Petitioner manufactures in Tennessee products which it sends in
trucks to customers in nearby states. Finding that driver owners
carrying those products in Arkansas, who allegedly had leased their
vehicles to petitioner, were in reality transporting petitioner's
goods as "contract carriers" for which a state Act required a
permit, the State Supreme Court dismissed petitioner's bill praying
that enforcement of the Act be enjoined. Neither petitioner nor the
drivers had obtained any kind of authority from the Interstate
Commerce Commission.
Held:
1. The finding of the State Supreme Court that the driver-owners
were in reality transporting petitioner's goods as contract
carriers is not without factual foundation, and is accepted by this
Court. Pp.
344 U. S.
159-160.
2. The State's requirement of a permit in such circumstances is
not an undue burden on interstate commerce, and does not conflict
with the Commerce Clause of the Federal Constitution, nor with the
Federal Motor Carrier Act. Pp.
344 U. S.
161-163.
3.
Buck v. Kuykendall, 267 U.
S. 307, distinguished. Pp.
344 U. S.
161-162.
4. It is unnecessary here to consider apprehended burdensome
conditions which the State has not attempted to enforce. Pp.
344 U. S.
162-163.
5. The State is not without power to require interstate motor
carriers to identify themselves as users of the State's highways.
P.
344 U. S.
163.
219 A. 553, 244 S.W.2d 147, affirmed.
In an action brought by petitioner in an Arkansas state court to
enjoin enforcement of the Arkansas Motor Carrier Act, the State
Supreme Court ordered dismissal of the bill. 219 Ark. 553, 244
S.W.2d 147. This Court granted certiorari. 343 U.S. 962.
Affirmed, p.
344 U. S.
163.
Page 344 U. S. 158
MR. JUSTICE BLACK delivered the opinion of the Court.
The petitioner, Lloyd A. Fry Roofing Company, manufactures
asphalt roofing products in Memphis, Tennessee, and sends them in
trucks to customers in nearby states. Some of these trucks are
driven by their owners, who have allegedly leased them to the
petitioner. Five of these driver-owners, while carrying Fry's
interstate shipments on Arkansas highways, were arrested for having
failed to obtain a permit as required of all contract carriers by §
11 of the Arkansas Motor Act. [
Footnote 1] Petitioner brought this action in an Arkansas
state court to enjoin the state's Public Service Commission from
further molestation or prosecution of the drivers. The bill
asserted both state and federal grounds for denying that the state
law could be applied to require a permit. The state grounds alleged
were: neither petitioner Fry Roofing Company nor the truck drivers
could be required to get a state permit, because the state law
exempted "private" carriers from that duty, and petitioner was such
a "private carrier" -- that is, a commercial enterprise, carrying
its own products exclusively in its own leased trucks operated by
its own
bona fide driver-employees. Since, petitioner
claimed, the drivers were its
bona fide employees, it
necessarily followed that they need not get
Page 344 U. S. 159
state permits as "contract carriers" because they were not in
the business of transporting goods for hire. [
Footnote 2] The federal ground asserted by
petitioner to prevent application of the state statute was that
requiring either Fry or the drivers to get state permits would
unduly burden interstate commerce in violation of the United States
Constitution, and would invade a field of regulation preempted by
the Federal Motor Carrier Act. [
Footnote 3]
Answering the bill, the State Commission asked the court to
dismiss it, strongly urging that petitioner's alleged lease of
trucks and operation of them by its own employees were mere
pretenses, a subterfuge to enable petitioner and others to evade
and escape the regulatory provisions of the Arkansas Motor Act.
After lengthy hearings, the trial court found that the arrested
drivers were in fact,
bona fide employees of petitioner,
that the truck leases were also
bona fide, and that
petitioner was therefore transporting its own goods as a private
carrier exempt from the state Act. For this reason, the court held
that the Act did not require either petitioner or its drivers to
get a permit. Accordingly, the Commission was enjoined as prayed.
Reviewing the facts for itself, the State Supreme Court found that
the arrested truck
Page 344 U. S. 160
drivers were not petitioner's employees, that the truck lease
arrangements were shams, and that petitioner was therefore a
shipper -- not a carrier of any kind. In this situation, the court
found that the driver-owners were, in reality, transporting
petitioner's goods as "contract carriers" for hire, engaged in the
very kind of business for which § 11 of the state Act required a
permit. The court then dismissed the bill and denied a rehearing,
thereby rejecting the federal questions raised. 219 Ark. 553, 244
S.W.2d 147. Certiorari was granted because of the Commerce Clause
and Federal Motor Carrier Act questions. 343 U.S. 962.
