In other words, in determining whether or not there is evidence such as to render the Commission's finding conclusive, the court is restricted to determining whether any such evidence appears in the record, and, once having found it, the court cannot take into consideration its relationship to other evidence, regardless of how persuasive or how plentiful the controverting proof may be.

For example, let us assume a case in which a single eyewitness has testified, from bare memory, as to the occurrence of a certain event. Inasmuch as his testimony is not vague rumor or speculation, it constitutes substantial evidence within the meaning of the rule under discussion. Since it does so qualify, findings of fact based upon that kind of testimony are binding upon the circuit court of appeals in spite of the fact that the record might contain contradictory testimony of numerous unimpeachable witnesses supported by objective evidence in the nature of photographs or other credible evidence. The appellate court is precluded from taking into account the contradictory testimony and evidence, as that would constitute a weighing of the evidence, which it may not do, in view of the statutory provision that the Commission's finding is conclusive because there is "substantial" evidence to support it, that is, the competent, relevant, material, and otherwise admissible testimony of the single witness referred to above. If the testimony of the single witness has been based upon mere rumor, the circuit court of appeals could have disregarded it is not being "substantial," but as it was not, it must be accepted by that court as sufficient to support the Commission's findings, even though the court itself would disagree with the Commission's findings. That is the sole extent of the rule announced by the court that the evidence to support a Commission's finding must be "substantial." The Reece bill seeks to vest in the circuit courts of appeal the authority to consider the evidence in support of the Commission's finding of fact in its relationship to the other evidence introduced during the course of the proceeding; in other words, to allow it to weigh the evidence to the extent, at least, of determining whether or not the Commission's finding was supported by a preponderance of the evidence.

II

Fair play demands that the defendant in a judicial or quasi-judicial proceeding, have his rights determined upon the fair preponderance of the evidence. There is no tolerance within the American concept of justice for imposition of penalties or deprivation of rights when the weight of the evidence discloses that the respondent has conducted himself with propriety.

If the Federal Trade Commission should be required to determine proceedings before it upon the fair preponderance of the evidence, ability of the appellate courts to affirm the Commission's findings after an unrestricted examination into the matter would foster confidence in and enhance the prestige of the Commission. If, on the other hand, the outcome of the Federal Trade Commission proceedings is to continue to be controlled by factors other than the fair preponderance of evidence, it would represent a deplorable condition of moral bankruptcy and judicial impotency that would turn away the victim without a remedy. Thus far, we have considered the public interest only insofar as it concerns respondents in Federal Trade Commission proceedings, for it is upon those respondents that the impact of injustice most directly falls. No legislative inquiry into the desirability of the Reece bill would be complete. however, without a consideration of its salutary benefits to the consuming public.

If any single thing were to be designated as most distinctive of the American competitive economy, it would be the care with which merchandise is developed, manufactured, packaged, and distributed to suit every need, desire, and whim of the consumer. It is to the consumer's advantage that he may be informed as to the extent of the benefits to be derived from the various articles of merchandise available in the market. In the case of new and improved products and processes, this is more than desirable, as it becomes a matter of public

concern.

Yet, under the Federal Trade Commission Act as now written, the Commissioners are empowered to withhold such desirable advice and information from the American public notwithstanding that the fair preponderance of evidence may reveal the obvious welfare of the public in learning of such new and improved products and processes.

III

The Commission's argument against those provisions of the Reece bill which would enlarge judicial review are divided into two headings: (1) the increased judicial authority is unnecessary; and (2) it is inadvisable.

The mere fact that the Commission opposes a requirement that its orders be based upon a preponderance of the evidence, necessarily implies a desire upon its part to retain its present power to decide the rights of respondents in a manner that runs counter to the weight of the evidence. So self-condemnatory is this position that further refutation would be superfluous. Any governmental commission which, vested with the responsibility of determining important and valuable public and private rights, desires freedom to do so regardless of a preponderance of the evidence, needs by very virtue of such a philosophy to be the subject of effective judicial review.

Aside from the foregoing, however, the sole argument advanced by the Commission to demonstrate that judicial authority to test its decisions by the standard of the preponderance of evidence is unnecessary, becomes patently unsound upon analysis.

In this connection, the Commission urges that under the present law, the appellate courts possess power to vacate any findings which are not supported by substantial evidence. So far so good, and in this statement the Commission is correct. However, it goes further to say that this is equivalent to the appellate authority of the courts as to regular jury cases or trial-court determinations in the Federal district courts, and that to confer upon the circuits courts power to overrule findings by the Commission which are not supported by a preponderance of the evidence would be to give such courts power beyond those ordinarily possessed by them in the regular judicial process.

