Eichholz v. Comm'n, 306 U.S. 268 (1939)

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Case:   EICHHOLZ V. COMM'N

Case #: 306US268


NO. 367.  ARGUED FEBRUARY 1, 1939.  - DECIDED FEBRUARY 27, 1939.  - 23
F.SUPP.  587, AFFIRMED. 


1.  UNDER JUDICIAL CODE SEC. 266, THAT PART OF A DECREE OF THE THREE
JUDGE DISTRICT COURT WHICH DENIED A PERMANENT INJUNCTION IS REVIEWABLE
DIRECTLY BY THIS COURT INDEPENDENTLY OF OTHER PROVISIONS OF THE DECREE,
NOT FINAL, CONCERNING A COUNTERCLAIM.  P. 269. 

2.  MERE PENDENCY BEFORE THE INTERSTATE COMMERCE COMMISSION OF AN
APPLICATION UNDER THE FEDERAL MOTOR CARRIER ACT TO OPERATE AS A MOTOR
CARRIER IN INTERSTATE COMMERCE DOES NOT SUPERSEDE THE AUTHORITY OF A
STATE TO ENFORCE REASONABLE REGULATIONS OF TRAFFIC UPON ITS HIGHWAYS
WITH RESPECT TO SUCH APPLICANT.  P. 273. 

3.  FOR THE EFFECTUATION OF ITS LAWS REQUIRING COMMON CARRIERS BY
MOTOR TO OBTAIN CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY BEFORE
OPERATING INTRASTATE, A STATE MAY FORBID INTRASTATE BUSINESS BY
CARRIERS WHO HAVE NOT SUCH CERTIFICATES BUT HAVE PERMITS FROM THE STATE
FOR USE OF ITS HIGHWAYS IN INTERSTATE COMMERCE ONLY; AND WHERE AN
INTERSTATE CARRIER EVADES THE PROHIBITION BY CARRYING GOODS FROM WITHIN
THE STATE TO A PLACE NEAR TO AND BEYOND ITS BOUNDARY AND THEN CARRYING
THEM BACK FOR DELIVERY IN THE STATE NEAR THE BOUNDARY, THE STATE MAY
REVOKE HIS PERMIT.  P. 273. 

IN THE ABSENCE OF THE EXERCISE OF FEDERAL AUTHORITY, AND IN THE LIGHT
OF LOCAL EXIGENCIES, THE STATE IS FREE TO ACT IN ORDER TO PROTECT ITS
LEGITIMATE INTERESTS EVEN THOUGH INTERSTATE COMMERCE IS DIRECTLY
AFFECTED. 

EICHHOLZ V. PUBLIC SERVICE COMMISSION OF MISSOURI ET AL. 

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN
DISTRICT OF MISSOURI. 

APPEAL FROM A DECREE DENYING A PRELIMINARY INJUNCTION AGAINST
ENFORCEMENT OF AN ORDER REVOKING THE APPELLANT'S PERMIT TO OPERATE IN
MISSOURI AS AN INTERSTATE CARRIER BY MOTOR. 

MR. CHIEF JUSTICE HUGHES DELIVERED THE OPINION OF THE COURT. 

THIS IS AN APPEAL FROM A DECREE OF THE DISTRICT COURT, COMPOSED OF
THREE JUDGES, HOLDING VALID AN ORDER OF THE PUBLIC SERVICE COMMISSION
OF MISSOURI WHICH REVOKED APPELLANT'S PERMIT AS AN INTERSTATE CARRIER,
AND DENYING A PERMANENT INJUNCTION RESTRAINING THE COMMISSION AND
CERTAIN STATE OFFICERS FROM PROSECUTING SUITS AGAINST APPELLANT FOR
USING THE HIGHWAYS OF THE STATE IN THE TRANSPORTATION OF PROPERTY FOR
HIRE IN INTERSTATE COMMERCE.  23 F.SUPP.  587. 