We are urged to set aside the findings of the State Supreme
Court before passing upon the constitutional questions presented.
Petitioner contends that these findings are without evidential
support, and that the subsidiary findings do not support the
ultimate conclusion that the leases were shams. Whether rejection
of these findings would place petitioner's Commerce Clause
contentions in a more favorable position we need not consider. For
there is much record evidence, both oral and written, some of which
tends to support petitioner's contention of good-faith arrangements
and some the contrary. Some details of petitioner's conduct
resemble, and some details differ from, patterns of conduct found
by courts in other cases to have been contrived to avoid legal
regulation.
See, e.g., United States v. LaTuff Transfer
Service, 95 F. Supp.
375, and cases there cited. There are no exceptional
circumstances of any kind that would justify us in rejecting the
Supreme Court's findings; they are not without factual foundation,
and we accept them.
The finding that the arrested drivers own and operate the trucks
for hire makes them contract carriers as defined in the state Act.
Section 11 of that Act requires contract carriers to get a permit,
and outlines certain considerations
Page 344 U. S. 161
the state commission may weigh in granting or refusing the
permit. Among these matters is the adequacy of transportation
services already being performed by "any railroad, street railway
or motor carrier." Refusal of a state certificate based on such
grounds was held to be an unconstitutional obstruction of
interstate commerce in
Buck v. Kuykendall, 267 U.
S. 307. To deny these interstate carriers an Arkansas
permit for such reasons would conflict with the
Buck
holding.
Unlike the situation in the
Buck case, Arkansas has not
refused to grant a permit for interstate carriage of goods on state
highways. It has asked these driver-owners to do nothing except
apply for a permit, as contract carriers are required to do by the
state Act. And the State Commission here expressly disclaims any
"discretionary right to refuse to grant a permit for contract
carriage where that carriage is in interstate commerce." The state
asserts no power or purpose to require the drivers to do more than
register with the appropriate agency. [
Footnote 4] Such an identification is necessary, the
Commission urges, in order that it may properly apply the state's
valid police, welfare, and safety regulations to motor carriers
using its highways. Nor is there any showing whatever that the
Commission has attempted or will attempt to attach any burdensome
conditions to the grant of a permit, or conditions that would in
any manner
Page 344 U. S. 162
conflict with the National Motor Carrier Act or any Interstate
Commerce Commission regulations issued thereunder. Moreover, the
Arkansas Act imposes upon its Commission the duty of reconciling
state regulation with that of the Interstate Commerce Commission,
just as the Interstate Commerce Act requires federal officials to
cooperate with the states and their duly authorized state
officials. Here, neither petitioner nor the drivers have obtained
any kind of authority from the Interstate Commerce Commission.
Indeed, petitioner's whole case has been built on the premise that
neither it nor the drivers must get a permit from the state or the
national regulatory agency. In this situation, our prior cases make
clear that a state can regulate so long as no undue burden is
imposed on interstate commerce, and that a mere requirement for a
permit is not such a burden. [
Footnote 5] It will be time enough to consider apprehended
burdensome conditions when and if the state attempts to impose
and
Page 344 U. S. 163
enforce them. At present, we hold only that Arkansas is not
powerless to require interstate motor carriers to identify
themselves as users of that state's highways.
Affirmed.
[
Footnote 1]
"No person shall engage in the business of a contract carrier by
motor vehicle over any public highway in this State unless there is
in force with respect to such carrier a permit issued by the
Commission, authorizing such persons to engage in such business. .
. ."
Ark.Acts 1941, No. 367 at 937, 947-948.
[
Footnote 2]
The state Act's definition of a contract carrier is:
"The term 'contract carrier by motor vehicle' means any person,
not a common carrier included under Paragraph 7, Section 5(a) of
this Act, who or which, under individual contracts or agreements,
and whether directly or indirectly or by a lease of equipment or
franchise rights, or any other arrangement, transports passengers
or property by motor vehicle for compensation."
Ark.Acts 1941, No. 367, § 5(a)(8).
Compare definition
in the United States Motor Carrier Act, Part II of the Interstate
Commerce Act, 49 U.S.C. § 303(15).