Anyone who has been present at a jury trial knows that a regular and major portion of the judge's charge to the jury is devoted to instructions that it must decide the case before it upon the fair preponderance of the evidence. This is a legal requirement. Any jury verdict which does not conform to it may be set aside either by the trial court itself or by a circuit court upon appeal.

The Commission has found and quoted some language to the effect that appellate review as to the acceptance of substantial evidence to support a finding is equivalent to the scope of review of motions for directed verdicts. But the Commission overlooks the important fact that there is in the regular civil trial a further motion to set aside a jury's verdict as being contrary to the weight of the evidence which is different from and additional to the motion to direct a verdict (Adams v. United States, 116 F. (2d) 199 (C. C. A. 7, 1940)). As to district court trials by a judge without a jury, rule 52b of the Federal Rules of Civil Procedure provides: "* when findings of fact are made in actions tried by the court without a jury, the question of the sufficiency of the evidence to support the findings may thereafter be raised.

* *

Certainly, the present powers of the circuit courts to review findings by the Commission on the sole basis of whether or not there is any substantial evidence in the record to support them falls far short of their power to pass upon motions to set aside the verdict of a jury as being contrary to the weight of the evidence, or to determine the "sufficiency of the evidence to support the findings" of district court trial judges.

Even if the Commission's arguments in this regard were sound, it would nevertheless not justify the conclusion sought to be drawn by the Commission. There are many other factors which distinguish a proceeding before the Commission from a regular civil trial, and the differences are such as to require more extensive powers of review upon appeal in Commission cases than are necessary to the administration of justice in civil trials.

In the first place, proceedings before the Commission are not governed by ordinary rules of evidence (Phelps Dodge Refining Corporation v. FTC.,F. (2d) (C. C. A. 1943); John Bene & Sons, Inc. v. FTC, 299 Fed. 468 (C. C. A. 2d, 1924)). The rules which are administered in civil trials have been evolved out of centuries of experience and intensive thought in order to assure that the evidence permitted to be heard by a jury is best adapted to the nonprejudicial determination of the essential facts. Under such circumstances, a finding that substantial evidence has been presented during the course of the case in support of the jury's finding is assurance that evidentiary matter of real weight, competency, and importance has been adduced during the course of the trial.

In a Commission proceeding, however, the respondent has no such safeguard. The protective rules of evidence may be disregarded. Statements or documents may be introduced into evidence to support the finding, which would be inadmissible and hence insufficient to support a decree in a civil case.

Another distinction of vital importance is that a jury is impartial. The Commission, on the other hand, for all of its conscious desire to be honest, objective, and fair, inescapably approaches a determination of proceedings before it midst an aura of prejudgment. This arises out of the fact that the Commission is not only the court but the prosecutor as well, and may even furnish witnesses for the Government from among its own employees and agents. The mere fact that the Commission issues a complaint requires a preliminary determination by it that the respondent has violated its precepts. (Section 5 of the Federal Trade Commission Act authorized issuance of a complaint only "whenever the Commission shall have reason to believe [the respondent] has been or is using any unfair method of competition or deceptive act or practice in commerce.")

Many, if not most, of the Commission's findings of wrongdoing by respondents are based upon the interpretation which it attaches to certain forms of commercial activity and practice, interpretations to which fair-minded strangers might not agree. The very issuance of a complaint in such a case bears testimony to the existence of such a point of view at the Commission, and the same thought processes that led the Commission to issue the complaint motivate the ultimate decision upon the issues raised by the complaint. If this is not predetermination, we do not know what the word means. Commission proceedings are more truly activities of enforcement than of adjudication. In the light of the the evils which may arise out of so fertile a source of activity, it becomes apparent that greater protection by way of judicial review is needed than in civil trials, where the predisposing factors to injustice do not exist.

That this is a real and not an imaginary evil artificially conjured up for purposes of scholastic debate is strikingly illustrated by the case of Marquette Cement Manufacturing Company v. Federal Trade Commission, (C. C. A. Seventh, 1945). In that case, the respondent before the Commission sought to have the Commission disqualify itself from conducting the proceeding on the grounds of bias and prejudgment. It attempted to introduce before the Commission 23 documentary exhibits covering a period from 1927 to 1941, and showing that, prior to the respondent's hearing, the Commission had already arrived at a determination as to what the outcome should be.

