Mr. REECE. Might not this differeence enter into the two cases: a jury hears the witnesses and sees the witnesses. The judge presides over the case. The judge and jury are enabled to evaluate the personal reactions and the probity of the evidence, whereas in a proceeding before the Commission, the evidence is taken by an examiner, so that the case comes before the Commission on brief and arguments so that the Commission does not have opportunity that the jury and the original trial judge have in a case of evaluating the witnesses and evidence by personal observation. In a measure the Commisison is sitting, we should not say as an appellate agency, but as an agency which is reaching a determination from the record itself and not from the evidence given in person by the witnesses. I would like your reaction on that. Mr. WOODEN. You have a similar situation where questions are referred to a master by the court, and the court does not see the witnesses there and has to pass judgment upon the record. Mr. O'HARA. That is the unusual rather than the usual trial of civil matters. Mr. WOODEN. I would not say that it is so very unusual, not very rare at all. Provision is made for it in the rules of civil procedure, but, not only that, the findings of the master on questions of fact are, by the rules, made conclusive unless they are clearly erroneous. Mr. REECE. What would be the injury or danger of harm that might be wrought by providing, or making possible, an appeal to the courts in the event the litigant felt that an error or mistake had been made? Mr. WOODEN. Well, it would simply give the litigants a second trial on the same record that he had before, and it would put the Federal Trade Commission through the same experience and cycle of experience that the Interstate Commerce Commission went through 30 or 40 years ago. That is just what happened to it, because the courts undertook to substitute their judgment on the facts for those of the Interstate Commerce Commission. And it seems to me that when the Congress has conferred upon this Commission the functions that it has, and the powers that it has, that to adopt this preponderance rule is to simply say, "We do not trust you to follow the preponderance rule in the trial of your cases, and so we are going to give the courts a veto power to see whether you have actually decided according to the preponderance of the evidence, and not according to substantial evidence." Some of these things are anticipatory of things that I expect to treat in my prepared statement. Mr. O'HARA. I would like to ask a couple of questions, if you please. Is it actually true that in the appeal from these cases from the Commission that you are in the same position that you are in a trial of a jury case, so far as the record is concerned? Mr. WOODEN. Well, there is not any doubt that the Commissioners do not see the witnesses as they testify. That is very plain. There is that difference, but, after all, it is a question of balancing the pros and cons of a situation like this. And if the Congress wants the Commission to do the job of showing what the facts are, and finding what the facts are, it is not possible, humanly possible, for the Commissioners to hear every witness testifying in every case. There is some give-and-take in this proposition. You cannot find perfection. If the fact that the Commission is one step removed from personal observation of the witnesses be an imperfection, how do you expect to correct it by a trial de novo before an appellate court which would be two steps removed from such observation? Mr. O'HARA. How many cases are disposed of by the Commission by trial per year, the average number? Mr. WOODEN. Well, I can only guess at it. Mr. WOODEN. Those involve the final decisions. That many cases. are decided by the Commission per year. There are other cases that are being heard all of the time where the Commissioners, personally, cannot, of course, hear the witnesses themselves. Mr. O'HARA. Why do you labor the point, as Mr. Kelley did yesterday, that the integrity of the Commission is involved, because some one introduces a bill, such as Mr. Reece has, to change the rules so as to impress the preponderance of evidence rule, that that is an attack upon the integrity of the Commission? I mean, it is just beyond my understanding to comprehend that viewpoint. Mr. WOODEN. Well, I think the express language of the proponents of the bill is susceptible to no other interpretation, for one thing. But I also say that if they did not say anything of that sort, the necessary implication of one who says that we have got to have a preponderance rule for appellate purposes because we are afraid the Commission does not apply that rule for trial purposes, that is implicitly and necessarily, in my judgment, a challenge to the mental integrity of the Commission. Mr. O'HARA. Let me say that I think I would go a step farther, if I was the author of this bill, and have a trial de novo provision as an alternate, if desired, let me say, Mr. Wooden, so that you will understand, from any administrative decision so that you would not think that it is personal. It is not personal. That is the way I, personally, feel. I think we have reached a point in the administrative law and its effect in this country that that is my viewpoint very definitely on any administrative