Acme Fast Freight v. United States

• Decision Date: 08 January 1940
• Citation: 30 F. Supp. 968
• Parties: ACME FAST FREIGHT, Inc., et al. v. UNITED STATES et al.
• Court: U.S. District Court — Southern District of New York

30 F. Supp. 968

ACME FAST FREIGHT, Inc., et al. v. UNITED STATES et al.

District Court, S. D. New York.

January 8, 1940.

Clark, Carr & Ellis, of New York City (John R. Turney, George A. Ellis and

Paul A. Crouch, both of New York City, of counsel), for complainants.

Thurman Arnold, Asst. Atty. Gen., Elmer B. Collins, Sp. Asst. to Atty. Gen., and John T. Cahill, U. S. Atty., of New York City, for defendant United States.

Daniel W. Knowlton, Chief Counsel, and J. Stanley Payne, Asst. Chief Counsel, both of Washington, D. C., for defendant Interstate Commerce Commission.

Before AUGUSTUS N. HAND, Circuit Judge, and LEIBELL and MANDELBAUM, District Judges.

AUGUSTUS, N. HAND, Circuit Judge.

This is a suit (1) to set aside an order of the Interstate Commerce Commission refusing to issue a certificate of public convenience and necessity to certain of the complainants herein and to enforce by writ of mandatory injunction the exercise of jurisdiction on the part of the Commission of the application for such a certificate, and (2) to set aside a certain order of the Commission rejecting and striking from its files certain joint tariffs of complainants.

The orders were issued in a proceeding initiated by filing with the Commission an application for a certificate or certificates of public convenience and necessity authorizing the continuance of the operations conducted by them on and after June 1, 1935. The application was made under the socalled "grandfather" clause of Section 206(a) of the Motor Carrier Act, 1935, 49 U.S.C.A. § 306(a). That section makes it unlawful for any "common carrier by motor vehicle" subject to the provisions of the Act to engage in any interstate or foreign operation on any public highway unless there is in force with respect to such carrier a certificate of public convenience and necessity issued by the Commission authorizing such operations, subject to the following proviso, which contains the socalled "grandfather" clause:

"Provided, however, That, subject to section 210 310, if any such carrier * * * was in bona fide operation as a common carrier by motor vehicle on June 1, 1935, over the route or routes or within the territory for which application is made and has so operated since that time, * * the Commission shall issue such certificate without requiring further proof that public convenience and necessity will be served by such operation, and without further proceedings, if application for such certificate was made to the Commission as provided in paragraph (b) of this section and within one hundred and twenty days after this section shall take effect October 1, 1925 * * *".

The six applicants before the Commission were Acme Fast Freight, Inc., Acme Transfer & Storage Company, Inc., Atlas Freight, Inc., Chaffee-Shippers Service, Inc., Shippers Service Express, Inc., and Southwestern Carloading Company. All the capital stock of these six companies is owned by T. A. B., Incorporated, a holding company. Acme Fast Freight, Inc., is called the controlling company; the other five companies are operated as divisions of that corporation.

After hearings, Division 5 of the Commission issued a report in which it held that two of the six applicants, to wit, Shippers Service Express, Inc., and Acme Transfer & Storage Company, Inc., owning and operating trucks, were engaged as common carriers by motor vehicle and were entitled to certificates, but that the other four applicants, not owning or operating any motor vehicles and not conducting any motor vehicle operations, were only freight forwarders and, as such, were not engaged as "common carriers by motor vehicle" nor as contract carriers within the purview of the Motor Carrier Act, but were entitled to licenses as brokers upon compliance with the requirements of Section 211(c) of that Act, 49 U.S.C.A. § 311(c). Commissioner Eastman filed a dissent in respect to the right of the forwarders to brokers' licenses. The Division also stated that as they were not "common carriers by motor vehicle" they could not obtain services from common carriers by motor vehicle at less than the published rates and could not establish divisions of joint rates with the latter.

Division 5 was reversed as to the portion of its report in favor of granting brokers' licenses and otherwise affirmed and the tariffs filed by the four forwarding companies showing joint rates between them and motor carriers were thereafter rejected and stricken from the files.