The Commission would not even permit the exhibits to be introduced into evidence. However, the exhibits did come before the circuit court of appeals in the course of a proceeding by the respondent to have the Commission's determination review. The Circuit Court of Appeals for the Seventh Circuit was forced to decide that it was powerless to compel the Commission to disqualify itself even though prejudgment might have existed. It based this decision upon the fact that Congress, which created the Commission, did not provide for its disqualification, even though bias might exist. Some of the statements in the opinion of the court are highly illuminating.

"Congress is the creator of all inferior Federal courts, as well as administrative agencies. The jurisdiction and authority of each is confined solely to that which Congress bestows. There are no limitations upon this congressional power other than the Constitution. Congress has conferred upon a litigant the right to challenge the qualification of a judge, provided such litigant complies with the statutory mandate. On the other hand, no such right has been conferred upon a litigant before the Federal Trade Commission. In our view, the right to disqualify a trier of facts created by Congress, whether it be a judge or an administrative agency, is a matter for Congress. Such right may be conferred or withheld as Congress deems advisable."

"In conclusion, we are not unsympathetic to the criticism directed at the Commission by Marquette, a criticism much aimed at all administrative agencies, to the effect that their multiple functions as prosecutor, judge, and jury constitute an abridgment of the cherished right to a fair and impartial hearing. On the other hand, as already pointed out, they are the creatures of Congress and it is not within the province of courts either to emasculate or enlarge the powers which it has conferred. Any appeal for relief should be made to Congress rather than to the courts."

A third distinction is that in civil trials the trier of the fact, whether it be judge or jury, has the all-important opportunity of personally viewing the wit

nesses. This is the most vital factor in their process of deciding the weight to be given to conflicting testimony, and in passing upon the credibility of the various persons who take the stand. By virtue of this opportunity, the trial judge, or jury, possesses an advantage in passing upon the evidence which is lacking in appellate courts. In Commission proceedings, however, the five commissioners who initially pass upon the facts, stand in no better position with regard the evidence than does the appellate court which reviews their findings. Both base their determination solely upon the same printed record, and neither of them views the witnesses or the trial itself. Thus, while there may in civil trials be justification for according the appellate courts less power than the trial courts to pass upon the facts, there is no such reason with regard to Commission proceedings.

IV

The Commission's contention that it is inadvisable for appellate courts to be enabled to decide whether or not findings are based upon the preponderance of the evidence may be subdivided into three headings: (1) That the Commission is better prepared, as an expert upon the matters tried before it, to make such a determination; (2) that the courts would fall into the error of substituting quantity of evidence for weight of evidence; (3) that there would be conflicting determinations upon the same set of facts by different circuit courts of appeal. All of these contentions are without merit.

If the courts are inexpert in matters which come up to them through the Commission, then they must necessarily be labeled inexpert in the matters which they handle in the ordinary day-to-day course of their regular judicial function. We doubt that there is any subject matter the Commission can name which comes before it that doesn't also come to the circuit courts of appeal through its review of district court decisions. Intricate matters of bankruptcy, corporate affairs, real estate matters, unfair competition, economic conditions, and the like, all form the regular grist of the judicial mill. Minds which over the years of a life tenure in office have become sharpened to such matters do not become dulled to those situations when they are presented in appeals from Commission orders. Possibly the most specialized factual circumstances with which the Commission deals are those relating to technical questions, relating to foods, drugs, and cosmetics. Yet, the circuit courts of appeal, apparently oblivious of any mental impediment, review with apparent competency those very same matters in conrection with Food and Drug Administration proceedings originating in district court actions. Additionally, under section 13 of the Federal Trade Commission Act, a temporary injunction may be sought by the Commission in a district court, based upon precisely the same matters which are to be litigated before the Commission itself. Is it to be claimed that the same type of judicial mind which is called upon to determine the propriety of issuing such an injunction is not sufficiently expert to judge the facts involved in the course of an appeal?

