Schenley Distillers Corporation v. United States
Docket: 560
Court: Supreme Court of the United States; January 2, 1946; Federal Supreme Court; Federal Appellate Court
The case involves an appeal by Schenley Distillers Corporation and its Motor Division from a district court's dismissal of their petition to overturn an order by the Interstate Commerce Commission (ICC). The appellants sought a permit under the Interstate Commerce Act to operate as a 'contract carrier by motor vehicle' for specified commodities. Initially, the appellants moved to dismiss their own application, arguing that their operations did not fit the definition of a 'contract carrier.' They contended they were a 'private carrier' instead, which is defined as transporting property owned, leased, or bailed by the carrier for commercial purposes. The ICC ruled that the appellants were a 'contract carrier' and denied the application due to insufficient evidence showing compliance with the requirements for a contract carrier permit. The full commission later denied reconsideration of this ruling. The district court confirmed its jurisdiction to review the ICC's order but dismissed the case regarding Schenley Distillers Corporation, stating it had no legal interest in the permit application beyond being a stockholder. The court emphasized that a minority stockholder of a carrier corporation lacks standing to challenge an ICC order. A parent corporation that controls its subsidiary through stock ownership and asserts derivative rights to compel the subsidiary to obtain a permit is less aggrieved by a commission's denial of that permit than a minority stockholder would be. The parent is adequately represented in litigation by the subsidiary, which it controls, and mere ownership of all subsidiary stock does not confer standing to challenge the commission's order. The appellant, Schenley Distilleries Motor Division, Inc., failed to demonstrate sufficient grounds for the permit, and the commission's determination that the appellant is a 'contract carrier' is subject to review. The commission's report, included in its order, denied the appellant's request to be classified as a 'private carrier' exempt from permit requirements. The filing of an application requesting dismissal is an appropriate method to contest permit applicability without risking illegal operation. The district court correctly upheld the commission's conclusion that the appellant's operations constituted 'contract' rather than 'private' carriage, despite the appellant's argument that its services were for its parent and affiliated corporations. The commission's finding that the transportation involved compensation from these entities substantiates this classification. Corporate separateness is maintained when the entities are deliberately structured for operational advantages, and each must fulfill its statutory obligations. The court affirmed the commission's ruling. Justice Jackson did not participate in the decision.