provisions. Under the existing provisions of part II of the Interstate Commerce Act governing motor carriers, three types of carriers are defined. "The common carrier" definition is distinguished in that it involves the holding out to the general public to engage in motor vehicle commerce whether over regular or irregular routes.49 "The contract carrier" involves transportation other than as a "common carrier" under individual contracts or agreements." 50 The only other type of carrier for which definition is included in the statute is "private carrier," meaning any person not included in either of the foregoing definitions, "who or which transports * * * 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 furtherance of any commercial enterprise." It should be noted that these distinctions definitely are in derogation of the common law. Under common law there were really only two types of carriers: "Common carriers" and "private carriers." The latter group was further divided for certain purposes, such as relative rights and duties affecting tort liability, into two groups: "Private carriers for hire" and those "not for hire." The term "contract carrier" is merely a new classification which originally would have been regarded as falling within the definition of "private carrier for hire." The term first came into general use in connection with State statutes regulating motor transportation." 52 47 By c. 722, Title I, secs. 16-17, 54 Stat. 919-20, the special declaration of policy in the Motor Carrier Act, 1935, was eliminated and this part II of the Interstate Commerce Act now refers back to "the National Transportation Policy." which reads: "It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions; all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above de claration of policy." (54 Stat. 899 49 U. S. C. A. P. P. '42, p. 3.) 48 86 Cong. Rec. 11546. 49 U. S. C., sec. 303 (a) (14). 50 49 T. S. C. 303 (a) (15). 51 49 U. S. C., sec. 303 (a) (17). 52 Explained in dissenting opinion of Commissioner Lee, Ex Parte No. MC-12, 1 M. C. C. 628, 634-35 (1937). 53 E g. Vernon's Ann. Civ. St. Tex. art. 911b, construed in Stephenson v. Binford, 53 F. (2d) 509 (1931) (aff'd 287 U. S. 251 (1932)): "State statutes found themselves involved in constitutional difficulties when an attempt was made to regulate all carriers by motor vehicle in the same manner. One device employed was a statutory declaration that all vehicles operating for hire on the public highways of the state should be deemed common carriers. Another attempt to regulate such transportation actually made no such declaration but required that public convenience and necessity be shown before an operator would be entitled to transport for hire on the public highways. In other cases, it was endeavored to apply such acts to those engaging exclusively in interstate commerce. Such statutes were held invalid and the principle became established that a State Legislature by its mere fiat could not convert a contract carrier or private carrier for hire, into a common carrier. This prohibition. contained in Michigan v. Duke, 266 U. S. 570 (1925); Buck v. Kuykendall, 267 U. S. 307, 314 (1925) cited supra, note 30; Frost v. Comm., 271 U. S. 583 (1926); and Smith v. Cahoon, 283 U. S. 553 (1931) was held successfully averted in Stephenson v. Binford, supra, by use of the term "contract carriers" and by applying conditions to their use of highways differing from requirements imposed upon common carriers." Statutory regulation of contract carriers by motor vehicle under title 49 of the United States Code, outlined generally, is as follows: Section 309 requires a permit to engage in the business of contract carrier by motor vehicles and includes a grandfather clause for operations from July 1, 1935, and "since that time." This section also prescribes the nature of the application for permits and the form and contents of such permits. Section 310 prevents dual operation as common carrier and contract carrier unless authorized by the Commission. Section 310 (a) authorizes temporary authority for operations without hearings in the discretion of the Commission. Section 311 requires and governs the issuance of a license to "brokers"; requires furnishing of financial security, and provides for examination of accounts, reports, and records of such brokers.54 Section 312 provisions relating to suspension, change, revocation, and transfer are applied alike to certificates, permits, and licenses. Section 314 makes acquisition of control of other carriers and also issuance of certain securities subject to approval by the Commission.55 Section 315 prevents issuance of a permit unless financial security against liability, as the Commission shall prescribe, shall have been furnished. Section 318 requires the filing by contract carriers and conformity to schedules showing minimum rates and charges and also provides the machinery and authority for complaints and investigations, new or reduced charges. Section 320 requires all motor carriers as well as brokers or lessors to furnish accounts, records, and reports. Section 321 requires of all motor carriers (including brokers), the designation of persons upon whom notices, orders, or processes may be served. Section 322 prescribes criminal penalties for violation of any provision of the chapter. C-Regulatory Provisions. In regulating contract carriers, pursuant to the act, the Interstate Commerce Commission in Ex Parte No. MC-12 5 required, "That for the future the said contracts or agreements shall be in writing, shall provide for