A similar underestimation of judicial intelligence is implied by the Commis'sion's claim that the appellate courts will confuse quality of evidence with quantity. If the relative expertness of the appellate courts and the Federal Trade Commission to deal with such concepts is to be estimated, the former must be considered to have the advantage by far, for this is exactly the field with which it daily deals in considering, upon appeal, the propriety of factual decisions by trial courts and juries. It is the court of law, rather than the Commission, which has defined the difference between weight of evidence and 'amount of evidence, and to claim that the author of the distinction is less competent to apply it than persons who merely parrot it, is not very persuasive. Insofar as the Commission's fear of conflicting decisions amongst circuit courts is concerned, all that need be said is that the function of the United States Supreme Court is designed to meet just such a contingency. If the questions of fact are so close that different circuit courts will reach differing conclusions in similar situations, then it is far better to have such a conflict arise and be ultimately determined by the care and consideration involved in a Supreme Court decision, than to leave resolution of such a close question to the Federal Trade Commission alone, without any possibility of further independent review. By frequent statements in its memorandum, the Commission points out that there are remarkably few appeals taken from its orders. From this it would infer that its findings are so satisfactory that there are few appeals. We draw a very different conclusion. We believe the paucity of appeals is due to knowledge that the jurisdiction of circuit courts of appeal is so circumscribed and

limited under the present provisions of the Federal Trade Commission Act that the expense of appealing is unwarranted, since the appellant cannot succeed, even though the preponderance of evidence is on his side. In all justice this is a situation crying for correction. Of what avail to have the right to go through the form of an apeal, if the court appealed to is powerless to accord justice? The answer is obvious.

It is, therefore, respectfully submitted that H. R. 2390 should be enacted into law. MOTOR AND EQUIPMENT MANUFACTURERS ASSOCIATION, By ALBERT H. ELCHHOLZ, General Manager.

Dated January 23, 1946.

BRIEF OF CHADBOURNE, WALLACE, PARKE & WHITESIDE IN SUPPORT OF THE BILL This memorandum is submitted by Chadbourne, Wallace, Parke & Whiteside, a law firm of 25 Broadway, New York City, as the result of an invitation to do so extended by the Honorable B. Carroll Reece to one of its clients.

In submitting this memorandum in support of the proposed amendment we do so in the belief, gained as a result of our own experience as well as our study of the reported decisions, that this legislation is in the public interest. We have represented, or presently represent, various clients in a number of Federal Trade Commission matters. We do not, however, refer herein to any proceedings now pending which involve any of our clients.

THE PROPOSED AMENDMENT OF SECTION 5 (C), PERMITTING THE REVIEWING COURT TO APPRAISE THE EVIDENCE UPON WHICH THE COMMISSION BASES ITS ORDER, AND TO REVIEW THE REMEDY PRESCRIBED

As Congressman Reece has pointed out, the Federal Trade Commission acts simultaneously as complainant, jury, judge, and prosecutor. Acting upon its own initiative, or upon a complaint received from "any person, partnership, corporation, or association" (including, of course, any competitor of the respondent), the Commission prepares and serves its complaint. After the respondent has answered, his case is tried before a trial examiner, who is a representative of the Commission, and the role of prosecuting attorney is taken by one of the Commission's attorneys. At the conclusion of the trial, the trial examiner makes his report upon the facts, conclusions of fact, conclusions of law, and recommendation for appropriate action by the Commission. After giving the respondent an opportunity to file exceptions to the trial examiner's report and submit a brief, the Commission makes its findings of fact and issues its order.

In addition to this combination of the prosecuting and judicial capacity in one closely knit organization, the Federal Trade Commission Act presently provides that, upon a court review of the Commission's order, the Commission's findings as to the facts shall be conclusive if supported by evidence. No matter how clear and convincing the evidence to the contrary may be, the Commission can support its position and make findings of fact in accordance with its complaint which are entirely unassailable, provided it can point to any substantial evidence in the record in support of the facts as it claims them to be. And having determined the facts, the Commission can proceed to issue an order which, under recent decisions of the courts, cannot be modified by any court on review, no matter how far it goes beyond the actual needs of the situation. This recent development is in itself so serious as to require the proposed amendment of the act, as will appear from consideration of several court decisions before and after the promulgation of the present doctrine.

It has been recognized for many years that, under the act as it now reads, a court cannot disturb the Commission's findings if supported by evidence. For instance, the testimony of generally qualified experts who have had no personal experience with the product in question constitutes "substantial evidence" which will support the Commission's finding, so as to preclude the reviewing court from considering the weight of conflicting testimony of other experts who have had actual experience with the product (Neff v. Federal Trade Commission, 117 F. (2d) 495). For a time, however, the reviewing courts, particularly the second and third circuits, endeavored to apply a measure of reasonableness to the ultimate result, by modifying the remedy or by finding that the evidence was not "substantial."