BY A SUPPLEMENTARY ANSWER, THE PUBLIC SERVICE COMMISSION PLEADED A
COUNTERCLAIM FOR FEES ALLEGED TO BE DUE TO THE STATE FOR THE USE OF ITS
HIGHWAYS SINCE THE GRANTING OF THE RESTRAINING ORDER WHICH WAS ISSUED
ON THE INSTITUTION OF THE SUIT.  THE DISTRICT COURT ADJUDGED THE
DEFENDANTS ENTITLED TO RECOVER ON THE COUNTERCLAIM AND APPOINTED A
SPECIAL MASTER TO TAKE THE NECESSARY ACCOUNTING.  AS THE DECREE IS NOT
A FINAL ONE SO FAR AS THE COUNTERCLAIM IS CONCERNED, THE APPELLEES MOVE
TO DISMISS THE APPEAL.  THE MOTION IS DENIED.  THE DECREE DENIED A
PERMANENT INJUNCTION AND THIS COURT HAS JURISDICTION OF A DIRECT APPEAL
FROM THAT PART OF THE DECREE BY VIRTUE OF THE EXPRESS PROVISION OF THE
STATUTE.  JUDICIAL CODE, SEC. 266; 28 U.S.C. 380.  COMPARE PUBLIC
SERVICE COMM'N V. BRASHEAR FREIGHT LINES, ANTE, P. 204.  SEE SMITH V.
WILSON, 273 U.S. 388, 390, 391; STRATTON V. ST. LOUIS SOUTHWESTERN RY.
CO., 282 U.S. 10, 14. 

SINCE 1931 APPELLANT, FRANK EICHHOLZ, HAS OPERATED FREIGHT TRUCKS IN
INTERSTATE COMMERCE BETWEEN THE STATES OF MISSOURI, IOWA AND KANSAS AND
HAS MAINTAINED TERMINAL FACILITIES IN ST. LOUIS, MISSOURI, KANSAS CITY,
KANSAS, AND OTHER PLACES IN KANSAS AND IOWA.  PRIOR TO THE PASSAGE OF
THE FEDERAL MOTOR CARRIER ACT OF 1935(49 U.S.C. 301 ET SEQ.), HE
OBTAINED A PERMIT FROM THE PUBLIC SERVICE COMMISSION OF MISSOURI "TO
OPERATE AS A FREIGHT CARRYING MOTOR CARRIER OVER AN IRREGULAR ROUTE"
BETWEEN POINTS IN MISSOURI AND POINTS BEYOND THAT STATE, "EXCLUSIVELY
IN INTERSTATE COMMERCE."  HE DID NOT SEEK OR OBTAIN FROM THE COMMISSION
AN INTRASTATE PERMIT. 

ON THE PASSAGE OF THE FEDERAL ACT, APPELLANT APPLIED FOR A PERMIT
FROM THE INTERSTATE COMMERCE COMMISSION, AND THAT APPLICATION WAS STILL
PENDING AT THE TIME OF THE HEARING BELOW AND ARGUMENT HERE. 

WHEN THE STATE PERMIT WAS GRANTED, AND THEREAFTER, THERE WAS IN FORCE
RULE NO. 44 OF THE PUBLIC SERVICE COMMISSION WHICH PROVIDED AS
FOLLOWS: 

"NO DRIVER OR OPERATOR OPERATING UNDER AN INTERSTATE PERMIT SHALL
ACCEPT FOR TRANSPORTATION WITHIN THIS STATE ANY PERSON OR PROPERTY
KNOWN TO BE DESTINED TO A POINT WITHIN THE STATE OF MISSOURI.  IF SUCH
INTERSTATE CARRIER ACCEPTS WITHIN MISSOURI A PASSENGER WHOSE
DESTINATION IS BEYOND THE LIMITS OF THE STATE OF MISSOURI, SUCH
PASSENGER SHALL NOT BE PERMITTED TO TERMINATE HIS TRIP WITHIN THE STATE
OF MISSOURI; AND IF SUCH INTERSTATE CARRIER ACCEPTS WITHIN MISSOURI
PROPERTY DESTINED TO A POINT BEYOND THE LIMITS OF THE STATE OF MISSOURI
SUCH PROPERTY SHALL NOT BE TERMINATED WITHIN THE STATE OF MISSOURI." 

