1. Section 205(h) of the Motor Carrier Act of 1935 incorporates
by reference the "party in interest" provision of § 1(20) of the
Interstate Commerce Act. P. 315 U. S.
2. A railroad company which is in competition with an individual
engaged in the transportation of motor vehicles by the drive-away
or caravaning method, is a "party in interest" entitled, under §
205(h), to sue to set aside an order of the Interstate Commerce
Commission granting to such individual a certificate of public
convenience and necessity. P. 315 U. S.
3. Operations authorized under the "grandfather clause" of §
206(a) of the Motor carrier Act of 1935, in the territory to be
served, need not be restricted to specified routes or between fixed
termini. P. 315 U. S.
4. In the case of a transporter of motor vehicles by the
drive-away or caravaning method, the Interstate Commerce
Commission, under the "grandfather clause," may, considering the
characteristics of the particular transportation service, authorize
operation to all points within a State, although but a few points
had previously been served. Such authorization in this case was not
inappropriate, and must be sustained. P. 315 U. S.
5. There was evidence in this case that a transporter of motor
vehicles by the drive-away or caravaning method was in bona
operation in certain States on and since June 1, 1935,
and the Commission's determination that he was, and that he was
entitled in those States to rights under the "grandfather clause,"
may not be set aside. P. 315 U. S.
6. That a carrier's status under the law of a State is that of a
contract carrier does not necessarily bar his obtaining common
carrier rights there under the "grandfather clause." P.
315 U. S.
Page 315 U. S. 16
7. Whether a carrier's operation in a particular State was
within the meaning of the "grandfather clause"
is a question of fact for the Commission to determine. P.
315 U. S.
8. Violation of state law by a carrier, though relevant to
establishing an absence of "bona fide
operation," does not
necessarily bar rights under the "grandfather clause." P.
315 U. S.
9. There is evidence in this case to sustain the Commission's
finding that the carrier's operation in a particular State was
notwithstanding violation of the state law, and
the finding is sustained. P. 315 U. S.
10. Where the carrier's last shipment to a particular State was
on May 12, 1935, and more than a year elapsed between June 1, 1935,
and the time of the hearing on the application, held
a grant of "grandfather" rights under § 206(a) -- which requires
that the carrier shall have been in bona fide
June 1, 1935, and "since that time" -- was properly set aside. P.
315 U. S.
36 F. Supp. 898 affirmed.
Appeal and cross-appeal from a decree of a District Court of
three judges in a suit brought to set aside an order of the
Interstate Commerce Commission, 8 M.C.C. 469.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
These cases are an appeal and a cross-appeal under § 210 (28
U.S.C. § 47a), and § 238 of the Judicial Code
Page 315 U. S. 17
as amended (28 U.S.C. § 345) to review a final decree of a
district court of three judges (28 U.S.C. § 47) which modified in
part and sustained as modified (D.C. 36 F.Supp. 898) an order of
the Interstate Commerce Commission (8 M.C.C. 469) granting appellee
Fleming a certificate of public convenience and necessity as a
common carrier by motor vehicle under the so-called "grandfather
clause" (§ 206(a)) of the Motor Carrier Act of 1935. [Footnote 1
] 49 Stat. 543, 551, 49 U.S.C. §
The findings of the Commission may be briefly summarized as
follows: Fleming, on and since June 1, 1935, was engaged in
operation as a common carrier by motor vehicle
"in drive-away service of new automotive vehicles, finished and
unfinished, and new automotive vehicle chassis." This drive-away or
caravaning method of transportation is performed by individual
driving of the vehicle under its own power, by driving one vehicle
under its own power and towing a second vehicle attached to the
first, or by driving under its own power a vehicle upon which
another vehicle is partially or wholly mounted. Shipments by
Fleming originated from the factories of automobile manufacturers
in Detroit, Michigan, and were made to dealers and distributors in
various states. Certain new cars were returned to Detroit in the
same manner. Fleming commenced operations in 1933, and, between
January 1, 1934, and June 1, 1935, transported shipments to one
point each in Arkansas and Alabama; to two points each in
California, New York, Pennsylvania and Tennessee; to three points
each in Washington, Oregon, Kentucky, and North Carolina; to four
points in Texas; to five points in South Carolina, and to seven
points in Georgia. About 1,200 vehicles were transported in this
period, and more than 2,100 from 1933 to July,
Page 315 U. S. 18
1936, the time of the hearing. Shipments consisted of from one
to sixteen vehicles, shipments of two and four being the most
common. Fleming's service was confined to deliveries at very few
points in several states due to the fact that he was furnishing a
highly specialized transportation service from manufacturers to
dealers and distributors. Shipments to most of the states named
were numerous. Shipments to other states were fewer in number.