[
Footnote 3]
49 Stat. 543, as amended, 54 Stat. 919, 49 U.S.C. § 301
et
seq. The federal Act contention was not specifically referred
to in the original bill, but was urged in, considered, and rejected
by the State Supreme Court.
[
Footnote 4]
"It appeared that, while the act calls the certificate one of
'public convenience and necessity,' the commission had recognized,
before this suit was begun, that . . . it had no discretion where
the carrier was engaged exclusively in interstate commerce, and was
willing to grant to plaintiffs a certificate upon application and
compliance with other provisions of the law."
Clark v. Poor, 274 U. S. 554,
274 U. S. 556.
In the
Clark case, this Court affirmed an order dismissing
the bill.
See Columbia Terminals Co. v.
Lambert, 30 F. Supp.
28, 32, and 309 U.S. 620.
[
Footnote 5]
In
Columbia Terminals Co. v. Lambert, 30 F. Supp.
28, 29, the District Court upheld a Missouri statute
reading:
"It is hereby declared unlawful for any motor carrier . . . to
use any of the public highways of this state for the transportation
of persons or property, or both, in interstate commerce without
first having obtained from the commission a permit so to do. . .
."
Buck v. Kuykendall, 267 U. S. 307, was
held not to require the statute's invalidation, since Missouri had
not refused to grant a permit on the ground that the state had
power to say what interstate commerce would benefit the state and
what would not. Agreeing with this constitutional holding, we
ordered the complaint dismissed. 309 U.S. 620.
See also
Eichholz v. Public Service Comm'n, 306 U.
S. 268,
306 U. S.
273-274;
H. P. Welch Co. v. New Hampshire,
306 U. S. 79,
306 U. S. 84,
85;
Maurer v. Hamilton, 309 U. S. 598,
aff'g 336 Pa. 17, 7 A.2d 466;
McDonald v.
Thompson, 305 U. S. 263,
aff'g 95 F.2d 937;
South Carolina State Highway Dept.
v. Barnwell Bros., Inc., 303 U. S. 177,
625.
Cf. Buck v. Kuykendall, 267 U.
S. 307, and
H. P. Hood & Sons, Inc. v. Du
Mond, 336 U. S. 525,
336 U. S.
538.
MR. JUSTICE DOUGLAS with whom THE CHIEF JUSTICE, MR. JUSTICE
BURTON and MR. JUSTICE MINTON join, dissenting.
Whether the driver-owners involved here are contract or private
carriers is immaterial to the determination of the federal question
presented. That question is whether Arkansas can require a person
engaged exclusively in the interstate transportation of goods by
motor carrier to obtain a certificate of necessity and convenience
from Arkansas. That is precisely what Arkansas has required, as
made clear by the opinion of the State Supreme Court in the instant
case.
"We are of the opinion that the driver-owners involved in this
litigation were
contract carriers" (as defined in the
Arkansas statute), and " . . . that they were therefore required to
have a certificate of necessity and convenience from the Arkansas
Public Service Commission." 219 Ark. 553, 557, 244 S.W.2d 147,
149.
The label "Certificate of Necessity and Convenience" is more
accurate than the word "permit," for the Arkansas law makes the
grant of permission dependent upon a consideration of the following
factors: [
Footnote 2/1] "the
reliability and financial condition of the applicant" -- his "sense
of responsibility toward the public" -- "the transportation service
being maintained by any railroad, street railway
Page 344 U. S. 164
or motor carrier" -- "the likelihood of the proposed service's
being permanent and continuous throughout twelve months of the
year" -- "the effect which such proposed transportation service may
have upon existing transportation
Page 344 U. S. 165
service" -- "any other matters tending to show the necessity or
want of necessity for granting said application." The permit will
issue if it appears that "the applicant is fit, willing, and able"
properly to perform the service, and if the proposed operation
"will promote the public interest" and the policy of the Act.
[
Footnote 2/2]
This statute is a regulation of interstate commerce, not a
regulation of the use of Arkansas' highways. It is precisely the
kind of control which the Washington tried to exercise over motor
carriers and which was denied her by
Buck v. Kuykendall,
267 U. S. 307. As
Mr. Justice Brandeis, speaking for the Court in that case, said,
the effect of this kind of state regulation is "not merely to
burden, but to obstruct," interstate commerce.