IN DECEMBER, 1936, AFTER HEARING, THE COMMISSION REVOKED APPELLANT'S
PERMIT, HOLDING THIS RULE TO HAVE BEEN VIOLATED.  ITS DECISION WAS
BASED UPON A FINDING THAT APPELLANT HAD UNLAWFULLY ENGAGED IN
INTRASTATE COMMERCE UNDER THE PRETENSE OF TRANSACTING INTERSTATE
BUSINESS; THAT AS A SUBTERFUGE HE HAD HAULED FREIGHT ORIGINATING IN ST.
LOUIS, MISSOURI, AND DESTINED TO KANSAS CITY, MISSOURI, AND VICE VERSA,
THROUGH HIS TERMINAL IN KANSAS CITY, KANSAS, WHICH WAS LOCATED LESS
THAN ONE-HALF MILE FROM THE MISSOURI STATE LINE.  THE COMMISSION STATED
THAT THE TESTIMONY SHOWED AN INDUSTRIOUS SOLICITATION BY APPELLANT FOR
THE TRANSPORTATION OF FREIGHT BETWEEN ST. LOUIS, MISSOURI, AND KANSAS
CITY, MISSOURI, ON THE BASIS OF HIS QUOTED INTERSTATE RATE BETWEEN SUCH
CITIES AS SET FORTH IN HIS TARIFF FILED WITH THE INTERSTATE COMMERCE
COMMISSION, WHICH RATE WAS MUCH LOWER THAN THE ESTABLISHED RATE FOR
INTRASTATE CARRIERS OPERATING BETWEEN THESE CITIES, AND THAT BY SUCH
MEANS A LARGE VOLUME OF BUSINESS HAD BEEN DEVELOPED.  IT APPEARED THAT
HE WAS CARRYING FREIGHT AT THE INTERSTATE FIRST-CLASS RATE OF SIXTY
CENTS PER CWT. BETWEEN ST. LOUIS, MISSOURI, AND KANSAS CITY, MISSOURI,
THROUGH HIS TERMINAL AT KANSAS CITY, KANSAS, WHILE THE SIMILAR
INTRASTATE FREIGHT RATE ESTABLISHED BY THE PUBLIC SERVICE COMMISSION
BETWEEN THE TWO CITIES IN MISSOURI WAS NINETY-TWO CENTS PER CWT. 

ON THE CHALLENGE IN THIS SUIT OF THE VALIDITY OF THE COMMISSION'S
ORDER, THE DISTRICT COURT HEARD THE EVIDENCE OF THE PARTIES AND FOUND
THAT THE CARRIAGE OF PROPERTY FROM ST. LOUIS, MISSOURI, TO KANSAS CITY,
KANSAS, AND THENCE BACK INTO KANSAS CITY, MISSOURI, FOR DELIVERY, WAS
NOT "THE NORMAL, REGULAR OR USUAL ROUTE" FOR SHIPPING MERCHANDISE
BETWEEN THE TWO CITIES IN MISSOURI; THAT THE ROUTE USED BY APPELLANT TO
HIS TERMINAL AT KANSAS CITY, KANSAS, WAS THROUGH KANSAS CITY, MISSOURI,
AND THAT THE SAME TRAFFIC-WAYS WERE USED IN MAKING DELIVERIES OF
MERCHANDISE AFTER IT HAD BEEN HAULED IN THE FIRST INSTANCE TO THE
TERMINAL; THAT AFTER REACHING THE TERMINAL IN KANSAS CITY, KANSAS,
APPELLANT IN MANY INSTANCES DID NOT UNLOAD THE MERCHANDISE, THAT MUCH
OF SUCH SHIPMENTS WAS IN CARLOAD LOTS, AND THAT THE METHOD EMPLOYED WAS
TO HAUL THE MERCHANDISE TO HIS TERMINAL IN KANSAS CITY, KANSAS, "WHERE
A NEW DRIVER, EITHER WITH THE SAME TRACTOR AND TRAILER, OR WITH ANOTHER
TRACTOR AND THE SAME TRAILER, WOULD RETURN THE MERCHANDISE TO KANSAS
CITY, MISSOURI"; THAT IN SOME INSTANCES MERCHANDISE WAS ACTUALLY
UNLOADED AT THE DEPOT IN KANSAS CITY, KANSAS, AND THEN DISTRIBUTED TO
THE CONSIGNEES IN KANSAS CITY, MISSOURI, BUT THAT THIS WAS "A
NEGLIGIBLE PERCENTAGE OF THE SHIPMENT BETWEEN MISSOURI POINTS"; AND
THAT THE METHOD OF OPERATION WHICH APPELLANT EMPLOYED WAS DESIGNED TO
AFFORD SHIPPERS THE BENEFIT OF A LOWER RATE AND WAS NOT IN GOOD FAITH. 