body. Mr. WOODEN. In that connection, it raises a question why the Federal Trade Commission should be singled out for special attention by a special bill when there is a bill that would apply to all administrative agencies pending. Mr. O'HARA. Let me say, Mr. Wooden, that I do not blame you for feeling that way, because in treating this subject, in any questions that I may have asked, I am dealing with the whole subject of administrative law, and not just the matter of the Federal Trade Commission. It is not a personal matter with me at all. Mr. REECE. I do not wish to interrupt, and I do so with some embarrassment. Mr. Wooden, without your intending to do so, I think the statement that you make and the one that my good friend Bill Kelley makes suggesting that the proposal that the law be changed to require the preponderance of evidence rule to be followed impugns the Commission, in a measure, impugns my purpose in intro ducing the bill as well as the purpose of the witnesses in defending it. It certainly is not my purpose in introducing the bill to, in any way, impugn, or even reflect upon, the Commission or its work and I am confident none of the witnesses intended to do so. The law now only requires, according to the report which the Commission submitted, the evidence rule to be followed; that is, "The Commission's findings as to facts, the statute provides, 'If supported by evidence, shall be conclusive."" And the suggestion that it be written into the law that the preponderance rule shall be followed when we have legislation up dealing with this subject, I do not construe to be an indication that the Commission has been derelict in its work, Mr. Wooden. In the same report, the Commission-and this is something that I do not quite understand says: Adoption of the preponderance rule would, inevitably and materially, increase the length of the record in the Commission's proceedings, unduly prolong the trial of cases, and increase the expense of litigation. That statement hardly seems to be consonant with the presentation being made. When I refer to the preponderance rule, I do not refer to quantitative evidence, but, rather, to the weight of evidence. And I presume the Commission, in writing that, had the same thing in mind. Pardon me, Mr. Chairman, for making that statement, but I wanted to get my position set right in view of the statements which the witnesses have made. Mr. RABIN. May I ask you a question, Mr. Reece? You agree that the courts have written into the books, before the word "evidence," the word "substantial"; they have written that in by decisions; there is no question about that? Mr. REECE. That would seem to be the case, but is that the same as the substantial-evidence rule or the same as the preponderance rule? Mr. RABIN. It is not; otherwise we would not be here. It is not. Mr. REECE. That seems to be an important consideration. Mr. RABIN. That is the issue. I wanted to get into the record that the word "substantial" has been written into the law by decision. Mr. REECE. Yes. Mr. SADOWSKI. Are we all through on the question? If so, proceed, then. Mr. WOODEN. In connection with Congressman Reece's last statement, I would like to say that I have had the personal experience of knowing and seeing that records were lengthened, hearings lengthened for the purpose, as I see it, of aiming to get the circuit court of appeals to do what they do not now do under the substantial-evidence rule, namely, to have them weigh the evidence and pick and choose among conflicting inferences for that purpose. That leads directly into the lengthening of records and the lengthening of hearings, because they are aiming at the second trial de novo. That is the place that they are aiming to go. Mr. REECE. Well, now, the proposal of this bill does not indicate a trial de novo. That came up incidentally at the suggestion of someone else. Mr. WOODEN. But Dean Stason, the first witness in support of the bill, said that is exactly what this bill would do, provide a trial de novo but only on the same record that was made before the Commission. I would like to proceed. Mr. SADOWSKY. You may proceed. Mr. WOODEN. According to my prepared statement, if I may. The statement of Mr. Kelley has shown what the substantial evidence rule is as applied by the courts in reviewing the Commission's findings of fact and how it has worked in actual practice. We have seen that it does not, as its critics assert, permit the Commission to make and maintain findings of fact such as reasonable men could not justify on a preponderance of the record evidence. Unless so supportable the Commission's findings can be set aside now under the substantial evidence rule. Accordingly the chief reasons advanced by such critics are without substance. From this it follows that the proponents of the preponderance rule for appellate purposes have failed in their efforts to show any defects in the substantial evidence rule which call for its abandonment. The purpose of this statement, however, is not to further defend the substantial evidence rule. No further defense seems necessary. It is the purpose here to show affirmatively the defects of the preponderance rule as a standard for review by the appellate courts. This necessarily involves an understanding and a reappraisal of the reasons why Congress has hitherto declined to establish