BY WARREN H. WAGNER, Editor Transferred rights-collateral attack-Keystone restriction-groceries. On June 27, 1958, a three-judge court for the District of Colorado denied an injunction sought to enjoin the enforcement of a cease and desist order of the Commission against handling certain commodities not embraced by the motor carrier's authority and hauling for shippers not within the "Keystone" restriction. Quoting from the court's memorandum opinion: Scott Truck Line, Inc., sues to enjoin the enforcement of a cease and desist order of the Interstate Commerce Commission. Jurisdiction is conferred by 28 U. S. C. § 1336. Hearing and determination by a district court of three judges is required under the provisions of 28 U. S. C. §§ 2325 and 2284. The predecessor of Scott in 1936 filed with the Commission an application under the "grandfather clause" of the Motor Carrier Act of 1935 for a permit to transport as a contract carrier by motor vehicle in interstate commerce certain special commodities over a defined route. In 1938 the Commission issued a "compliance order" which provided that upon compliance with certain requirements a permit would be issued to the applicant for his motor contract carrier business. This order authorized the applicant to transport over defined routes "advertising matter and such general merchandise as is dealt in by wholesale and retail grocery and food business houses." In 1943 a permit was issued which authorized the transportation of the commodities over the routes, as such commodities and routes were defined in the compliance order, with the restriction that applicant's operations as a motor contract carrier should be performed, “*** under special and individual contracts or agree ments, With persons *** who operate wholesale or retail establishments, the business of which is the manufacture, processing or sale of groceries or food, * * *.”’ The Commission, in 1949, authorized the transfer of the permit to Scott and issued to Scott a permit containing the same terms and conditions as were in the permit held by its predecessor. In 1956 the Commission instituted an investigation concerning the practices of Scott in its operations under its permit. The matter was presented to an examiner on a stipulation of facts and he found that Scott was transporting authorized commodities within authorized territories but under contracts with shippers with whom it was not authorized to contract. Specifically the examiner found that: "respondent [Scott] is transporting lye, detergents, soaps and similar commodities *** under contracts with persons or companies who operate establishments the business of which is not the manufacture, processing or sale of groceries or food; that such transportation, in interstate or foreign commerce, is not authorized by respondent's permit No. MC-64114, and is therefore unlawful, and should be promptly discontinued." An appropriate cease and desist order was entered by the Commission. All procedural prerequisites to the institution of this court action have been satisfied. From the stipulation of facts presented to the Commission it appears that Scott for several years had been transporting under special contract for four named shippers. The shippers and the commodities carried are thus described in the stipulation: "That the business of said shippers is the manufacturing and selling of lye; cleaning compounds, liquid and dry; detergents; dish washing liquids and powder; and soap and soap compounds. None of the said companies engage in the manufacture, processing, or sale of food or of any articles for human consumption which are customarily served as a food, or which are used in the preparation of food. "That the shippers operate wholesale establishments and the articles which are manufactured or processed and sold by them, are items generally handled by, carried in the inventory of, and sold by retail grocery and food business houses in the United States." Thus it is conceded that the articles transported are within the commodity description set out in the permit. The action of the Commission is based solely on the ground that the shippers are not within the class defined by the clause restricting those with whom Scott could contract. This clause is known as a "Keystone" restriction because it was first used by the Commission in its report in Keystone Transportation Company Contract Carrier Application, 19 M. C. C. 475. Such a restriction on the class of shippers with whom a contract carrier might contract has been upheld by the United States Supreme Court in Noble v. United States, 319 U. S. 88. . . Scott urges that the inclusion of the Keystone clause in the permit was not proper because such limitation was not imposed by the compliance order. The compliance order was not a permit. By its own terms it was subject to change or modification by the Com mission until the permit issued." The Commission had the power to include in the permit restrictions not contained in the compliance order. Scott urges that the permit which restricts it to contracts with "persons *** who operate wholesale or retail establishments, the business of which is the manufacture, processing or sale of groceries or food" is an unlawful extension and distortion of the principles of the Keystone case. The import of the argument is that the original restrictions of the Keystone type were to define the business of a particular contract carrier by reference to whether the shippers served were wholesalers or retailers, whereas Scott's permit contains the more narrow limitation authorizing contracts only with those who are engaged in the manufacture, processing or sale "of groceries or food." As the Commission has the power to describe the business of a contract carrier in terms of the type or class of shippers served, it can do so in the manner employed here. The issue then narrows to the meaning of the word "groceries" as used in the Keystone clause. Scott says that it was intended to mean "all commodities customarily found in retail grocery or food business houses." The argument proceeds on the basis that as soap and the various other items in question are customarily found in grocery stores, a manufacturer, processor or seller of such items is a manufacturer, processor or seller of groceries and, hence, one with whom Scott may contract under the Keystone clause. The Commission has found that the term "groceries" as used in Scott's permit "means articles for human consumption which are customarily served as food, or which are used in the preparation of food, except fresh meats." Such definition has been consistently applied by the Commission. Counsel for Scott refer to various dictionary, encyclopedia, and text book definitions of groceries and also to the definition of that term contained in the opinion of the Colorado