Id. 267
U.S. at
267 U. S.
316.
State regulations in the interest of safety, the exaction of a
fee for highway maintenance, and the like are of a different
character.
See South Carolina State Highway Dept. v. Barnwell
Bros., 303 U. S. 177,
303 U. S. 189,
and cases cited. So is a requirement that an interstate carrier get
a permit to do intrastate business.
See Eichholz v. Public
Service Commission, 306 U. S. 268.
The certificate or permit exacted here is one authorizing an
interstate contract carrier "to engage in such business." Until
today, no state could impose any such condition on one engaged
exclusively in interstate commerce. Until today, such a certificate
was the concern solely of the Interstate Commerce Commission.
Congress gave the Commission authority to regulate interstate
contract carriers. 49 U.S.C. § 304(a)(2). Congress made it
mandatory for them to obtain a permit to do business.
Id.,
§ 309. It gave the Commission broad powers of investigation over
these carriers,
id. § 304(c), provided for injunctions
against violations,
id. § 322(b), and imposed
Page 344 U. S. 166
criminal sanctions.
Id., § 322(a). There is no phase of
the operation which Arkansas in this action seeks to regulate that
Congress has left untouched. It is the Interstate Commerce
Commission that must determine whether this leasing operation is
bona fide or a sham, whether the carriers are private
interstate carriers requiring no permit or interstate contract
carriers requiring one. Congress, in other words, has preempted the
field, precluding both inconsistent and overlapping state
regulations. [
Footnote 2/3]
See
Hines v. Davidowitz, 312 U. S. 52;
Hill v. Florida, 325 U. S. 538;
Rice v. Santa Fe Elevator Corp., 331 U.
S. 218;
Bethlehem Steel Co. v. State Board,
330 U. S. 767;
La Crosse Tel. Corp. v. Wisconsin Board, 336 U. S.
18;
Plankinton Packing Co. v. Wisconsin Board,
338 U.S. 953;
Automobile Workers v. O'Brien, 339 U.
S. 454.
[
Footnote 2/1]
The relevant parts of § 11 of Act No. 367, Ark.Acts.1941, pp.
947-949, are as follows:
"(a) No person shall engage in the business of a contract
carrier by motor vehicle over any public highway in this State
unless there is in force with respect to such carrier a permit
issued by the Commission, authorizing such persons to engage in
such business. . . ."
"
* * * *"
"(c) Subject to this Act, a permit shall be issued to any
qualified applicant therefor authorizing in whole or in part the
operations covered by the application if it appears from the
application or from any hearing held thereon that the applicant is
fit, willing, and able to properly perform the service of a
contract carrier by motor vehicle and to conform to the provisions
of this Act and the lawful requirements, rules, and regulations of
the Commission, and the proposed operation, to the extent
authorized by the permit, will promote the public interest and the
policy declared in Section Two (2) of this Act; otherwise such
application shall be denied. . . ."
"
* * * *"
"(e) In granting applications for permits, the Commission shall
take into consideration the reliability and financial condition of
the applicant and his sense of responsibility toward the public;
the transportation service being maintained by any railroad, street
railway, or motor carrier; the likelihood of the proposed service's
being permanent and continuous throughout twelve months of the
year, and the effect which such proposed transportation service may
have upon existing transportation service, and any other matters
tending to show the necessity or want of necessity for granting
said application."
"(f) the Commission shall specify in the permit the business of
the contract carrier covered thereby and the scope thereof and
shall attach to it at the time of issuance, and from time to time
thereafter, such reasonable terms, conditions, and limitations
consistent with the character of the holder as a contract carrier
as are necessary to carry out, with respect to the operations of
such carrier, the requirements established by the Commission under
this Act; provided, however, that no terms, conditions, or
limitations shall restrict the right of the carrier to substitute
or add contracts within the scope of the permit, or to add to his
or its equipment facilities, within the scope of the permit, as the
development of the business and the demands of the public may
require."
[
Footnote 2/2]
§ 11,
344
U.S. 157fn2/1|>note 1,
supra.
[
Footnote 2/3]
Columbia Terminals Co. v. Lambert, 30 F. Supp.
28, whose ruling we sustained, 309 U.S. 620, is not in point.
The Interstate Commerce Commission had ruled in that case that the
particular operations there involved were not covered by the
federal Act.
See 30 F. Supp. at 30.