American Union Transport v. United States

• Decision Date: 07 March 1944
• Citation: 55 F. Supp. 682
• Parties: AMERICAN UNION TRANSPORT, Inc., et al. v. UNITED STATES.
• Court: U.S. District Court — Southern District of New York

55 F. Supp. 682

AMERICAN UNION TRANSPORT, Inc., et al. v. UNITED STATES.

District Court, S. D. New York.

November 30, 1943.

On Rehearing March 7, 1944.

Harold L. Allen, of New York City, for plaintiffs.

Howard F. Corcoran, U. S. Atty., Marvin M. Notkins, Asst. U. S. Atty., and Maurice A. Krisel, Atty., War Shipping Administration, all of New York City, for defendant.

Before SWAN, Circuit Judge, and CAFFEY and COXE, District Judges.

SWAN, Circuit Judge.

The plaintiffs are corporations, partnerships and individuals engaged in business in the Port of New York as forwarders of freight in foreign commerce. Alleging that they are not persons subject to the Shipping Act of 1916 and the amendments thereof, 46 U.S.C.A. Chap. 23, §§ 801-842, they brought this suit against the United States pursuant to § 31 of the Shipping Act, 46 U.S.C.A. § 830, whereby the venue and procedure in suits to restrain enforcement of any order of the Maritime Commission are made the same as in similar suits respecting orders of the Interstate Commerce Commission. See 28 U.S.C.A. §§ 41(28), 43-48. The complaint attacks two orders of the Maritime Commission made on August 21, 1942, and January 14, 1943, respectively.

The order of August 21, 1942, recites that each of the plaintiffs and others similarly engaged in "the business of forwarding in foreign commerce" is an "other person subject to this Act" within the meaning of that term as used in §§ 1 and 17 of the Shipping Act, 46 U.S.C.A. §§ 801, 816; that a specified corporation (not one of the plaintiffs) had engaged in practices which violated section 17 of the Act; and that the public interest requires a general inquiry to determine the extent of the existence of such practices among other forwarders in the Port of New York. It ordered that the Commission upon its own motion and without formal pleading "enter upon an investigation with a view toward making such order or orders or taking such other action in the premises as may be warranted by the record"; and that the plaintiffs and other forwarders named in an appendix to the order be made respondents in the proceeding. After the issuance of this order the Commission sent to all the respondents named therein a questionnaire which propounded, among other questions, the following: "Do you carry on the business of forwarding in connection with common carriers by water in foreign commerce." All the plaintiffs answered this question in the affirmative, but allege in their complaint that this answer was erroneous. Thereafter on December 9 and 10, 1942, public hearings were held, and on the date last named the hearing was adjourned sine die to enable the Commission to obtain further information for a later resumption of the investigation. On January 14, 1943, the Commission on its own motion and purporting to exercise powers conferred by section 21 of the Act, 46 U.S.C.A. § 820, ordered the plaintiffs and others to answer within 30 days a questionnaire which required a lengthy report of business they had transacted in specified periods during 1940, 1941 and 1942, with break-downs of their receipts and disbursements. The plaintiffs thereupon brought the present suit.

A motion for an interlocutory injunction being made, a court of three judges was formed pursuant to 28 U.S.C.A. § 47. Thereafter the defendant filed its answer and moved for summary judgment in its favor upon the pleadings, exhibits, affidavits and evidence introduced at the Commission's hearings. Both motions were heard together on July 15, 1943. Decision was deferred at the request of the parties in order that they might later submit briefs, which they have done.

From the defendant's answer and exhibits attached thereto it appears that on May 18, 1943, the Commission vacated its order of January 14, 1943 and substituted therefor another order and questionnaire which required a similar but somewhat less burdensome report of business to be filed by the plaintiffs within 45 days from the date of the order. The plaintiffs have not formally amended their complaint to cover the May 18th order but both parties desire us to pass upon the validity of that order. Consequently we shall proceed upon the assumption that the complaint has been amended so that all allegations as to the order of January 14, 1943, except those referring to failure to submit the questionnaire to the Director of the Budget, now refer to the order of May 18th.¹

