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U.S. Supreme Court

Gilbertville Trucking Co., Inc. v. United States, 371 U.S. 115 (1962)

Gilbertville Trucking Co., Inc. v. United States

No. 40

Argued October 15, 1962

Decided December 3, 1962

371 U.S. 115


Appellants, two incorporated common carriers by motor vehicle and their stockholders, applied to the Interstate Commerce Commission under § 5(2) of the Interstate Commerce Act for approval of a merger of the two corporations. Acting under §5(7), the Commission initiated an investigation into the possibility of a violation of § 5(4), and the two proceedings were consolidated. After hearings and further proceedings, the Commission found that informal de facto management and control of the two corporations in a common interest had been unlawfully effectuated in violation of § 5(4); it denied approval of the merger; ordered the violation terminated; and ordered one of the individual appellants to divest himself of his stock in one of the corporations. A suit by appellants to enjoin and set aside the Commission's orders was dismissed by the District Court, on the ground that the orders were reasonable and supported by substantial evidence.

Held: the order denying approval of the merger is affirmed; but the judgment is reversed in part, and the case is remanded for further proceedings. Pp. 371 U. S. 116-131.

(a) On the record in this case, the Commission was justified in concluding that the two appellant common carriers by motor vehicle were in fact being managed and controlled in a common interest. Pp. 371 U. S. 117-122.

(b) Section 5 (4) is not limited to the proscription of holding companies and other corporate devices; it applies to the accomplishment or effectuation of control or management in a common interest of two or more carriers, "however such result is attained," and the Commission's conclusion that the informal de facto relationships found to exist in this case resulted in control or management of the two corporations in a common interest which violated § 5(4) is sustained. Pp. 371 U. S. 122-126.

(c) The Commission did not act arbitrarily in denying approval of the proposed merger because of the violation of § 5(4), and its order denying such approval is affirmed. Pp. 371 U. S. 127-129. chanroblesvirtualawlibrary

Page 371 U. S. 116

(d) Since the record contains no evidence that the parties were heard on the issue of divestiture or that proper standards were applied in determining that it was the appropriate remedy for the violation of § 5(4) found to exist in this case, the judgment of the District Court is reversed in part, and the case is remanded for further proceedings. Pp. 371 U. S. 129-131.

196 F.Supp. 351 affirmed in part and reversed in part.

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