In order to obtain a determination as to whether it was a
"contract carrier by motor vehicle" as defined by § 203(a)(15) of
Part II of the Interstate Commerce Act or a "private carrier of
property by motor vehicle" as defined by § 203(a)(17), one of the
appellants applied to the Interstate Commerce Commission for a
permit under § 209(b) to operate as a "contract carrier." In the
proceedings before the Commission, it moved to dismiss its own
application on the ground that the proposed operations were not
such as to make it a "contract carrier," introduced no evidence to
prove compliance with § 209(b), and sought a ruling by the
Commission that it could carry on its operations as a "private
carrier" without obtaining a permit. It contended that it was a
"private carrier" because its operations were to be performed for
its parent corporation (which owned all of applicant's stock) and
for other corporations owned or controlled by the parent. The
Commission ruled in its report that applicant was a "contract
carrier," and not a "private carrier," and made this report a part
of an order denying the application because of failure to show
compliance with § 209(b). Applicant and its parent corporation sued
to set aside the Commission's order.
Held:
1. The parent corporation had no standing to sue, since it did
not apply for a permit and its sole interest in the permit sought
by the applicant was that of a stockholder. P.
326 U. S.
435.
2. The parent corporation is adequately represented for the
purposes of such a suit by the subsidiary, whose conduct of the
litigation it controls. P.
326 U. S. 435.
3. It was appropriate for the Commission to treat the filing of
an application under § 209(b), with a request that it be dismissed
on the ground that it is not required, as a proper method of
raising the issue whether the applicant is subject to the Act.
Cornell Steamboat Co. v. United States, 321 U.
S. 634,
321 U. S. 635,
reaffirmed. P.
326 U. S.
436.
4. The Commission's order determining that applicant is subject
to the Act is a reviewable order . P.
326 U. S.
436.
Page 326 U. S. 433
5. Applicant's proposed operations would clearly constitute it a
"contract," rather than a "private," carrier. P.
326 U. S.
436.
6. While corporate entities may be disregarded when they are
used to avoid a clear legislative purpose, they will not be
disregarded where those in control have deliberately adopted the
corporate form in order to secure its advantages and where no
violence to the legislative purpose is done by treating the
corporation as a separate legal person. P.
326 U. S.
437.
7. The fact that several corporations are used in carrying on
one business does not relieve them of their several statutory
obligations. P.
326 U. S.
437.
61 F. Supp.
981 affirmed.
Appeal from a judgment of a district court of three judges
dismissing a suit to set aside an order of the Interstate Commerce
Commission.
PER CURIAM.
This is an appeal from a judgment of a district court, three
judges sitting, constituted under the Urgent Deficiencies Act, 38
Stat. 220, 28 U.S.C. § 47, dismissing appellants' petition to set
aside an order of the Interstate Commerce Commission. Appellant
Schenley Distilleries Motor Division, Inc., applied to the
commission for a permit, under § 209(b) of Part II of the
Interstate Commerce Act, 49 U.S.C. § 309(b), authorizing operation
as a "contract carrier by motor vehicle" of specified commodities
in interstate commerce between specified points. At the outset of
the proceedings before the commission, the appellant moved for
dismissal of the application on the ground that the proposed
operations were not such as to constitute applicant a "contract
carrier by motor vehicle," defined by § 203(a)(15) of the Act, 49
U.S.C.
Page 326 U. S. 434
§ 303(a)(15), as
"any person which, under individual contracts or agreements,
engages in the transportation (other than transportation referred
to in paragraph (14) and the exception therein) by motor vehicle of
passengers or property in interstate or foreign commerce for
compensation."
Applicant contended at the hearing that it was a "private
carrier of property by motor vehicle," which is defined by §
203(a)(17) as
"any person not included in the terms 'common carrier by motor
vehicle' or 'contract carrier by motor vehicle,' who or which
transports in interstate or foreign commerce by motor vehicle
property of which such person is the owner, lessee, or bailee, when
such transportation is for the purpose of sale, lease, rent, or
bailment, or in furtherance of any commercial enterprise."
Applicant introduced no evidence to prove compliance with the
requirements set forth by § 209(b) for granting a permit as a
"contract carrier," but sought a ruling by the commission that it
could carry on its operations as a "private carrier" without
obtaining a permit. Stating that
"the primary reason for filing this application was to secure a
determination as to whether the involved operations were those of a
contract carrier of property by motor vehicle or of a private
carrier,"
Division 5 of the commission, in its report, ruled that the
applicant was a "contract carrier," and not a "private carrier." As
no evidence had been introduced to show that the proposed
operations would comply with § 209(b), Division 5 made its order
denying the application, and made the report a part of the order.