Thus, the three shipments to Arkansas aggregated twenty-five
vehicles, the four shipments each to Texas and Oregon aggregated
fourteen vehicles and twenty-four vehicles, respectively, and the
five shipments to Washington aggregated twenty-eight vehicles.
Operations in those four states started just prior to June 1, 1935;
but they were sufficient in scope to establish that Fleming was in
operation in them on the statutory date. Fleming
held his services out to the public generally as a common carrier
and operated as such, and he held himself out to transport by the
drive-away method between any points in the states for which
application was made.
Though his transportation of shipments was restricted to a few
points in each of the enumerated states, the Commission held that
he was entitled to transport to all points in all of the states
served, with the exception of New York and Pennsylvania, as
respects which the application was denied. The District Court
sustained the order of the Commission in all respects except the
operation in Arkansas. As to that, it held that his service had
We are met at the outset with the question of the standing of
the appellant railroad companies (seventy-one in number) to bring
and maintain the suit in the District Court. All but a few
intervened in the hearing before the Commission. Each is a common
carrier and a competitor of Fleming in some portion of the
Page 315 U. S. 19
Fleming is authorized to serve. They rest their right to sue on
§ 205(h) of the Motor Carrier Act, [Footnote 2
] 49 U.S.C.Supp. § 305(h), which provides
"Any final order made under this part shall be subject to the
same right of relief in court by any party in interest as is now
provided in respect to orders of the Commission made under part I.
. . ."
Sec. 1(20) of Part I (49 U.S.C. § 1(20)), authorizes "any party
in interest" to sue to enjoin any construction, operation or
abandonment of a railroad made contrary to § 1 (18) or (19). Such
suits may be maintained not only where the railroad proceeds
without authorization of the Commission, but also where it proceeds
under a certificate of the Commission whose validity is challenged.
Claiborne-Annapolis Ferry Co. v. United States,
285 U. S. 382
Hence, we conclude that § 205(h) has incorporated by reference the
"party in interest" provision of § 1(20). We do not stop to inquire
what effect, if any, the status of appellant railroad companies as
intervenors before the Commission had on their right to bring and
maintain this suit. Cf. Chicago Junction Case,
264 U. S. 258
with Pittsburgh & West Virginia Ry. Co. v. United
States, 281 U. S. 479
They clearly have a stake as carriers in the transportation
situation which the order of the Commission affected. They are
competitors of Fleming for automobile traffic in territory served
by him. They are transportation agencies directly affected by
competition with the motor transport industry -- competition which,
prior to the Motor Carrier Act of 1935, had proved destructive.
S.Doc. No. 152, 73d Cong., 2d Sess., pp. 13-27. They are members of
the national transportation system which that Act was designed to
coordinate. S.Rep. No. 482, 74th Cong., 1st Sess.; H.Rep. No. 1645,
74th Cong., 1st Sess. Hence, they are parties in interest
Page 315 U. S. 20
the meaning of § 205(h) under the tests announced in Texas
& Pacific Ry. Co. v. Gulf, C. & S.F. Ry. Co.,
270 U. S. 266
Western Pacific California R. Co. v. Southern Pacific Co.,
284 U. S. 47
Claiborne-Annapolis Ferry Co. v. United States, supra.
The appellant railroad companies earnestly contend that the
Commission was without authority to authorize Fleming to serve a
whole state where, as here, his services had been, in fact, limited
to only a few points in the state. The argument is that any rights
obtained under the "grandfather clause" should be delimited to the
actual area in which the applicant was in bona fide
operation during the period in question. Sec. 206(a) provides for
the issuance of a certificate of public convenience and necessity
without proof beyond the fact that the applicant or his predecessor
"was in bona fide
operation as a common carrier by
motor vehicle on June 1, 1935, over the route or routes or within
the territory for which application is made, and has so operated
since that time."
