Alamo Express, Inc. v. United States

• Decision Date: 20 March 1965
• Docket Number: Civ. A. No. 3485.
• Citation: 239 F. Supp. 694
• Parties: ALAMO EXPRESS, INC., Brown Express, Inc., Red Arrow Freight Lines, Inc., and Southwestern Motor Transport, Inc., Plaintiffs, v. The UNITED STATES of America, the Interstate Commerce Commission, Central Freight Lines, Inc., W. W. Callan, and Inland Motor Freight Lines, Inc., Defendants.
• Court: U.S. District Court — Western District of Texas

239 F. Supp. 694

ALAMO EXPRESS, INC., Brown Express, Inc., Red Arrow Freight Lines, Inc., and Southwestern Motor Transport, Inc., Plaintiffs, v. The UNITED STATES of America, the Interstate Commerce Commission, Central Freight Lines, Inc., W. W. Callan, and Inland Motor Freight Lines, Inc., Defendants.

Civ. A. No. 3485.

United States District Court W. D. Texas, San Antonio Division.

March 20, 1965.

Felts & Robinson, by Dan Felts, Austin, Tex., for Alamo Express, Inc.

Rawlings, Sayers, Scurlock & Eidson, by Reagan Sayers, Fort Worth, Tex., for Brown Express, Inc.

Ewell H. Muse, Jr., Austin, Tex., for Southwestern Motor Transport, Inc.

Richey, Sheehy, Teeling & Cureton, by W. E. Cureton, Waco, Tex., for Central Freight Lines, Inc. and W. W. Callan.

Henry Valdespino, Asst. U. S. Atty., San Antonio, Tex., and John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., for United States of America.

Robert W. Ginnane, Gen. Counsel and Arthur J. Cerra, Asst. Gen. Counsel, Interstate Commerce Commission, Washington, D. C., for Interstate Commerce Commission.

Before BROWN, Circuit Judge, SPEARS, Chief Judge, District Court, and SUTTLE, District Judge.

SUTTLE, District Judge.

Plaintiffs brought this action to set aside, annul and enjoin orders of the Interstate Commerce Commission granting authority under Section 5(2)(a) of the Interstate Commerce Act, 49 U.S.C. § 5(2)(a), to CENTRAL FREIGHT LINES, INC., to acquire control of INLAND MOTOR FREIGHT LINES, INC., through purchase of capital stock, and in turn to W. W. CALLAN, controlling stockholder of CENTRAL, by virtue of the transaction. Their main complaint is that after they had won several prior rounds before the Commission as protestants to the Defendants' application for control, the Commission suddenly reversed itself and held against them and granted the orders in question to Defendants. Plaintiffs attack the final orders as being arbitrary, unsupported by the evidence, and in excess of the authority granted to the Commission by Congress. While the course of the litigation has been long, complex, and at times uncertain, we find nothing in the record to justify a reversal of the Commission's Orders, or a remand to it for any further consideration.

The main issue through the Commission proceedings ultimately came to be whether or not the split-off or separation of intrastate operating rights from interstate rights by INLAND to ALAMO and SOUTHWESTERN should result in denial of CENTRAL and CALLAN'S application to control INLAND. The separation of intrastate from interstate rights took place as follows: Blake Gillan, presently the principal stockholder of INLAND, acquired the capital stock of INLAND from James S. McNamara in December, 1957. McNamara had obtained the stock in early 1956 from J. H. Robinson, who prior thereto caused INLAND to lease its Texas intrastate rights to SOUTHWESTERN and ALAMO on long-term leases. Thereafter, Robinson personally acquired the reversionary interest in the rights leased to Alamo and Southwestern with the approval of the Railroad Commission of Texas. Since Robinson's death these reversionary interests have belonged to Robinson's Estate. SOUTHWESTERN and ALAMO are using the described leased intrastate rights for the performance of interstate operations, under the "grandfather" clause of Section 206(a)(7) of the Act. The leased intrastate rights in question parallel most of INLAND'S certificated interstate rights. The plaintiffs contended, with success until the orders in question were granted, that this split-off contravened the policy of the Commission of declining to approve transactions where the severance of interstate and corresponding intrastate rights, previously operated by a single carrier, resulted in the creation of two rights and two operations in the place of one. The Commission eventually decided that the situation presented by the instant fact situation was controlled by an exception to this policy which relieved "non-offending" parties to the split-off of the prohibition, and approved the Defendants' applications.

