United States v. Drum, 368 U.S. 370 (1962)

United States v. Drum

No. 23

Argued October 11-12, 1961
Decided January 15, 1962 *
368 U.S. 370

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

Syllabus

Each of the individual appellees owns a truck tractor which he operates under a leasing arrangement with a furniture manufacturer in the interstate transportation of the manufacturer’s furniture and in the backhaul of raw materials used in the manufacture of its products. Appellees are compensated for the use of their tractors and for their services as drivers solely on the basis of fixed rates per mile driven. They bear all of the operating costs of the transportation and assume the financial risk of profit or loss thereon. The manufacturer has a collective bargaining agreement with the union representing appellees and grants them certain benefits of employees, including, inter alia, seniority rights, job security, death benefits, vacation pay and social security and workmen’s compensation coverage. The Interstate Commerce Commission found that appellees are "contract carriers" within the meaning of § 203(a)(15) of the Interstate Commerce Act and are subject to the licensing requirements of § 209(a)(1), and it ordered them to cease and desist from operating without permits. The District Court held that the transportation was by the manufacturer as a "private carrier," within the meaning of §203(a)(17), and it set aside the Commission’s order.

Held: the Commission’s finding is sustained, and the judgment of the District Court is reversed. Pp. 371-386.

(a) The Commission’s conclusion that the financial risks of this transportation had been shifted from the manufacturer to the owner-operators to an extent which rendered the sanctioning of the operation as private carriage by the manufacturer a departure from the statutory design was well within the range of the responsibility assigned by Congress to the Commission. Pp. 383-385.

(b) If the District Court intended to hold that the Commission was confined to the "control" test -- i.e., whether the manufacturer had any right to control, direct or dominate the transportation -- it was in error, since a finding of shipper control does not require a resolution of the ultimate issue in the shipper’s favor. Pp. 381-383, 385-386.

(c) If the District Court meant to substitute its judgment for that of the Commission on the question of substance on this record, it indulged in an unwarranted incursion into the administrative domain. P. 386.

193 F.Supp. 275, reversed.