William N. Feinstein & Company v. United States

• Decision Date: 04 October 1962
• Citation: 209 F. Supp. 613
• Parties: WILLIAM N. FEINSTEIN & COMPANY, Inc., et al., Plaintiffs, v. UNITED STATES and the Interstate Commerce Commission, Defendants, and The Baltimore & Ohio Railroad Company et al., Interveners.
• Court: U.S. District Court — Southern District of New York

209 F. Supp. 613

WILLIAM N. FEINSTEIN & COMPANY, Inc., et al., Plaintiffs, v. UNITED STATES and the Interstate Commerce Commission, Defendants and The Baltimore & Ohio Railroad Company et al., Interveners.

United States District Court S. D. New York.

October 4, 1962.

COPYRIGHT MATERIAL OMITTED

Robert W. Ginnane, Gen. Counsel, I. K. Hay, Associate Gen. Counsel, Washington, D. C., for Interstate Commerce Commission.

A. C. Armstrong, Baltimore, Md., Richard E. Costello, J. Edgard McDonald, New York City, Edward A. Kaier, Philadelphia, Pa., for Railroad Interveners; Edward F. Butler, New York City, of counsel.

Bernstein, Weiss, Tomson Hammer & Parter, New York City, for Complainant Petitioner; William J. Angello, Jr., New York City, of counsel.

RYAN, Chief Justice.

William N. Feinstein & Co., Inc.,¹ files this suit to review, set aside and annul a decision of the Interstate Commerce Commission (5 U.S.C.A. §§ 1001-1011, 49 U.S.C.A. § 17(9) and 28 U.S.C. § 1398 and 2321-2323). The challenged decision (William N. Feinstein & Co. v. New York Central Railroad Company, 313 ICC 783) found that certain charges exacted from plaintiff's assignor by the New York Central Railroad for the unloading of onions² consigned to the latter's Pier 17, New York City, were not unjust, unreasonable or otherwise unlawful. Plaintiff contends that this finding by the Commission was arbitrary, capricious, an abuse of discretion, unsupported by substantial evidence and otherwise unlawful. The Baltimore & Ohio, Erie Lackawanna, New York Central and Pennsylvania Railroads (terminal carriers of fresh fruits and vegetables destined for New York City) were permitted by an order dated June 26, 1962 to intervene in this suit in support of the Commission's decision.

The background and essential facts of this suit are not in dispute. Substantially, all carload shipments of fresh fruits and vegetables shipped to New York City from the south and west during the period in issue in the proceedings in 313 ICC 783 were delivered to the pier stations³ of the terminal carriers serving New York, the interveners herein. These perishable shipments were moved by rail to the Jersey side of the Hudson River where the freight cars were placed on barges, floated across the river and then either switched to the carriers' team tracks in Manhattan or docked, as the great majority were, at the carriers' pier stations. The New York Central Railroad was and is the only terminal carrier serving New York which has direct rail lines to its 33rd Street team tracks in Manhattan. It, however, delivered many carloads of fresh fruits and vegetables, including the onion shipments in issue, to its terminal Pier 17. When the car floats were docked at the appropriate piers, their contents were unloaded by the carriers and placed in designated areas on the pier floors. The consignees were not permitted themselves to unload their produce and access was first given them after unloading. The carriers provided the pier stations with special sale and auction facilities, whereby much of the produce was immediately disposed of by the consignees.

No charge for unloading perishable produce at these pier stations in addition to the line haul rate had ever been assessed by the terminal carriers serving New York until 1947 when, for the first time, these carriers filed schedules to become effective June 1, 1947 which provided for a separate charge for unloading fruits and vegetables consigned to their New York pier stations. No charge was sought for unloading commodities other than fruits and vegetables at these same pier stations during the entire period in issue in the proceedings in 313 ICC 783.