HISTORY OF THE PROCEEDINGS

In October, 1960, the Commission on its own motion instituted an investigation under Section 5(7) of the Act to determine whether the control or management of INLAND had been effectuated by CENTRAL and CALLAN, principal stockholder and chairman of CENTRAL'S Board of Directors. This case, Number MC-F-7682, is known as the Investigation Case.

In May, 1961, CENTRAL and CALLAN filed application under Section 5 of the Act to acquire control of INLAND through purchase of its capital stock. This case, Number MC-F-7882, is known as the Control Case.

In the Control Case, an application under Section 210a(b) of the Act for temporary control by CENTRAL of INLAND through management was approved by Commission Order on September 5, 1961. Because of common facts and issues, the Commission proceeded to dispose of both the control and investigation proceedings on the same record and in reports combining the actions.

In its first report, January 11, 1963, the Commission concluded that the control and management of INLAND in a common interest with CENTRAL had been effectuated and was in violation of Section 5(4) of the Act and had continued until September 5, 1961, when terminated by the grant of temporary control authority. The violation, however, was found not to be such as to preclude CENTRAL as being unfit to control INLAND, nor so aggravated as to prevent approval in the control case, if it could otherwise be found to be consistent with public interest. Because of the split-off, however, the application in the control case was denied and an order entered directing divestiture of stock in INLAND by the defendants herein.

In its second report, November 15, 1963, the Commission modified the Orders requiring divestiture to permit the respondents in the investigation case to employ any lawful means of preventing further violation without the necessity of complete divestiture. The reconsideration by the Commission of its divestiture order came as the result of the decision of the United States Supreme Court in Gilbertville Trucking Company v. United States, 371 U.S. 115, 83 S.Ct. 217, 9 L. Ed.2d 177 (1962), which indicated that divestiture could often be too harsh a measure to obtain compliance with Interstate Commerce rules and regulations.

Finally, on June 29, 1964, the Commission reversed its prior order of denial and granted CENTRAL authority to control INLAND subject to a condition not in issue, based upon a finding that the individual applicants had not been responsible for the split-off, and that CENTRAL'S acquisition of control of INLAND would be consistent with the public interest, applying for the first time an exception to the Commission's policy against split-offs, which had been announced by the Commission in Shein's Express — Purchase — Leo Smith Forwarding Company, Inc., 80 M. C. C. 511 (1959). The last order of the Commission, dated October 20, 1964, found that the June 29, 1964, order was within the Commission's discretion and denied Plaintiffs' Petitions for Reconsideration.

SCOPE OF REVIEW

All parties are agreed as to limited scope of review here. Our duty is to determine whether the conclusions of the Commission "finds support in the record as a whole, * * *. `even though the Court would justifiably have made a different choice had the matter been before it de novo';" NLRB v. Fant Milling Co., 360 U.S. 301, at 309, 79 S.Ct. 1179, 1184, 3 L.Ed.2d 1243 (1959); United States v. Pierce Auto Freight Lines, 327 U.S. 515, 66 S.Ct. 687, 90 L. Ed. 821 (1940); § 10(e), Administrative Procedure Act, 5 U.S.C. § 1009(e). If the Commission has made adequate findings which are supported by substantial evidence, this Court may not set aside the orders even though it may disagree with such findings, ICC v. Union Pacific R. Co., 222 U.S. 541, at 547, 32 S.Ct. 108, 56 L.Ed. 308 (1922); Rochester Tel. Corp. v. United States, 307 U.S. 125, at 139, 140, 59 S.Ct. 754, 83 L.Ed. 1147 (1939); Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). "`The wisdom and experience of (the) commission', not of the courts, must determine whether the proposed consolidation is `consistent with the public interest.' * * * If the Commission did not exceed the statutory limits within which Congress confined its discretion and its findings are adequate and supported by evidence, it is not our function to upset its order." McLean Trucking Co. Inc. v. United States, 321 U.S. 67, at 87, 64 S.Ct. 370, 381, 88 L.Ed. 544 (1944).

We find that the Commission had the authority to reopen for reconsideration and to rescind or modify prior orders and did not abuse its discretion in so doing here; that the Commission's finding approving the transaction as consistent with the public interest is supported by the record, and was not arbitrary, unreasonable...