the preponderance rule for appellate purposes. Those reasons run deep in the realm of fundamental public policy, as embodied in the substantive provisions of the Federal Trade Commission and Clayton Acts. By contrast with the statement of Mr. Hoge that under the substantial evidence rule there is "no practical review" and of Mr. Thompson that it is an "admitted mockery," the sixth circuit court of appeals has said that the rule of substantial evidence is one of fundamental importance and is the dividing line between law and arbitrary power (N. L. R. B. v. Thompson Products, Inc., 97 F. (2d) 13, 15 (1938)). Mr. Digges says that he sees— no reason, no justifiable reason, why the rule of proof which the Commissioners say they enforce anyway should not be written into the statute if that in fact is the rule of proof which they enforce (typewritten transcript, p. 44). That statement simply assumes that the rule of proof should be the same for appellate as for trial purposes and therefore begs the question that is here involved. It will be the thesis of this statement to show that there should be, as now, a different rule for appellate than for trial purposes and that while the preponderance rule is implicit in all trial forms, it is not appropriate to the appellate functions of a reviewing court. What does the term "preponderance" mean? "Preponderance of the evidence" as defined by the courts, is not a legal term (Maryland Casualty Co. v. Boverie (Tex.) 37 S. W. 2d 310, 312). The word "preponderance" has the same meaning when applied to evidence as applied in ordinary conversation and is defined as to outweigh, to exceed or surpass in weight, force, influence, number, and so forth, to overbalance (City of Cushing v. Bay, 198 Pac. 877). The court in San Antonio Traction Co. v. Higdon, (Tex.) 123 S. W. 732), citing and quoting Wigmore on Evidence, said: Proof by preponderance of evidence is that state of mind in which there is felt to be a preponderance of evidence in favor of the demandant's proposition, though the application of the phrase "preponderance of evidence" is apt to lead the judicial discussion close to the danger line of the fallacious, quantitative or numerical theory of testimony. Why then substitute for the definite and certain substantial evidence rule a word so indefinite in meaning and uncertain in effect? Because of its close relation to the fallacious, quantitative, and numerical theory of evidence, adoption of the preponderance rule would inevitably and materially increase the length of the record of proceedings, unduly prolong the trial of cases, and increase the expense of litigation. It would increase the work of the already overburdened courts and to the extent it is effective it would require appellate courts to determine the credibility of witnesses, weigh the evidence and completely absorb the fact-finding functions of the Commission. Those who are not satisfied with the substantial evidence rule as applied by the courts in reviewing orders of the Federal Trade Commission obviously want something more than a review based upon the standard of what capable and reasonable men might have reasonably decided. What that something is was stated by Dean Stason to the committee on the opening day of the hearings. He said that the preponderance of evidence provision in the bill would, in effect, make the court proceeding a trial de novo on the same record as that prepared by the Commission, instead of being a trial de novo in the sense that new testimony is taken. It would be a trial de novo, excepting that the record would be prepared by the Commission (typewritten transcript, p. 18). Dean Stason also informed the committee as follows: Now, if we do adopt the principle of the trial de novo, then by so doing, you bring about several collateral results which may not be so good. In the first place, you burden the courts with a very considerable mass of litigation that the courts would find difficult to dispose of. And, in the second place, you would be taking the authority and responsibility away from the commissions, making it unlikely that they would be developed in an authoritative and responsible way. In the third place, you would by adopting the trial de novo technique put to one side whatever benefits might be obtained by the very large technical staff and equipment of the agency (ibid, p. 33). The conclusion is automatic that proponents of the preponderance of evidence rule really want two trials based on preponderance, one which the Commission must give them unless the Commissioners are false to their oaths and elemental obligations and another in the court of appeals. By the same token why should they not be allowed to go into another circuit court after losing out in one? The two circuits could as easily disagree on what is the preponderance of the evidence as one court could disagree with the Commission. In his 1941 testimony on the administrative law bills then pending, Dean Stason described an early construction of the substantial evidence rule which made it the practical equivalent of the preponderance rule. He said: * * * the term "substantial evidence" is sometimes construed to require virtually a weighing of the testimony, a balancing of the persuasive effect of the evidence offered on the one side against that offered by the other. That technique |