Supreme Court in Allen v. Colorado Springs, 101 Colo. 498, 501, 75 P. 2d 141, 142. These are not persuasive, as we are dealing with the term groceries as used by the Commission which is charged with the administration of the act. Here the Commission has held that a manufacturer, processor or seller of lye, liquid and dry-cleaning compounds, detergents, dishwashing liquids and powder, and soap and soap compounds is not engaged in the business of manufacturing, processing or selling groceries or food. As there is a rational basis for such conclusion, the courts will not set it aside. The difference in language between the commodity clause and the Keystone clause does not create any ambiguity or uncertainty. The effect is clear. Under the Commission definition, soap is not included within the term "groceries. At the same time soap is a The order reads that upon the satisfaction of certain conditions a permit shall be issued "unless otherwise ordered" in accordance with the specifications made a part of the order. commodity generally found in a grocery store. Applying the two clauses together, Scott is authorized to transport soap under a contract with a manufacturer, processor or seller of groceries but not under a contract with a person who does not manufacture, process or sell groceries. was a The situation is somewhat similar to that considered in Nelson v. United States, [355 U. S. 554]. There a contract motor carrier contended that the phrase "stock in trade of drug stores" generic description of commodities by reference to place of sale and would entitle it to transport goods like those stocked in drug stores to any consignee within its territory. The court upheld the Commission in its position that the phrase had reference to intended use and authorized transportation of goods moving to a drug store or ultimately intended to become part of the stock of a drug store. In its opinion the court commented on the use by the Commission "of a definite and distinctive linguistic pattern whenever descriptions are made by reference to place of sale:** *'' In the instant case Scott asserts the right to contract with anyone who manufactures, processes or sells commodities generally found in grocery stores. If such had been the intent of the Commission, it would have used appropriate language in the Keystone clause of Scott's permit. Under Nelson v. United States, when there is no patent ambiguity, reference to the underlying grandfather operation is not permissible to aid in the interpretation of a permit. The application of this rule would preclude consideration of Scott's argument that the grandfather application of its predecessor shows contracts with wholesalers and hence it should not now be under any restriction in its dealings with wholesalers. However, we have examined the grandfather application and have found that it does not disclose any contract transportation for any person who was not engaged in the manufacture, processing or sale of food or groceries as the term groceries is defined by the Commission.14 Our examination of the original grandfather application and its supporting material does not sustain Scott's contention that the permit, as interpreted by the Commission, violates the grandfather clause of the 1935 act in that it denies the right to carry on the operations which were conducted by Scott's predecessor prior to the controlling date. Even if it did, the point could not be raised in this proceeding as it constitutes a collateral attack on the permit. As is pointed out in Nelson v. United States, supra, p. 561, the 14 The shipping orders submitted in support of the grandfather application establish transportation for five shippers of the following items: crackers, coffee, pickles, meats, oleomargarine, salad dressing, sandwich spread and advertising. As to one shipper the general term "groceries" is used, but a detailed examination of the shipping orders shows that the following commodities were transported: tea, cheese, peanut butter, eggs, macaroni and like products, candy, oleomargarine, stearine, salad dressing, mustard, pickles, sauces, canned meats and canned soups. remedy is to petition the Commission to reopen the grandfather proceedings. Scott sought and received the Commission's approval for the transfer of this permit. It will not be heard in this proceeding to say that it is entitled to more than its predecessor had or the transferred permit gave. Any correction, modification or enlargement of the permit can only be obtained in a direct proceeding before the Commission. It is deemed that this opinion sufficiently states the findings of fact and conclusions of law of the court. Further or additional findings and conclusions are not necessary. The clerk will prepare and submit a judgment denying the injunction and dismissing the case. Permit denied if common carrier now performs service in question-"casual or occasional transportation”—administrative interpretation. Norris Edward Bass v. United States, et al. No. 415 On June 30, 1958, a three-judge court for the Western District of Virginia declined to set aside an order of the Commission denying an application for a permit to operate as a contract carrier in charter service between Virginia and elsewhere in the United States. Quoting from the per curiam decision of the Court: The business of the plaintiff is that of transporting children to and from schools in Campbell County, Virginia. He has also been transporting special groups, usually, but not exclusively, school children and boy scouts, under charter contracts on educational tours, camping trips and church-convention trips. He holds no permit from the Interstate Commerce Commission, although some of these trips are across state lines. His application asked the Commission to determine whether or not these interstate operations were legally permissible without a permit, and if the Commission should hold that a permit was required, he asked that one be granted to him. I. In this proceeding, the plaintiff makes no contention that the fact findings of the Commission are not supported by substantial evidence. He contends, however, that by Title 49 USCA, Section 309 (b), being "fit, willing and able properly to perform the service of a contract carrier by motor vehicle," he is entitled to a permit, notwithstanding the fact that a number of common carriers serving the same area are providing, in addition to their common carrier service, chartered contract service. The theory of the plaintiff is that the National Transportation Policy, . . . requires the Commission so to administer the Act as to recognize and preserve "the inherent advantages" of all modes of transportation, subject to the provisions of the Act; that common carriers are engaged in one mode of transportation, and contract carriers in another, and that |