Detroit & Cleveland Nav. Co. v. United States

• Decision Date: 29 September 1944
• Docket Number: No. 4259.,4259.
• Citation: 57 F. Supp. 81
• Parties: DETROIT & CLEVELAND NAV. CO. et al. v. UNITED STATES et al.
• Court: U.S. District Court — Western District of Michigan

57 F. Supp. 81

DETROIT & CLEVELAND NAV. CO. et al. v. UNITED STATES et al.

No. 4259.

District Court, E. D. Michigan, S. D.

September 29, 1944.

Angell, Turner, Dyer & Meek, of Detroit, Mich., Pope & Ballard, of Chicago, Ill., and S. S. Eisen, of New York City, for plaintiffs.

Daniel H. Kunkel and Daniel W. Knowlton, both of Washington, D. C., for defendants.

Robert L. Pierce and Wendell Berge, both of Washington, D. C., and John C. Lehr, of Detroit, Mich., for the United States.

Foster, Yost & Lott, of Detroit, Mich., for T. J. McCarthy Steamship Co., and Automotive Trades Steamship Co.

Before SIMONS, Circuit Judge, and TUTTLE and O'BRIEN, District Judges.

SIMONS, Circuit Judge.

The plaintiffs are common carriers of motor vehicles by water upon the Great Lakes, authorized as such by the Interstate Commerce Commission under § 309(a) of the Interstate Commerce Act, 49 U.S.C.A. § 909(a), and were protestants in hearings before the Commission upon the application of the defendant steamship companies, to operate as common carriers of motor vehicles between Detroit, Michigan, and ports on Lake Erie and Lake Superior. The hearings resulted in an order of the Commission granting a certificate of convenience and necessity to the defendants under § 309(c) of the Act, and this order the plaintiffs now seek to enjoin, set aside, and annul. The case was submitted to a court of three judges in pursuance of § 47, Title 28 U.S.C.A., and it is stipulated that the cause is submitted as upon final hearing upon the record made before the Commission.

The court is fully advised in respect to the finality of factual determinations made by the Commission if supported by evidence, Merchants' Warehouse Co. v. United States, 283 U.S. 501, 508, 51 S.Ct. 505, 75 L.Ed. 1227, and understands that "the judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body." Mississippi Valley Barge Co. v. United States, 292 U.S. 282, 286, 54 S.Ct. 692, 694, 78 L.Ed. 1260. The court is also aware of the basic purpose of the Transportation Act of 1920, in that "it recognized that preservation of the earning capacity, and conservation of the financial resources, of individual carriers, is a matter of national concern; that the property employed must be permitted to earn a reasonable return; that the building of unnecessary lines involves a waste of resources, and that the burden of this waste may fall upon the public; that competition between carriers may result in harm to the public, as well as in benefit * * *." Texas & Pacific R.R. Co. v. Gulf, Colorado & Sante Fe R.R. Co., 270 U.S. 266, 277, 46 S.Ct. 263, 266, 70 L.Ed. 578, also Texas & New Orleans R.R. Co. v. North Side Belt R.R. Co., 276 U.S. 475, 479, 48 S.Ct. 361, 72 L.Ed. 661. The court also assumes that the underlying purpose of the original Act is likewise the purpose of the amendment thereto made by the Act of September 18, 1940, covering water carriers and now incorporated as Part III, Chap. 12 of the Act, 49 U.S.C.A. § 901 et seq.

Section 309(a), being § 909 of Title 49 U.S.C.A., contains the so-called "grandfather clause", providing, in effect, that where an applicant for a certificate of public convenience and necessity was in bona fide operation as a common carrier by water on January 1, 1940, and continued in such operation to the date of the application, the applicant shall be entitled to such certificate as a matter of right. Section 309(c) provides that the Commission may grant such certificate also to any applicant fit, willing, and able to perform the service proposed, if such service will be required by the present or future public convenience and necessity.

Originally the applications of the defendant carriers were for certificates either under the "grandfather clause" of § 309(a) or under § 309(c), and sought authority as common carriers between Detroit and Lake Erie ports. Upon oral argument, however, before a division of the Commission, the applicants indicated that they also desired authority to serve ports on Lake Superior. Their applications under § 309(a) were denied by the division on the ground that the applicants were not in bona fide operation as common or contract carriers by water on January 1, 1940. This finding was affirmed by the Commission. As to the applications under the provisions of § 309(c), the division concluded that the evidence submitted was not sufficient to support a finding that present or future public convenience and necessity required operation by applicants, but upon hearing by the Commission an ultimate finding was made that the operations proposed will be consistent with the public interest and the national transportation policy declared in the Act, and notwithstanding protest that the order sought extended the scope of authority beyond the scope of the application, the certificate authorized included authority to serve Lake Superior ports.

The question of law submitted to the court is that the action of the Commission is not supported by evidence. The plaintiffs, however, rest their case upon the evidentiary findings of the Commission, and submit the proposition that these findings do not support the ultimate finding and conclusion of the Commission as to public convenience and necessity. There is, therefore, no need for the court to give detailed consideration to the record made before the Commission, and we confine ourselves mainly to the facts developed in its report. These disclose that applicants' president, T. J. McCarthy, was affiliated with the D. & C. Company, in a soliciting capacity, for about 9 years prior to 1942; that from 1937 to 1942 two of his vessels were chartered by the D. & C. to transport motor vehicles from. Detroit to Lake Erie ports, and a third vessel for the same purpose was chartered during the 1940 and part of the 1941 season. All three vessels were originally bulk carriers but were later equipped to carry motor vehicles. Because of the cessation of manufacture of motor vehicles for civilian use, all three vessels were reconverted to bulk freighters prior to the 1943 navigation season. The applicants, however, have retained the equipment and parts originally installed, and are prepared to reconvert their vessels into motor vehicle carriers upon termination of the war. Meanwhile, some use had been made of their vessels for carriage of military vehicles to Great Lake ports during 1942, and similar shipments were in prospect for 1943 at the time of the hearing, such vehicles being carried on the spar decks while the vessels were being operated in bulk transportation.

At the time of the final hearing no vessels of the motor vehicle carrying type were in operation on the Great Lakes, and a large percentage of all types of vessels formerly so used had been requisitioned by the government and withdrawn from service on the lakes, although since then the applicants have advised the Commission that the government was returning to the plaintiff Great Lakes Transit Corporation, 4 of the 14 vessels of that carrier which had been requisitioned. The applications were supported by witnesses from motor manufacturing companies, the substance of whose testimony was that the vessels of the applicants were essential to the transportation of automobiles in the past, that it would not have been possible, without them, for the water carriers to have handled the automobiles offered for transportation in 1940 and 1941, and that these vessels would again be reeded when normal production of motor vehicles is resumed. There was also evidence that there had been some delay in the transportation of motor vehicles by water during the 1941 season. During the seasons 1939 to 1941, inclusive, the vessels of the applicants, chartered by the D. & C. Company, handled from 64 to 74 percent of the motor vehicles carried by that company prior to the cessation of their manufacture. The peak period for the movement of automobiles on the Great Lakes during those years commenced in September or early October, with the production of new models. In 1940 and 1941 there were delays ranging from 2 to 4 days in the loading of automobiles from the docks at Detroit, incident to the congestion of such traffic, and because of such delays it was necessary, at times, to move automobiles by motor trucks.

Before the discontinuance of the manufacture of motor vehicles for civilian use, the plaintiff Nicholson operated four vessels specially designed for the purpose of transportation of motor...