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NATIONAL BUS TRAFFIC ASSN., INC. v. UNITED STATES

July 30, 1956

NATIONAL BUS TRAFFIC ASSOCIATION, Inc., and Hudson Transit Lines, Inc., Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants



The opinion of the court was delivered by: BIGGS

Tauck has operated all-expense travel tours usually by motor bus, to various points in the United States and Canada from the New York City area since 1926. Before the present proceeding began Tauck had been licensed to engage as a broker of transportation by motor vehicle of passengers and their baggage pursuant to the 'grandfather' clause of the Motor Carrier Act, 1935, now Section 209, Part II of the Interstate Commerce Act, 49 U.S.C.A. § 309, between New York City and Newark, New Jersey, as originating points on the one hand and destination points in a number of northeastern states and the District of Columbia on the other hand. *fn2" In the present proceeding the Commission extended Tauck's geographical authority as a broker to operate all-expense tours originating at New York, Newark and Philadelphia, to all points in the United States. *fn3"

 Tauck's tours are all-expense arrangements, so-called 'package tours'. Tauck sells individual 'certificates of membership' in a specific tour to individual travelers, who ordinarily make arrangements either through Tauck's own offices or through travel bureaus or similar factors, which serve as selling agents for Tauck. The single price which the individual tourist pays for his certificate of membership covers almost all of the expenses of the trip, specifically including transportation, meals, and hotel accommodations. Tauck ordinarily uses motor buses as the means of transportation on its tours but railroad and water transportation are also employed occasionally. Only motor bus transportation is involved in the instant case. What the terms 'charter' or 'charter authority' mean is discussed at length hereinafter. It is sufficient to state at this point that Tauck's practice is to charter a motor bus from an operator holding a certificate of convenience and necessity from the Interstate Commerce Commission under Section 207 of the Interstate Commerce Act. See 49 U.S.C.A. § 307. Since Tauck plans its trips far in advance, it must also, at least on occasion, charter a motor vehicle before it or its agents have concluded the sale of certificates of membership to the general public for that particular trip.

 In order to understand the difficulties in which Tauck presently finds itself it is necessary to review some of the provisions of the Motor Carrier Act of 1935, Section 201 et seq., Part II of the Interstate Commerce Act. See 49 Stat. 543, 49 U.S.C.A. § 301 et seq. Part II sets out a comprehensive scheme of regulation of motor carriers under the supervision of the Interstate Commerce Commission which is given broad power to grant certificates and licenses to motor carriers and to prohibit unregulated motor transportation of passengers and freight. The statutory scheme provides for licensing or certificating kinds of motor vehicle operators engaged in interstate commerce including common carriers, contract carriers, as well as motor transportation brokers. The various classifications are defined in Section 203, Part II, of the Act. 49 U.S.C.A. § 303.

 The Commission has classified all-expense tour operators, including Tauck itself, as 'brokers' under the Act. *fn4"

 Tauck made its application to the Commission, the subject of the present proceedings, in 1948. In the administrative process before the Commission Tauck's application was considered a number of times with different results. The Examiner who heard the case was of the view, and so recommended, that Tauck's application should be denied on the ground that Tauck was not a broker but a common carrier. Division 5 of the Commission concluded that Tauck was acting as a broker and granted it the geographic extension it sought but expressly conditioned the grant by prohibiting Tauck from chartering buses or other motor transportation. This opinion required Tauck to use only motor carriers who had been authorized by the Commission to sell individual tickets to passengers. See 1949, 49 M.C.C. 491.

 Division 5 then granted Tauck's petition to reconsider and in a second opinion and order granted Tauck's extension application and permitted Tauck to use charter bus service provided the certificates of membership issued to the individual tourists 'should clearly specify that purchase of a share or membership in the group by the individual shall amount to a designation of * * * (Tauck) as agent for the group members singly and collectively for the purpose of arranging such motor transportation.' Division 5 also required that the contract for charter service 'should be made in the name of the group by * * * (Tauck) as agent in order that there may be no question as to the carrier's direct responsibility as a carrier to the group members.' See 1951, 52 M.C.C. 373.

 The matter then came before and was decided by the Commission *fn5" on April 21, 1952. In substance the Commission affirmed the order of Division 5 on reconsideration, allowing Tauck to sue charter service, but made three conditions: '(1) provided the contract negotiated with the carrier furnishing the motor transportation is one between it and the group members collectively, *fn6" (2) provided the carrier is paid its full published charter fare, and (3) provided that * * * (Tauck) in arranging the motor transportation does not receive a commission from the carrier.' See 54 M.C.C. 291. The decision in the Tauck case has been followed by the Commission in disposing of a number of subsequent applications by all-expense tour operators.

 Most interstate bus operators certificated by the Commission are authorized to sell individual tickets to passengers, but some are not. The operators prohibited from selling individual tickets are restricted to hiring out their buses at a flat rate to groups interested in contracting for a bus or buses for a specific trip. The limited authority granted these operators is commonly referred to as 'charter' authority. *fn7"

 The dispute here is not as to whether Tauck should have been granted the specified geographical extension it seeks -- this is conceded -- but whether in making use of the extension Tauck shall be allowed to use, as it has used in the past, chartered motor vehicles to transport its passengers, as appears from the reports of the Commission.

 Section 203(a)(18), 49 U.S.C.A. § 303(a)(18), provides that 'The term 'broker' means any person not included in the term 'motor carrier' and not a bona fide employee or agent of any such carrier, who or which, as principal or agent, sells or offers for sale any transportation * * *, or negotiates for, or holds himself or itself out by solicitation, advertisement, or otherwise as one who sells, provides, furnishes, contracts, or arranges for such transportation.'

 Section 211(a) of the Act, 49 U.S.C.A. § 311(a), states that 'No person shall for compensation sell or offer for sale transportation subject to this part or shall make any contract, agreement, or arrangement to provide, procure, furnish, or arrange for such transportation or shall hold himself or itself out by advertisement, solicitation, or otherwise as one who sells, provides, procures, contracts or arranges for such transportation, unless such person holds a broker's license issued by the Commission to engage in such transactions: Provided, however, That no such person shall engage in transportation subject to this part unless he holds a certificate or permit as provided in this part. In the execution of any contract, agreement, or arrangement to sell, provide, procure, furnish, or arrange for such transportation, it shall be unlawful for such person (a broker) to employ any carrier by motor vehicle who or which is not the lawful holder of an effective certificate or permit issued as provided in this part: And provided further, That the provisions of this paragraph shall not apply to any carrier holding a certificate or permit under the ...


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