In respect to the order of August 21st the plaintiffs must fail. This is not the kind of order which the District Court is given jurisdiction to annul under 28 U.S.C.A. §§ 41(28), 46, 47. See United States v. Illinois Cent. R. Co., 244 U.S. 82, 89, 37 S.Ct. 584, 61 L.Ed. 1007; United States v. Los Angeles & S. L. R. Co., 273 U.S. 299, 309, 47 S.Ct. 413, 71 L.Ed. 651; Shannahan v. United States, 303 U.S. 596, 601, 58 S.Ct. 732, 82 L.Ed. 1039; Rochester Tel. Corp. v. United States, 307 U.S. 125, 130, 59 S.Ct. 754, 83 L.Ed. 1147. The order of August 21st does not of itself adversely affect the plaintiffs; although it recites that they are subject to the Act, it does not constrain them to do or refrain from doing anything; their rights will be adversely affected only on the contingency of future administrative action. It is like an order of the Interstate Commerce Commission setting a case for hearing despite a challenge to its jurisdiction, as in the Illinois Central case, supra. Whether the Maritime Commission has jurisdiction to enter, on its own motion, upon a general investigation of the practices of freight forwarders is immaterial so far as the August 21st order is concerned. Even if jurisdiction were lacking, the order directing the investigation did not adversely affect the plaintiffs; nor does that part of the order which names them as respondents. They are under no constraint to appear at the investigation, if hearings shall be resumed.

The situation is different with respect to the May 18th order. This directs affirmative action on the part of the plaintiffs, and for failure to comply with the order the statute imposes a penalty at the rate of $100 for each day of default. 46 U.S.C.A. § 820. The power of the Commission to make such order being in dispute, the need for injunctive relief is at least as great as it is with respect to orders of the type discussed by Mr. Justice Frankfurter as "Group (2)" in the Rochester Telephone opinion, 307 U.S. at pages 132-134, 59 S.Ct. at pages 758, 759, 83 L.Ed. 1147. If the Commission has exceeded its statutory powers, this court has jurisdiction to enjoin enforcement of the order. 46 U.S.C.A. § 830; Skinner & Eddy Corp. v. United States, 249 U.S. 557, 562, 39 S.Ct. 375, 63 L.Ed. 772.

The order purports to be issued pursuant to § 21, 46 U.S.C.A. § 820, which authorizes the Commission to require "any common carrier by water, or other person subject to this chapter" to file "any periodical or special report" or "any memorandum of any facts and transactions appertaining to the business of such carrier or other person subject to this chapter." Unless the plaintiffs are persons "subject to" Chapter 23 of Title 46 the Commission lacks power to require them to file with it answers to the questionnaire annexed to the order of May 18th. Whether the chapter does subject them to its provisions turns upon the definitions contained in § 1, 46 U.S.C.A. § 801, and the nature of the plaintiffs' business. The section begins with a definition of the terms "common carrier by water in foreign commerce" and "common carrier by water in interstate commerce." It then defines "common carrier by water" as meaning either of such previously defined common carriers. Next follows the definition which has given rise to the present litigation: "The term `other person subject to this Act' means any person not included in the term `common carrier by water,' carrying on the business of forwarding or furnishing wharfage, dock, warehouse, or other terminal facilities in connection with a common carrier by water."

There is no substantial dispute as to the plaintiffs' business activities. The complaint alleges that all of the plaintiffs are engaged in the business of shippers' agents and freight brokers in the Port of New York; they arrange, as agents for others, "for insurance, cartage, warehousing, and other services incidental to and including the affreightment of merchandise consigned to and from points within the United States, from and to points outside thereof"; they do not assume responsibility for delivery of the merchandise at destination. The affidavit of Herbert A. Byrne attached to the motion for an interlocutory injunction describes in greater detail how the business is done. There is nothing before us which contradicts in any essential respect his statements. He makes it clear that the "forwarder" acts solely as agent for the owner of goods in procuring their transportation by a common carrier by water and in performing services incidental to procuring such transportation. Usually the bill of lading is taken in the name of the owner of the goods; occasionally the forwarder may consolidate into one shipment goods of different owners, if the goods are similar in character and bound for the same port and the same consignee, and in the case of such a shipment the bill of lading is taken in the name of the forwarder. But in either case the forwarder's relationship to the owner is that of agent, and his relationship to the carrier is that of shipper's agent or shipper. See Lehigh Valley R. Co. v. United States, 243 U.S. 444, 445, 37 S.Ct. 434, 61 L.Ed. 839.

The question for decision is whether the activities above outlined constitute carrying on the business of forwarding "in connection with a common carrier by water." If the forwarder's connection with the carrier need be nothing more than the making of contracts of affreightment, either in the name of the owner of the goods to be transported or in the forwarder's own name,...