FIRST.  BY SEC. 5268(A) OF THE MISSOURI BUS AND TRUCK ACT (LAWS OF
1931, PP. 307, 308), THE STATE DECLARED IT TO BE UNLAWFUL FOR ANY
COMMON CARRIER BY MOTOR TO FURNISH SERVICE WITHIN THE STATE WITHOUT
FIRST HAVING OBTAINED FROM THE COMMISSION A CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY.  BY SEC. 5268(B) IT WAS DECLARED UNLAWFUL
FOR ANY MOTOR CARRIER (WITH CERTAIN EXCEPTIONS NOT MATERIAL HERE) TO
USE ANY OF THE PUBLIC HIGHWAYS OF THE STATE IN INTERSTATE COMMERCE
WITHOUT FIRST HAVING OBTAINED A PERMIT FROM THE COMMISSION.  IT WAS
PROVIDED THAT IN DETERMINING WHETHER SUCH A PERMIT SHOULD BE ISSUED,
THE COMMISSION SHOULD GIVE CONSIDERATION "TO THE KIND AND CHARACTER OF
VEHICLES PERMITTED OVER SAID HIGHWAY" AND SHOULD REQUIRE THE FILING "OF
A LIABILITY INSURANCE POLICY OR BOND" IN SUCH SUM AND UPON SUCH
CONDITIONS AS THE COMMISSION MIGHT DEEM NECESSARY TO PROTECT ADEQUATELY
THE INTEREST OF THE PUBLIC IN THE USE OF THE HIGHWAY.  THE STATUTE ALSO
AUTHORIZED THE PUBLIC SERVICE COMMISSION TO PRESCRIBE REGULATIONS
GOVERNING MOTOR CARRIERS. 

APPELLANT'S COMPLAINT DID NOT ATTACK THESE STATUTES; ON THE CONTRARY
HE ASSERTED THAT HE HAD FULLY COMPLIED WITH THEIR PROVISIONS.  HIS
COMPLAINT WAS OF THE ORDER OF THE COMMISSION REVOKING HIS PERMIT.  WE
CONFINE OURSELVES TO THE QUESTION THUS PRESENTED. 

SECOND. WHEN THE COMMISSION REVOKED THE PERMIT, THE INTERSTATE
COMMERCE COMMISSION HAD NOT ACTED UPON APPELLANT'S APPLICATION UNDER
THE FEDERAL MOTOR CARRIER ACT AND MEANWHILE THE AUTHORITY OF THE STATE
BODY TO TAKE APPROPRIATE ACTION UNDER THE STATE LAW TO ENFORCE
REASONABLE REGULATIONS OF TRAFFIC UPON THE STATE HIGHWAYS HAD NOT BEEN
SUPERSEDED.  WELCH CO. V. NEW HAMPSHIRE, ANTE, P. 79; COMPARE MCDONALD
V. THOMPSON, 305 U.S. 263. 