transportation for a particular shipper or shippers, shall cover a series of shipments during a stated period of time in contrast to contracts of carriage governing individual shipments, and copies of which shall be preserved by the carriers parties thereto so long as said contracts or agreements are in force and at least 1 year thereafter." In promulgating these regulations governing contracts, the Commission reasoned that the principle of regulating the contract carrier for the purpose of protecting the common carrier was inherent in the Motor Carrier Act. 66* * * The underlying purpose is plainly to promote and protect adequate and efficient common-carrier service by motor vehicle in the public interest, and the regulation of contract carriers is designed and confined with that end in view. For that reason it differs from the common-carrier regulation. "Thus, we are authorized to prescribe minimum charges for contract carriers, but not maximum charges. No need exists, as to such carriers, for protecting the public against exorbitant charges, because the contracting shippers are well able to protect their own interests in this respect. The patent object of Congress is to protect the common carriers against cut-throat competition. This appears explicitly in section 218 (b), which enjoins us, in prescribing minimum charges for contract carriers, to 'give no advantage or preference to any such carrier in competition with any common carrier by motor vehicle subject to this part.' The same thought is found in other provisions, notably section 209 governing the issue of permits to contract carriers, as compared with section 207, which 54 "The term 'broker' means any person not included in the term 'motor carrier' and not a bona fide employee or agent of any such carrier, who or with, as principal or agent, sells or offers for sale any transportation subject to this chapter, or negotiates for, or holds himself or itself out by solicitation, advertisement, or otherwise as one who sells, provides, furnishes, contracts, or arranges for such transportation." (49 U. S. C.. sec. 303 (a) (18).) 55 Through incorporation by reference in this section, carriers by motor vehicle are subject to the same regulation as are railroads under the Interstate Commerce Act (49 U. S. C., sec. 20 (a)) except that, "said povisions shall not apply to such carriers or corporations where the par value of the securities to be issued, together with the par value of the securities then outstanding, does not exceed $500,000 nor to the issuance of notes of a maturity of two years or less and aggregating not more than $100,000, which notes agregating such amount including all outstanding obligations maturing in two years or less may be issued without reference to the percentage which said amounts bear to the total amount of outstanding securities." 561 M. C. C. 628 (1937). has to do with the issue of certificates to common carriers. The test in the latter instance is public convenience and necessity, but in the issue of permits it is consistency with the public interest and the policy declared in section 202 (a). That policy lays stress upon the 'development of a highway transportation system properly adapted to the needs of the commerce of the United States and of the national defense,' upon the fostering of 'sound economic conditions' in such transportation, and upon the avoidance of 'unfair or destructive competitive practices.' 99957 The difficulties encountered in endeavoring to establish uniform rules and regulations based upon distinctions between common, contract, and private carriers are illustrated in the list of classifications which the Commission has found it necessary to issue.58 Carriers are divided into five general types: I. Common carrier of property; II. Contract carrier of property; III. Private carrier of property; IV. Broker of property transportation; V. Exempt carriers. These five types are in turn each further classified as to five different types of service. A. Regular route scheduled service; B. Regular route nonscheduled service; C. Regular route radial service; D. Irregular route nonradial service; E. Local cartage service. The above types and classifications of service are further broken down as respecting 17 different commodity groups. 1. Carriers of general freight; 2. Carriers of household goods; 4. Carriers of liquid petroleum products; 6. Carriers of refrigerated solid products; 8. Carriers of agricultural commodities; 9. Carriers of motor vehicles; 10. Carriers engaged in armored truck service; 11. Carriers of building materials; 12. Carriers of films and associated commodities; 13. Carriers of forest products; 14. Carriers of mine ores; not including coal; 15. Carriers engaged in retail store delivery service; 16. Carriers of explosives or dangerous articles; 17. Carriers of specific commodities not grouped. Where operations may fall in more than one group the carrier is subject to the rules and regulations applied to each group. D—Administrative and Judicial Interpretations. In formulating general rules, at the outset, the Commission followed principles laid down by the courts in connection with State statutes in distinguishing between contract and common carriage. An applicant's status was tested by that which he proposed to do.59 If he were to undertake to hold himself out directly to transport most classes of property for the general public over regular or irregular routes for compensation, the fact that he would transport property only under a contract, in and of itself did not bring him within the definition of a contract carrier. Although the operations were to be limited as to types of commodities carried, the territory served, and although the applicant would not undertake to advertise or actually solicit business, he still could be regarded as a common carrier.60 57 Id. at 629. 