Reconsideration by the full commission was denied.
This suit to set aside the commission's order was brought by the
applicant, Schenley Distilleries Motor Division, and by Schenley
Distillers Corporation, owner of all the
Page 326 U. S. 435
stock of the former. The district court held that it had
jurisdiction to review the order. It dismissed the suit as to the
parent corporation on the ground that it had no legal interest
sufficient to entitle it to maintain suit. The court held that the
commission properly ruled that the applicant was a "contract
carrier," and accordingly dismissed the complaint.
The district Court rightly held that the parent corporation had
no standing to sue. It did not ask that a permit be issued to it,
and its sole interest in the permit sought for its co appellant was
that of a stockholder. We have held that a minority stockholder of
a carrier corporation cannot bring suit to set aside a commission
order against the corporation.
Pittsburgh & W.Va. R. Co. v.
United States, 281 U. S. 479,
281 U. S.
486-488. A parent corporation which, by its stock
ownership, controls its subsidiary, and which, as a party litigant,
asserts only its stockholder's derivative rights to have its
subsidiary secure the permit,
cf. American Power Co. v.
SEC, 325 U. S. 385,
325 U. S. 389,
is even less aggrieved by the commission's order denying the permit
than would be a minority stockholder. For the parent is adequately
represented for purposes of suit by the subsidiary whose conduct of
the litigation it controls. We conclude that the character of a
stockholder's interest in this regard is not so altered by the mere
facts that it owns all the stock of the corporation against which
the commission's order is entered and that the parent manages and
controls its subsidiary, as to give the stockholder standing to sue
to set aside the commission's order.
As to appellant Schenley Distilleries Motor Division, Inc., the
appellee urges that the judgment should be affirmed on the ground
that the appellant made no showing sufficient to require the
issuance of the permit sought by the application, and that thus the
commission's order rests on a controlling ground --
i.e.,
lack of evidence. But there
Page 326 U. S. 436
remains the question whether the commission's determination that
appellant will be a "contract carrier" is reviewable in the present
suit. The commission made its report a part of its order, and the
report denied the relief which appellant sought -- namely, a
determination that it was a "private carrier" entitled to carry on
its operations without a permit and without subjecting itself to
criminal proceedings. The commission has treated the filing of an
application under § 209(b) with a request that the application be
dismissed on the ground that it is not required as a proper method
of raising the issue whether the applicant is subject to the Act.
Any other construction of that section would make it necessary for
a carrier to take the risk of operating illegally and incurring
criminal and other penalties in order to secure a determination
whether it is within the permit requirement. We have already
decided that the course followed here was "appropriate," and that
an order determining that the appellant is within the permit
requirement is a reviewable order.
Cornell Steamboat Co. v.
United States, 321 U. S. 634,
321 U. S. 635.
We reaffirm that holding.
We think the district court was plainly right in upholding the
commission's decision that appellant's proposed operations would
constitute it a "contract," rather than a "private," carrier.
Appellant's contention to the contrary is based on the fact that
its operations were to be performed for its parent and for other
corporations owned or controlled by the parent. Appellant says that
the transportation will be in furtherance of one "commercial
enterprise" within the meaning of § 203(a)(17). But that section
applies only to the extent to which § 203(a)(15) does not, and the
evidence supports the commission's finding that the transportation
was to be "for compensation" from appellant's parent and the other
corporations controlled by the parent. Appellant urges that we
disregard
Page 326 U. S. 437
the separate corporate entities which are to pay compensation to
appellant for the transportation, and treat the corporations
controlled by appellant's parent as one single commercial
enterprise. While corporate entities may be disregarded where they
are made the implement for avoiding a clear legislative purpose,
they will not be disregarded where those in control have
deliberately adopted the corporate form in order to secure its
advantages and where no violence to the legislative purpose is done
by treating the corporate entity as a separate legal person. One
who has created a corporate arrangement, chosen as a means of
carrying out his business purposes, does not have the choice of
disregarding the corporate entity in order to avoid the obligations
which the statute lays upon it for the protection of the
public.
The fact that several corporations are used in carrying on the
business does not relieve them of their several statutory
obligations more than it relieves them of the taxes severally laid
upon them. "If the one business could not be carried on without two
corporations taking part in it, each must pay, by the plain words
of the Act."
Edwards v. Chile Copper Co., 270 U.
S. 452,
270 U. S. 456.
Cf. Gray v. Powell, 314 U. S. 402,
314 U. S. 414;
Moline Properties v. Commissioner, 319 U.
S. 436.
Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.