THIRD.  APPELLANT DID NOT SEEK FROM THE STATE COMMISSION A
CERTIFICATE ENTITLING HIM TO DO AN INTRASTATE BUSINESS.  UNDER THE
COMMISSION'S RULE, HE HAD HIS CHOICE EITHER TO REFRAIN FROM CARRYING
PROPERTY BETWEEN POINTS IN MISSOURI OR TO SECURE A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY AS AN INTRASTATE CARRIER.  THE
VALIDITY OF THE REQUIREMENT OF SUCH A CERTIFICATE TO PROMOTE THE PROPER
AND SAFE USE OF THE STATE HIGHWAYS IS NOT OPEN TO QUESTION.  HENDRICK
V. MARYLAND, 235 U.S. 610, 622; MORRIS V. DUBY, 274 U.S. 135, 143;
CLARK V. POOR, 274 U.S. 554, 556, 557; SOUTH CAROLINA HIGHWAY DEPT. V.
BARNWELL BROTHERS, 303 U.S. 177, 189; COMPARE BUCK V. KUYKENDALL, 267
U.S. 307, 315; INTERSTATE BUSSES CORP. V. HOLYOKE RY. CO., 273 U.S. 45,
51; SPROUT V. SOUTH BEND, 277 U.S. 163, 169. 

RULE 44 WAS PLAINLY DESIGNED TO PROVIDE A SAFEGUARD AGAINST THE USE
OF AN INTERSTATE PERMIT TO CIRCUMVENT THE REQUIREMENT OF A CERTIFICATE
FOR INTRASTATE TRAFFIC.  THE RULE SIMPLY SOUGHT TO HOLD TO HIS CHOICE
THE ONE WHO HAD SOUGHT AND OBTAINED A PERMIT EXCLUSIVELY FOR INTERSTATE
TRANSPORTATION.  APPELLANT WAS ENTIRELY FREE TO CONDUCT THAT
TRANSPORTATION IF HE DID NOT ENGAGE IN THE INTRASTATE BUSINESS FOR
WHICH HE HAD DELIBERATELY REFRAINED FROM QUALIFYING HIMSELF.  WE CANNOT
SEE THAT THE RULE ON ITS FACE IMPOSED ANY IMPROPER BURDEN UPON
INTERSTATE COMMERCE AND THE QUESTION IS WHETHER IT DID SO THROUGH THE
APPLICATION THAT THE COMMISSION HAS MADE OF IT. 