A summary of the facts by Division 5, which met the final approval of the Commission, was in substance as follows:

The forwarding companies collect, consolidate, ship and distribute less-than-carload lots of freight and express shipments throughout the entire United States, utilizing the services of carriers by motor vehicle, rail and water, including the motor service of the two applicants actually owning and operating trucks. Consolidation and distribution stations for the collection and delivery of such freight and express shipments are maintained by these companies on leased property in 136 secondary cities, each serving territory that varies in area with the size and commercial importance of the city in which the station is situated. Key concentration and distribution stations are maintained on leased property in 60 other large cities, which serve as major concentration and distribution stations for groups of secondary stations, break-bulk and reshipment stations for through consignments and local consolidation and distribution stations. These key stations are leased in the name of Acme Fast Freight, Inc., and, when situated in the territory of any of the other companies, are also utilized by the latter in connection with their operations. The companies employ approximately 225 solicitors and general agents.

The basic principle underlying the operations of the companies is the concentration of numerous individual small shipments within the shortest possible distances so that the economy and expedition obtainable by handling consolidated carload lots by rail or water and truck-load quantities by motor may be gained for the larger part of the haul. Shipments assembled at applicants' smaller stations are generally moved by the shortest possible routes to or through key stations and to local stations by their own local vehicles or by railroads, steamships or motor vehicles operated by others. The choice of the carriers utilized always rests with the forwarding companies and not with the shipper. The forwarders use only motor carriers which they believe have complied with the requirements of the Act.

In addition to the movement of less-than-carload traffic at rates per pound and per hundred pounds, a package division handles parcels in expedited service at pound rates in consolidated shipments. Commodities in bulk like grain, oil, coal, sand, iron and steel are not accepted for shipment. Traffic ordinarily is handled from the premises of the shipper to the premises of the receiver. Where collection service is provided, the shipper notifies the nearest agent of the forwarding companies and receipts for the goods by either a bill of lading of the forwarding company or an interim receipt which later is exchanged for such a bill of lading. At times collection service at point of origin is not performed by the forwarder's carrier, although it is generally available and specified in the forwarder's tariffs. In such cases, the forwarder's custody of the goods begins at its receiving station instead of at shipper's premises.

The individual shipments are consolidated by the forwarding company into carload or truck-load lots for transportation by either rail, steamship or motor, depending upon which will provide the desired service to points at which are located the forwarding companies' destination or distribution stations, in the case of goods going direct to such points, or to intermediate concentration stations, as break-bulk or transfer points, where shipments are to go beyond. In the latter instances, re-sorting and reconsolidation occur before further shipment to ultimate destination. Motor movements are under way bills of the forwarding company, but bills of lading, issued by Acme Fast Freight, Inc., accompany the shipments to the destination stations and the forwarding company receives from the motor carrier a receipt for the property transported. Railroads and water carriers use their own billing for their portion of the hauls, apart from forwarder's billing. There is no contractual relation between the shipper and the actual carrier. Generally the shipper does not know the carrier, other than the forwarder, by which its goods are to be transported or whether its shipment will be transported by a motor, rail or water carrier, or some combination thereof.

When the forwarder uses the services of rail or water carriers, it pays regular tariff rates therefor and acts as both consignor and consignee of the shipment. Prior to April 1, 1936, it utilized the services of both common and contract motor carriers, in general, at charges agreed upon by contract. Thereafter it filed tariffs with the Commission naming the rates applicable on all traffic handled by it regardless of the type or types of transportation utilized, and obtained concurrences in these tariffs from the majority of the motor carriers serving it. These concurrences rested on oral contracts providing for a division of the forwarders' published rates on a basis independent of the rate and charges carried in tariffs of the motor carriers. In a few instances the forwarder has paid the motor carriers their published tariff rates.

Nearly 2,100 motor carriers carry for the forwarders, at least 94 per cent of which are common carriers. The status of the remainder is uncertain. All these motor carriers hire and discharge their own employes, select the type of vehicle required to transport the shipments, furnish and maintain their equipment, employ...