Gregg Cartage & Storage Co. v. United States

316 U.S. 74, 62 S. Ct. 932, 86 L. Ed. 1283, 1942 U.S. LEXIS 1074
CourtSupreme Court of the United States
DecidedApril 13, 1942
Docket535
StatusPublished
Cited by59 cases

This text of 316 U.S. 74 (Gregg Cartage & Storage Co. v. United States) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gregg Cartage & Storage Co. v. United States, 316 U.S. 74, 62 S. Ct. 932, 86 L. Ed. 1283, 1942 U.S. LEXIS 1074 (1942).

Opinions

Me. Justice Jackson

delivered the opinion of the Court.

This appeal is from a judgment of a statutory three-judge court denying appellants’ petition to set aside an order of the Interstate Commerce Commission refusing the Gregg Cartage & Storage Company a certificate of public convenience and necessity under the so-called grandfather clause of § 206 (a) of the Motor Carrier Act, 1935,49 U. S. C. § 306 (a).

[76]*76The Gregg Company, an Ohio corporation, operated in 1935 and earlier as a common carrier of general freight between points in several northeastern states. In a number of important cities, it maintained terminals at which freight was assembled. It performed no over-the-road carrier service with its own vehicles, but provided such service entirely by the use of so-called owner-operator vehicles. Such vehicles as it owned and operated directly wore used in cartage in and about Cleveland.

On February 12, 1936, the Gregg Company filed an application with the Interstate Commerce Commission for a certificate of public convenience and necessity as a common carrier under the grandfather clause of § 206 (a) of the Motor Carrier Act. A hearing was held on June 8 and 9, 1937, before an examiner who, on December 17, 1937, recommended that the certificate be granted.

Meanwhile, the Gregg Company had failed and ceased to operate. It had arranged the filing on October 4,1937, of a creditor’s bill in a state court of Ohio, which on the following day appointed the company’s counsel to be its receiver with authority to continue the business. On the day of this receiver’s appointment, other creditors filed a petition in bankruptcy in the United States District Court for the Northern District of Ohio, Eastern Division, which on October 27 adjudicated the company a bankrupt, and on October 30 appointed a receiver to preserve the assets of the estate pending the election and qualification of a trustee.1 In operating the business, the state court receiver confined himself to the completion of shipments en route, and did not solicit or accept new business. On October 14, he filed with the Commission a petition for permission to suspend operations without prejudice to rights under the grandfather clause. The [77]*77Commission, of the opinion that it lacked power to authorize such a suspension, denied this petition on November 30, 1937. The receiver in bankruptcy took over the business on the day of his appointment, and conducted no operations at any time. Pursuant to an order of the bankruptcy court, on December 6, 1937, he sold the trade names and good will of the bankrupt estate, together with its rights under the grandfather clause application, to appellant Northeastern Transportation Company, for 1850 at public auction.

On January 7, 1938, Northeastern and the receiver in bankruptcy filed a joint application with the Commission asking that Northeastern be substituted as applicant in lieu of Gregg. The Commission withheld action until it had determined Gregg’s rights. Northeastern considered a resumption of operations, but decided against it on the advice of field representatives of the Interstate Commerce Commission.

A further hearing before another examiner, confined to the circumstances of the interruption of Gregg’s service, resulted in another recommendation of the issuance of a certificate under the grandfather clause. The Commission, however, denied the application December 12, 1939, after a rehearing following the report of Division 5, a majority of which had held similarly on November 14, 1938. 10 M. C. C. 255, 21 M. C. C. 17. The Commission ruled that an interruption of service within the control of the applicant had occurred, that the purchase by Northeastern had conferred no operating rights, and that therefore neither corporation was entitled to a certificate under the grandfather clause. Five commissioners dissented. Gregg and its trustee in bankruptcy then filed a complaint in the United States District Court for the Northern District of Ohio, Eastern Division, praying that the order of the Commission denying Gregg’s application be annulled and set aside and that the Commission be directed [78]*78to issue a certificate of public convenience and necessity to Gregg. A statutory court of three judges was convened, Northeastern was allowed to intervene, and judgment went against the complainants, who appealed to this Court, which noted probable jurisdiction.2 42 F. Supp. 266.

Appellants contend that the Commission and the court below erroneously construed § 206 (a)3 of the Motor Carrier Act in holding that, excepting the specified interruptions of service, the statute required continuous operation from June 1,1935, until the hearing by the Commission on the application. We have, however, held to the contrary. United States v. Maher, 307 U. S. 148, petition for limited rehearing denied, 307 U. S. 649. Hoey v. United States, 308 U. S. 510; Lubetich v. United States, 315 U. S. 57.

Appellants contend alternatively that the Commission should be reversed for refusing to hold that the applicant “had no control” over the cessation of operations.

From October 15,1935 to December 31,1936, Gregg was insured against public liability and property damage by an insurance company, which in 1936 failed either to disprove or settle certain claims against Gregg and was rumored to be insolvent. For these reasons Gregg can-celled its contract with this company and obtained similar insurance with another company, paying the premiums in advance. The failing insurance company was adjudged a bankrupt in January of 1937, and ceased to pay any [79]*79claims. Gregg, thereby left with the burden of satisfying claims for personal injury and property damage arising during the period when it had carried insurance in the bankrupt company, paid some of them in the later months of 1937; but approximately 175, estimated to aggregate in their face amount about $200,000, remained unpaid. It also paid about $15,000 on claims for cargo loss and damage, which two other insurers, relying upon “technical” insurers’ defenses, refused to pay. All policies of insurance taken out by Gregg had the required approval of the Interstate Commerce Commission.

Solvent on June 30, 1937, Gregg had become insolvent by October 30, 1937. When it appeared impossible to satisfy all demands in full, resort was had to the friendly receivership in the state court. This precipitated the involuntary bankruptcy in the federal court, which in turn brought operations to a halt.

The Commission based its refusal to find that the applicant “had no control” over the interruption of service upon the fact that such interruption followed upon an adjudication of bankruptcy resulting from the unsuccessful conduct of its business affairs, and did not go back of the adjudication to find and give detailed consideration to the particular causes of the failure.

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Bluebook (online)
316 U.S. 74, 62 S. Ct. 932, 86 L. Ed. 1283, 1942 U.S. LEXIS 1074, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gregg-cartage-storage-co-v-united-states-scotus-1942.