APPELLANT INSISTS THAT THE HAULING FROM ST. LOUIS OVER THE STATE LINE
TO KANSAS CITY, KANSAS, OF MERCHANDISE CONSIGNED TO PERSONS IN KANSAS
CITY, MISSOURI, AND HAULING IT BACK AGAIN TO ITS INTENDED DESTINATION
IN KANSAS CITY, MISSOURI, WAS ACTUALLY INTERSTATE TRANSPORTATION. 
HANLEY V. KANSAS CITY SOUTHERN RY. CO., 187 U.S. 617; WESTERN UNION
TELEGRAPH CO. V. SPEIGHT, 254 U.S. 17; MISSOURI PACIFIC R. CO. V.
STROUD, 267 U.S. 404.  THAT FACT, HOWEVER, DOES NOT REQUIRE THE
CONCLUSION THAT THE STATE'S ACTION FOR THE PROTECTION OF ITS INTRASTATE
COMMERCE WAS INVALID.  SEE LONE STAR GAS CO. V. TEXAS, 304 U.S. 224,
238.  WE MAY ASSUME THAT CONGRESS COULD REGULATE INTERSTATE
TRANSPORTATION OF THE SORT HERE IN QUESTION, WHATEVER THE MOTIVE OF
THOSE ENGAGING IN IT.  BUT IN THE ABSENCE OF THE EXERCISE OF FEDERAL
AUTHORITY, AND IN THE LIGHT OF LOCAL EXIGENCIES, THE STATE IS FREE TO
ACT IN ORDER TO PROTECT ITS LEGITIMATE INTERESTS EVEN THOUGH INTERSTATE
COMMERCE IS DIRECTLY AFFECTED.  COOLEY V. BOARD OF WARDENS, 12 HOW. 
299, 319; MORGAN'S S.S. CO. V. LOUISIANA, 118 U.S. 455; SMITH V.
ALABAMA, 124 U.S. 465; KELLY V. WASHINGTON, 302 U.S. 1, 9, 10.  IF
APPELLANT'S HAULING OF THE MERCHANDISE IN QUESTION ACROSS THE STATE
LINE WAS NOT IN GOOD FAITH BUT WAS A MERE SUBTERFUGE TO EVADE THE
STATE'S REQUIREMENT AS TO INTRASTATE COMMERCE, THERE IS NO GROUND FOR
SAYING THAT THE PROHIBITION OF THE USE OF THE INTERSTATE PERMIT TO
COVER SUCH TRANSACTIONS, AND THE APPLICATION OF THE COMMISSION'S RULE
PROHIBITING THEM IN THE ABSENCE OF AN INTRASTATE CERTIFICATE, WAS AN
UNWARRANTABLE INTRUSION INTO THE FEDERAL FIELD OR THE SUBJECTION OF
INTERSTATE COMMERCE TO ANY UNLAWFUL RESTRAINT.  AND IF THE PROHIBITION
OF SUCH TRANSACTIONS WAS VALID, THE COMMISSION WAS UNDOUBTEDLY ENTITLED
TO ENFORCE IT BY REVOKING APPELLANT'S PERMIT FOR BREACH OF THE
CONDITION UPON WHICH IT WAS ISSUED AND ACCEPTED BY APPELLANT. 

FOURTH.  THE ULTIMATE QUESTION IS THUS ONE OF FACT, WHETHER THE
TRANSACTIONS OF APPELLANT WERE OF THE CHARACTER DESCRIBED BY THE
COMMISSION AND IN THE FINDINGS OF THE DISTRICT COURT. 

THE TRANSCRIPT OF THE RECORD BEFORE THE COMMISSION WAS INTRODUCED
BEFORE THE COURT, BUT NEITHER THAT EVIDENCE NOR THE ADDITIONAL EVIDENCE
TAKEN BY THE COURT IS PRESENTED IN EXTENSO BY THE RECORD HERE.  THE
PARTIES PROPERLY FILED, IN CONNECTION WITH THIS APPEAL, CONDENSED
STATEMENTS OF THE EVIDENCE UPON WHICH THEY RESPECTIVELY RELIED.  AN
EXAMINATION OF THESE STATEMENTS DISCLOSES NO REASON FOR DISTURBING THE
COURT'S FINDINGS. 

APPELLANT STRESSES THE FACT THAT HE HAD SELECTED HIS TERMINAL IN
KANSAS CITY, KANSAS, AT THE BEGINNING OF HIS OPERATIONS AS A MOTOR
CARRIER, ABOUT 1932, AND THAT IT WAS A CONVENIENT AND PROPER LOCATION. 
BUT THAT FACT DOES NOT ALTER THE NATURE OF THE TRANSACTIONS UNDER
REVIEW.  THERE WAS A VARIANCE IN THE TESTIMONY AS TO THE EXTENT OF THE
APPELLANT'S BUSINESS WHICH WAS CONDUCTED IN VIOLATION OF HIS PERMIT,
BUT THERE WAS ADEQUATE BASIS FOR THE COURT'S FINDING THAT IT WAS A
CONSIDERABLE PORTION OF HIS OPERATIONS AND JUSTIFIED THE ACTION OF THE
COMMISSION. 

THE DECREE OF THE DISTRICT COURT SO FAR AS IT DENIES AN INJUNCTION IS
AFFIRMED.