Railroad Transfer Service, Inc. v. City of Chicago/Opinion of the Court

This case arises from more than a decade of controversy between Railroad Transfer Service, Inc., and the City of Chicago over the city's persistent efforts to regulate Transfer's business, under contract with the railroads, of daily transporting by motor vehicle thousands of interstate railroad passengers between the city's rail terminals. In 1955 the railroads hired Transfer to replace another motor carrier in performing this interterminal transfer service. Bent on blocking this replacement, the city then amended Chapter 28 of its Municipal Code, which had before been primarily directed at regulating taxicab companies, to require that new companies seeking to perform the transfer service obtain licenses from the city by demonstrating, among other things, their ability to satisfy the public convenience and necessity. Because the city threatened to fine Transfer and arrest its drivers if it operated without a city license for each vehicle, Transfer, without attempting to obtain such licenses, and the railroads brought suit against the city to challenge the validity of the public-convenience-and-necessity section of the ordinance. In City of Chicago v. Atchison, T. & S.F.R. Co., 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed.2d 1174, rejecting the city's argument that the challenge was premature, we held that section 'completely invalid insofar as it applies to Transfer * *  * .' Id., at 89, 78 S.Ct. at 1070.

In 1959, after our decision in Atchison, the city repealed the invalid section, added some new provisions, and amended or left unchanged others which clearly applied to Transfer but were not specifically dealt with in our Atchison opinion. The amended ordinance, still making it unlawful for Transfer to operate without obtaining licenses from the city, provides that an applicant for a license must, among other things: pay a license fee, hire only Chicago residents as its drivers, maintain its principal place of business in Chicago, and file a detailed written application. Upon receipt of an application, the city must investigate the applicant's 'character and reputation * *  * as a law abiding citizen' and his 'financial ability' to render 'safe and comfortable' service, to replace and maintain equipment, and to pay all judgments arising out of vehicle operation. If the city finds that the applicant is 'qualified' and that the vehicle for which the license is sought is in 'safe and proper condition,' the amended ordinance requires the city to issue the license. Licenses are valid for only one year, and under the amended ordinance a licensee must annually go through this detailed application procedure. Outstanding licenses are revocable on a number of grounds at the city's discretion. Finally, the ordinance provides a fine of up to $100 for each violation of any of its provisions and specifies that each day such violation continues shall be deemed a separate offense.

With the ordinance thus amended, the city in 1960 demanded that Transfer apply for licenses. Transfer did so, after unsuccessfully attempting to pay the license fees under protest, and then brought this present lawsuit against the city, asking the District Court to declare the above-mentioned provisions of the ordinance invalid as unconstitutional burdens on interstate commerce and as unconstitutional attempts to regulate in an area preempted by the Interstate Commerce Act, 24 Stat. 379, as amended, 49 U.S.C. § 1 et seq. While the case was pending, the city again demanded that Transfer cease and desist operations unless it 'fully complied' with the ordinance and again amended its ordinance to impose new requirements on Transfer such as filing detailed financial reports and opening its books and records for city inspection. Nevertheless, the District Court dismissed Transfer's action as premature. Because Transfer had continued to operate by paying its license fees into court and because the city had taken no further action to enforce its ordinance, the Court of Appeals affirmed, holding Transfer's complaint premature and the ordinance valid on its face. 358 F.2d 55. We granted certiorari to consider these two holdings and conclude that the action is not premature and that the ordinance is invalid.

First. The prematurity arguments which the city makes here are similar to the ones it made and we rejected in Atchison. Though the city argues that some of the challenged provisions of the ordinance do not apply to Transfer, the Court of Appeals clearly considered them applicable. Though the city argues that it does not retain as much power to deny Transfer a license as Transfer fears, it is clear that 'the City claims at least some power * *  * to decide whether a motor carrier may transport passengers from one station to another.' 357 U.S., at 85, 78 S.Ct., at 1068 (emphasis added.) That was enough in Atchison to enable Transfer to attack the public-convenience-and-necessity requirement, even though the city there disclaimed any power to deny a license because of economic considerations. It is enough here. It is difficult to imagine a controversy more actual, alive, and ripe than this one. It has lasted for more than a decade. Though Transfer obtained its 1960 licenses after it filed this lawsuit to challenge the ordinance, it has continued to operate only by paying the license fees into court. The city has continually-and even while this case was pending-amended its ordinance to regulate Transfer further and has continually demanded that Transfer fully comply with the ordinance. Though the city now disclaims any power to 'stop' Transfer's operations, it does not give up its power under the ordinance to fine Transfer and arrest its drivers for operating without licenses or its power to revoke for discretionary reasons all licenses which Transfer may obtain. In short, although Transfer continues to operate, it is only at the city's reluctant sufference. If the ordinance is invalid insofar as it applies to Transfer, then, as we said in Atchison, 'that company was not obligated to apply for a * *  * (license) and submit to the administrative procedures incident thereto before bringing this action.' 357 U.S., at 89, 78 S.Ct., at 1070.

Second. The rationale of Atchison compels our holding that the provisions of the ordinance now challenged by Transfer cannot be validly applied to it. In Atchison, recognizing that Transfer's 'service is an integral part of interstate railroad transportation authorized and subject to regulation under the Interstate Commerce Act,' id., at 89, 78 S.Ct., at 1070, we pointed to various provisions of the Act which in our view completely precluded the city 'from exercising any veto power over such transfer service,' id., at 85, 78 S.Ct., at 1068 (emphasis added). The Act, as we said in Atchison, gives the railroads, not the city, the 'discretion to determine who may transfer interstate passengers and baggage between railroad terminals.' Id., at 84-85, 78 S.Ct., at 1068. That power, that discretion, is precisely what the comprehensive licensing scheme of the amended ordinance purports to reserve to the city. It matters not that the city no longer seeks to exercise that power by requiring a showing of public convenience and necessity. The total effect of the current ordinance on Transfer's operations and the burdens it places on interstate commerce are the same. As we recognized in Atchison, the city retains authority to insist that Transfer obey 'general safety regulations' such as traffic signals and speed limits. Id., at 88, 78 S.Ct., at 1069. Many of the provisions of the current ordinance, such as the requirements that Transfer maintain its principal place of business in Chicago, have its drivers reside in Chicago, file annually the most detailed financial reports, and open its books and records for city inspection, bear no resemblance to general safety regulations such as traffic signals and speed limits. Other provisions, if standing alone and enforced by means other than this particular licensing program, might possibly be justified as safety regulations. Castle v. Hayes Freight Lines, 348 U.S. 61, 75 S.Ct. 191, 99 L.Ed. 68. But we need not decide that question now, for here each of these provisions is an integral part of, and cannot be divorced from, the comprehensive licensing scheme that the city seeks to impose as a whole on Transfer. See Adams Express Co. v. State of New York, 232 U.S. 14, 34 S.Ct. 203, 58 L.Ed. 483. Here the city seeks to enforce each and all of these related requirements by denial of a license for noncompliance and then criminal sanctions for operation without a license. This is the 'veto power' which Atchison held the city may not exercise.

Reversed.

Mr. Justice HARLAN would affirm the judgment below substantially for the reasons given in the opinion of Chief Judge Hastings for the Court of Appeals, 358 F.2d 55.