Sec. 208(a) provides that such certificate
"shall specify the service to be rendered and the routes over
which, the fixed termini, if any, between which, and the
intermediate and off-route points, if any at which, and, in case of
operations not over specified routes or between fixed termini, the
territory within which, the motor carrier is authorized to
The authority granted Fleming was to operate in the designated
territory "over irregular routes" through specified states. It is
plain from the statute that operations need not be restricted to
specified routes or between fixed termini. But the question remains
as to the power of the Commission to authorize operation in an
entire state where only a few points in that state had been
"Territory" is not a word of art. The characteristics of the
transportation service involved, as well as the geographical area
serviced, are relevant to the territorial
Page 315 U. S. 21
scope of the operations which may be authorized under the
"grandfather clause." While the test of "bona fide
operation" within a specified "territory" includes "actual, rather
than potential or simulated service" (McDonald v.
Thompson, 305 U. S. 263
305 U. S.
), it does not necessarily restrict future operations
to the precise points or areas already served. The characteristics
of the transportation service rendered may, of necessity, have made
trips to any specified locality irregular or sporadic. And they may
likewise have restricted prior operations to but a few points in a
wide area which the carrier held itself out as being willing and
able to serve. The Commission has taken the characteristics of
various transportation services into consideration in determining
the scope of the territory covered by certificates under the
"grandfather clause." Thus, operations on irregular routes within a
wide territory have been authorized in case of common carriers of
household goods. Bruce Transfer & Storage Co., 2 M.C.C. 150;
William J. Wruck, 12 M.C.C. 150. Similar broad authority has been
granted common carriers of oil field equipment and supplies.
Charles B. Greer, Jr., 3 M.C.C. 483; Union City Transfer, 7 M.C.C.
717; L. C. Jones Trucking Co., 9 M.C.C. 740. And a like result has
been reached in case of automobile transporters such as the
applicant in the instant case. George Cassens & Sons, 1 M.C.C.
771. And see
Charles E. Danbury, 17 M.C.C. 243. The
general theory underlying the household goods cases was expressed
in W. J. Wruck, supra,
pp. 151, 152, as follows:
"Calls for service between the same points are seldom repeated.
Traffic is not regular in any given direction. What may be
infrequent but fairly regular business to or from a certain State
for a small carrier may be only sporadic business for a large
carrier; consequently, a frequency of service that might amount to
'grandfather' clause rights in the case of the former could
Page 315 U. S. 22
be inadequate in the case of the latter. It would be an
impractical solution to carve out oddly shaped areas for service
based solely on the frequency of service; consideration must also
be given to the general territory served under the holding-out,
even if the business in some States may not equal that in other
States in the territory."
The Commission took a somewhat similar approach to the problem
presented in the instant case. It noted that Fleming was restricted
to shipments at points where the manufacturers had established
distribution facilities; that those facilities were limited in any
given area; that Fleming's opportunity for service was therefore
confined to a very few distribution points, and his operations were
irregular; that less than an estimated seven percent of all new
automobiles sold during 1935 in twenty-four western states were
transported by the drive-away method; that distribution points in
the automobile industry are constantly shifted; that allowance must
be made for frequent changes in points served by a carrier who
depends for his traffic entirely upon this one industry, and that
Fleming's future opportunity for obtaining traffic will doubtless
be as limited as in the past. In view of the scope of his holding
out and the nature and characteristics of the highly specialized
transportation service rendered, the Commission authorized
continuance of his service to all points in the enumerated states.
That is a judgment which we should respect. Certainly we cannot say
that it was a wholly inappropriate method for creating that
substantial parity between future operations and prior bona
operations which the statute contemplates. The special
characteristics of this roving transportation service make tenable
the conclusion that Fleming's prior limited opportunity for service
could not be preserved unless statewide areas, within the scope of
his holding out and partially covered by his previous operations,
were kept open
Page 315 U. S. 23
for him. That judgment is for the administrative experts, not
Appellant railroad companies also urge that Fleming should not
have been awarded any rights under the "grandfather clause" in
Washington, Oregon, and California. Before June 1, 1935, Fleming
had made five deliveries to three different points in Washington,
four deliveries to three different points in Oregon, and at least
two deliveries to two different points in California. After June 1,
1935, and prior to the hearing in July, 1936, two deliveries were
made in Washington, two in Oregon, and apparently several in
California. These shipments did not appear to be merely nominal.