58 Ex Parte No. MC-10, 2 M. C. C. 703 (1937). 59 Following Terminal Taxicab Co. v. Ku t, 241 U. S. 252 (1916). 60 Beatty Contract Carrier Applications, 1 M. C. C. 141 (1936). 61 Early decisions of the Commission gave little heed to any requirement of specialized service. There appeared to be some difference in treatment as between grandfather applications and those contemplating new operations. Under a grandfather application a permit to operate as a contract carrier was granted for the transportation of motion-picture film and accessories, including advertising matter "for various motion-picture theaters in the territory involved in the application, under verbal contracts." In such case no inquiry as to any special service was made. Similarly, a contract carrier permit was granted when the operations were limited only as to types of commodities to be transported." In applications for new operations, requirements of specialized services were not mentioned as such, though many of said applications involved the transportation of liquid petroleum products in connection with which the use of special equipment may have been assumed without comment. In one of such applications, assisting a shipper in meeting competition and providing a more speedy type of service than that offered by existing transportation facilities constituted a sufficient showing to obtain a permit.** 65 63 The primary issue as to whether or not the proposed operations were consistent with the public interest was loosely determined in accordance with the ability of existing carriers to furnish services equally desirable and satisfactory to certain shippers." It was consistenly found that existing motor carriers should normally have the right to transport all traffic that they could be assumed to handle adequately, efficiently, and economically in the territories they served without the added competition of a new operator. 6&a . It was recognized that the showing necessary to prove operations "consistent with the public interest" was not as severe as the necessity of proving "public convenience and necessity." A grandfather application was sustained wherein those protesting issuance of a permit failed to show any real danger which would accrue to either public carriers or the public generally by reason of the granting of a permit; whereas the applicant demonstrated that his services were adequate for the purposes of the shipper with whom he contracted, and that such services, by reason of the applicant's location, were preferable to those of other carriers available for the particular purposes of the shipper concerned." It was held that where the applicant transported only specific commodities named in his application under a special arrangement with a shipper and did not offer to transport for the general public, he clearly was a contract carrier." However, where the evidence showed that the applicant had oral contracts with a number of shippers to transport, at agreed rates, all shipments of certain commodities which might be tendered him for movement over his chosen route and further showed that he had not solicited from the general public, but, within the limits of the capacity of his equipment would enter into similar contracts with other shippers he definitely was held to be a common carrier." Where applica Barwood Contract Carrier Application, 1 M. C. C. 247 (1936), but in granting authority for extension of operations to the same carrier, superior service to that furnished by Railway Express Agency was the essential consideration. Barwood Contract Carrier Application, 1 M. C. C. 249 (1936). 62 Corl Contract Carrier Application, 1 M. C. C. 292 (1936). Protestants merely failed to show that other carriers could furnish the same shippers, "service equally desirable and satisfactory to them.' This application was based only upon verbal agreements contingent upon a continuing demand for the shippers products and upon satisfactory service by the applicant. Five months later the Commission required that contract be in writing and be for a "series of shipments during a stated period of time." Ex parte No. MC-12, 1 M. C. C. 628, cited, supra, note 56. Infra, note 64. That special equipment was not a necessary item, however, is well illustrated in other cases herein before cited. Vedder Oil Co., Inc., Contract Carrier Application, 1 M. C. C. 757 (1937). 65 In denying a permit in Olson Contract Carrier Application, 1 M. C. C. 551, 553 (1937), the Commission complained, "There is no evidence indicating that the facilities available for the transportation between the points embraced in the instant application are inadequate, inconvenient, or otherwise unsuitable to meet the demands of the shipper." In granting a permit, however, the burden apparently had been placed upon the protestants in Corl Contract Carrier Application, 1 M. C. C. 292, 294 (1936), cited, supra, note 62. 