Numerous shippers, shipping organizations, State Commissions, the Port of Authority of New York and other interests protested against this charge on the ground that the pier unloading performed by the carriers was an integral part of the transportation service and necessarily included in the line haul rate. Following these protests, the Commission suspended the operation of the proposed charges (49 U.S.C.A. § 15(7)) and ordered an investigation to determine their lawfulness (Investigation and Suspension Docket No. 5500). After a hearing before an examiner and oral argument and reargument, the Commission on October 4, 1948 (Unloading Charges on Fruits and Vegetables at New York and Philadelphia, 272 ICC 648) found that the proposed charges ranging from $1.95 to $2.60 per net ton for the unloading of fresh fruits and vegetables at the pier stations in New York were just and reasonable. The charge approved for unloading onions was $1.95. The Commission concluded that such charges were substantially in the same category as those for switching, transit, refrigeration and other specific services for which separate charges were authorized, and that the then expense of unloading was such that the carriers should no longer be required to furnish it without compensation. The order of suspension previously entered by the Commission was vacated and the proceedings were discontinued. The charges approved in 272 ICC 648 became effective on November 1, 1948. Upon petition of the protestant shipping, marketing and port interest, the proceedings in Investigation and Suspension Docket No. 5500 were reopened and additional hearings were held. As a result thereof, the Commission on May 7, 1953 (Unloading Charges on Fruits and Vegetables at New York and Philadelphia, 286 I.C.C. 119) found that the charges approved in 272 ICC 648 were not shown to be just and reasonable and ordered them cancelled without prejudice to establishment of charges ranging from $1.05 to $1.65 per net ton including a charge of $1.05 for unloading onions. The Commission, upon the amplified record, concluded that the cost of unloading should be borne partly by the shipper and partly by the carriers. The reduced charges thus approved became effective on July 3, 1952.

Suit was then filed by the Florida Citrus Commission in the United States District Court for the Southern District of Florida to set aside the Commission's decision in 286 ICC 119 and the orders entered pursuant thereto. The three-Judge Court upheld the Commission and on August 31, 1953 dismissed the suit (Florida Citrus Commission v. United States, D.C., 114 F.Supp. 420). On appeal, the Supreme Court of the United States on June 7, 1954 vacated the judgment of the Florida District Court and remanded the matter to the Commission for appropriate findings, concluding that the Commission in 286 ICC 119 had not adequately explained its departure from prior norms and had not sufficiently spelled out the legal basis of its decision (Secretary of Agriculture v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015). The Court at page 653, 74 S.Ct. at page 831, stated:

"We do not know whether the Commission has disregarded its own findings that the unloading here is a prerequisite to delivery of the goods; or whether, in order to meet an unusual situation, the Commission has modified the normal doctrine that delivery is the responsibility of the carrier * * * or whether the Commission * * * has here deemed irrelevant the prevailing rule of its prior cases that a service necessarily encompassed by the line-haul rate cannot be separately restated without examining the sufficiency of the line-haul rate to cover it."

Upon supplemental hearings and further review of the record in compliance with the mandate of the Supreme Court, the Commission on June 28, 1956 (Unloading Fruits and Vegetables at New York and Philadelphia, 298 ICC 637) found that the charges in issue were not shown to be just and reasonable and ordered the schedule of charges to be cancelled as of August 16, 1956. Upon application of the carriers, however, the cancellation date was extended to October 16, 1956. In reaching its ultimate finding of unlawfulness in 298 ICC 637, the Commission concluded that the applicable tariffs provided that the line haul rate applied to and included delivery and that delivery at the pier stations was not effected until the contents were unloaded by the carriers and placed on the pier floor, that team track delivery was not a valid option to pier delivery and that, thus, pier unloading was not an optional service for which an extra charge could validly be assessed, that the making of a separate charge for this unloading which is an element of terminal service was not compatible with the basic principle of rate construction observed in this country and was inconsistent with the treatment of this service and the conclusions reached in the several proceedings in which the fruit and vegetable rates to New York were considered, that the addition of these charges disrupted the integrity of the rate groups, both at New York and Philadelphia, and destroyed the uniformity of charges in the comprehensive New York metropolitan area, that the exaction of the unloading charge, in addition to the line haul rate, produced total charges for line haul transportation to the pier stations which were technically in violation of the long-and-short haul clause of Section 4 and that the labor cost of unloading the traffic in issue was only about half of that for unloading other freight delivered at the same or similar points of delivery for which no separate charge was made.

Following the determination of the Commission in 298 ICC 637, plaintiff's assignor on December 3, 1956 filed suit in the United States District Court for the Southern District of New York (49 U.S.C.A. §§ 8 and 9) against the New York Central Railroad to recover as damages the charges it had paid the latter for the unloading of onions consigned to the Central's Pier 17, New York City. Plaintiff alleged that the assessment of the unloading charge was unlawful pursuant to the determination of the United States Supreme Court in Secretary of Agriculture v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015, and the determination...