] Thus, there was
evidence that, on and since June 1, 1935, Fleming had been in
operation in those states. The weighing of such
evidence involves in part a judgment based on the characteristics
of the highly specialized transportation service involved. Thus, as
we have said, that function is peculiarly one for the Commission,
not the courts.
Appellant railroad companies also insist that Fleming was not in
operation" in Oregon because, in January, 1936,
he obtained in that state a contract carrier permit. The argument
is that he could not obtain under the "grandfather clause" common
carrier rights in Oregon in the face of his contract carrier status
there. Cf. United States v. Maher, 307 U.
. They further urge that Fleming's operations in
Nebraska (one of the states through which his irregular routes were
authorized) were conducted in violation of state law. In that
connection, reliance is placed on his testimony that, in
Page 315 U. S. 24
Nebraska, he claimed to be the owner of the vehicles in order to
reduce license fees. The expression "in bona fide
operation" plainly "does not extend to one operating as a common
carrier on public highways of a State in defiance of its laws."
McDonald v. Thompson, supra,
p. 305 U. S. 266
Congress has not, however, conditioned rights under the
"grandfather clause" on compliance with state laws. Their violation
is material only insofar as it may be relevant to establishing an
absence of "bona fide
operation." Infractions of state
law, however, may be innocent or willful, minor or considerable.
They may or may not concern the right to operate in the state.
Furthermore, the status of a carrier under state law may or may not
be identical with his status as a common or contract carrier under
the Motor Carrier Act. The question whether his operation in a
particular state was "bona fide
" is a question of fact for
the Commission to determine. Such operation might well be in good
faith, though state laws were infracted. And the fact that an
applicant may have to make his peace with state authorities does
not necessarily mean that his rights under the "grandfather clause"
should be denied or withheld. See
Earl W. Slagle, 2 M.C.C.
127. Occasional noncompliance with state laws does not per
establish a course of conduct which is preponderantly one
of evasion. Certainly no such course of conduct can be fairly
implied in this case. Our task is ended if there is evidence to
support the Commission's finding of bona fides.
such evidence here.
It is urged on the cross-appeal that the court below should not
have set aside the Commission's inclusion of Arkansas in the
certificate. The evidence was that Fleming had served only one
locality in Arkansas -- the city of Texarkana. He had made three
shipments there aggregating twenty-five vehicles. All of those
shipments had been made prior to June 1, 1935, the latest being May
Page 315 U. S. 25
1935. Though fourteen months expired between that date and the
date of the hearing, there was no evidence that any shipments were
made to any locality in Arkansas since June 1, 1935. No explanation
of that long hiatus was proffered. But § 206(a) requires a finding
of "bona fide
operation . . . within the territory" not
only "on June 1, 1935," but also "since that time." We cannot say
that an unexplained failure to make any shipments to Arkansas for
over a year "since that time" satisfies the statutory command, even
though the nature of the highly specialized transportation service
involved be given the greatest weight. Cf. United States v.
A mere holding out will not alone suffice to
bridge the long gap extending through and beyond one entire
automobile production year, since applicant carries the burden of
establishing his right to the statutory grant.
We have considered the other points raised by appellant railroad
companies, and find them without substance.
MR. JUSTICE ROBERTS did not participate in the consideration or
decision of this case.
*Together with No. 267, United States et al. v. Alton
Railroad Co. et al.,
also on appeal from the District Court of
the United States for the Eastern District of Michigan.
The Motor Carrier Act of 1935 is now designated as Part II of
the Interstate Commerce Act, 54 Stat. 919.
Now § 205(g) of Part II of the Interstate Commerce Act, 54 Stat.
922, 49 U.S.C. § 305(g).
As to California, the evidence was less specific than in the
other states. Shipping bills showed three deliveries to California
aggregating five vehicles, the latest being in December, 1935. In
addition, there was testimony that, shortly prior to the hearing in
1936, deliveries of taxicabs and trucks had been made in that