6 C. & D. Oil Company Contract Carrier Application, 1 M. C. C. 329 (1936); Marini Common Carrier Application, 2 M. C. C. 727 (1937), 68 "The language of the statute makes it quite clear that the requirements for the issuance of a permit are not as exacting as those governing the issuance of a certificate. In the case of the latter it is necessary to find that the present or future public convenience and necessity require the proposed service, whereas in the case of the former it is necessary to find only that it is consistent with the public interest and with the policy declared in the act. Bassetti & Lawson Contract Carrier Application, 1 M. C. C. 187, 189 (1936). McBroom Contract Carrier Application, 1 M. C. C. 425 (1937). es Moore Contract Carrier Application, 1 M. C. C. 535 (1937). MacAllister Contract Carrier Application, 1 M. C. C. 721 (1937). tions for new operations were involved, although the applicant was to use special equipment, transporting only certain types of products, but would be available for use by all those engaged in the particular business, he was designated a common carrier. Without the special equipment, he became a common carrier of special "classes" of property.' 70 71 Perhaps the nearest approach to a specialization test in the early cases appeared in connection with an application in which the mere desire of a particular shipper to avail himself of the applicant's transportation service was held an insufficient showing of consistency with the public interest. The Commission found that the transportation proposed was then being handled with efficiency by an existing carrier and that other carriers in the field for some time could handle the traffic if the present operator's service should later be found unsatisfactory. opinion states, The "The shipper of this traffic has tendered a contract for the transportation thereof to applicants for what appears to be a legitimate business reason, but that reason is entirely aside from transportation considerations and has no direct relation to the needs of either shipper or consignee in the transportation of this traffic." ,972 Under the provisions of the statute, in connection with contract carriers applications, the Commission found itself without power to limit the applicant's operations to the performance of one specific contract even though testimony evidenced a willingness so to be limited." Realizing its inability to deny to a contract carrier the right to substitute or add contracts, the Commission commenced cautioning contract carriers against the possibility of their adding new contracts in such number and manner as to change their status to that of common carriers." As to its power to prescribe and limit types of commodities, however, the Commission found no limitation, and even grandfather operations were held to require granting a permit to transport only the specific commodities actually carried during the grandfather period.75 "To hold that a contract carrier is entitled to 'grandfather rights' to transport commodities generally because of a general holding out to carry any and all freight offered it under contract (during the grandfather period), when actual operations were restricted to a particular commodity, would constitute, an improper interpretation of the provisions of the Act." " Under a grandfather application a permit was granted for hauling merchandise only in case of "emergencies" upon a showing that such service had been performed during the prescribed period, "with interruptions the rule rather than the exception." Since applicant had no desire to servie the public generally, but only one shipper, a certificate as a common carrier, which in effect would require his services to be available to others, was not forced upon him." However, where an applicant sought a certificate, without grandfather rights, merely so as to be in a position to haul for other operations in a particular territory in case they at any time should need additional equipment, the application was denied." Likewise, a permit to operate as a contract carrier was refused an applicant, both unwilling and unable to serve the general public, who desired permission "to haul if, as, and when conditions may arise whereby he could conveniently and profitably haul for hire," as incidental to his other business activities." 70 Interstate Dress Carriers, Inc., Contract Carrier Application, 2 M. C. C. 477 (1937). Merit Dres Delivery Contract Carrier Application. 2 M. C. C. 553 (1937). 71 Cramer & Son Contract Carrier Application, 2 M. C. C. 211 (1937). 72 C. & D. Oil Co., Contract Carrier Application, supra, note 66; accord: Walton Contract Carrier Application, 2 M. C. C. 474 (1937). 73 Butcher Contract Carrier Application, 1 M. C. C. 485 (1937); also Longshore Contract Carrier Application, 2 M. C. C. 480, 481 (1937) wherein the opinion stated: 46 * Under section 209 (b) of the Motor Carrier Act, 1935, we are without authority to attach any terms, conditions, or limitations to a permit of a contract carrier which would restrict the right of the carrier to substitute or add contracts within the scope of the permit. We construe this provision as prohibiting limitations of the character sought by protestants. In other words, the 'scope of the permit,' as used in this section, relates to the routes or territory which the carrier may serve and to the commodities which it may transport, and not to the shipper or shippers to whom it may render its sevice." 74 Sturlin Contract Carrier Application. 1 M. C. C. 411 (1937): Webb Contract Carrier Application, 1 M. C. C. 414 (1937); Tenny & Thompson Contract Carrier Application, 2 M. C. C. 31 (1937). 75 Motor Convoy, Inc., Contract Carrier Application, 2 M. C. C. 197 (1937), but see infra, p. 45 and notes 120-124. 76 Great Laks Cartage Co. Contract Carrier Application, 2 M. C. C. 119 (1937). Cf. infra, pages 45-47 and notes 120-124. "Baker Contract Carrier Application, 2 M. C. C. 737 (1937). |