Armored Carrier Corporation v. United States

• Decision Date: 28 September 1966
• Docket Number: Civ. A. No. 65-C-1298.
• Citation: 260 F. Supp. 612
• Parties: ARMORED CARRIER CORPORATION, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and B. D. C. Corporation, Intervenor.
• Court: U.S. District Court — Eastern District of New York

260 F. Supp. 612

ARMORED CARRIER CORPORATION, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and B. D. C. Corporation, Intervenor.

Civ. A. No. 65-C-1298.

United States District Court E. D. New York.

September 28, 1966.

Derounian, Candee, Guardino & Murphy, New York City, for Armored Carrier Corp.

Joseph P. Hoey, U. S. Atty., for the United States and Interstate Commerce Commission; Nahum Litt, Washington, D. C., of counsel.

Rosenman, Colin, Kaye, Petschek & Freund, New York City, for B. D. C. Corp.

Before MOORE, Circuit Judge, and BARTELS and MISHLER, District Judges.

MISHLER, District Judge.

This action instituted pursuant to 28 U.S.C. §§ 2321-2325 seeks to vacate and set aside an order of the Interstate Commerce Commission dated June 30, 1965 (served July 14, 1965), in which it

1. Dismissed the complaint of the plaintiff (No. MC-C-3480) 2. Granted the application of B.D.C. Corporation (B.D.C.) the Intervenor, for a certificate of public convenience and necessity permitting the operation by B. D. C. as a common carrier of commercial paper, documents, and written instruments used in the conduct and operation of banks and banking institutions between Chicago, Illinois and points in five Wisconsin counties No. MC-114533 (sub. No. 32).

The complaint proceeding was initiated by the plaintiff on November 27, 1961, and charged B.D.C. with knowingly and willfully conducting unauthorized operations in interstate commerce between Chicago and the five Wisconsin counties. On December 1, 1961, B.D.C. applied for a certificate of public convenience and necessity between Chicago and the aforementioned five counties, and for temporary authority pending the determination. Emergency temporary authority was granted December 6, 1961, and temporary authority on January 2, 1962.

B.D.C. had received authority to transport cash letters between Chicago and 15 counties in Wisconsin in an I.C.C. certificate issued April 4, 1957. The five counties in question lay between Chicago and the 15 counties that B.D.C. was authorized to service.

The report of June 30, 1965 discusses the manner of B.D.C.'s operation, the need of the so-called "country banks" of the service offered and the sufficiency and efficiency of B.D.C.'s facilities, equipment and manner of operation. The report discusses 4½ years of unauthorized service to the five counties beginning in 1957. It found the unauthorized operations were inadvertently begun.¹ The report (p. 131) found "the evidence of past unauthorized operations does not require a finding of unfitness." It further found,

"* * * that applicant is fit, willing and able properly to perform such service and to conform to the requirements of the Interstate Commerce Act, and the rules and regulations of the Commission thereunder * * *."

I. B.D.C.'s unauthorized operations for four years prior to filing of the complaint.

The Interstate Commerce Commission (I.C.C.), Division I, found that the operations in question "were inadvertently begun." A question exists, due to the language used in the report, as to whether the continued unauthorized operations during the four-year period, 1957-1961, were "willfully performed" or continued to be inadvertent and in good faith. If the latter is the fact, such operations, albeit unauthorized, would be no bar to a grant of authority. See Interstate Common Carrier Council of Maryland v. United States, 1949, D. Md., 84 F.Supp. 414, aff'd mem., 338 U. S. 843, 70 S.Ct. 91, 94 L.Ed. 516 (per curiam). For the purposes of this issue, we consider that the Commission found the operations to be inadvertently begun but knowingly and willfully continued.

No case has been called to the Court's attention that declares that the knowing and willful performance of unauthorized operations is, as a matter of law, a bar to a grant of authority. Absent pertinent authority, and since the Commission is the expert in the field of transportation, East Texas Motor Freight Lines, Inc. v. Frozen Foods Express, 1956, 351 U.S. 49, 76 S.Ct. 574, 100 L.Ed. 917, its views should be entitled to special consideration. I.C.C. v. Nelson Coop. Marketing Ass'n, 1962, W.D. Okla., 209 F.Supp. 697, 701. The Commission's view appears clear—past knowing willful conduct in violation of the Act and the rules and regulations thereto, is an element to be considered in the determination of present and future fitness. Thus, in McLaughlin Common Carrier Application, 73 M.C.C. 318, the I.C.C. stated: "* * * applicant's past record leaves a great deal to be desired * * * but the record established * * * applicant's resolve in the future to live within the letter and the spirit of the law." Antietam Transit Co., Inc. Common Carrier Application, 84 M.C.C. 459 is not to the contrary. There the Commission found not only that Antietam performed prior willful unauthorized operations, but further that "its unauthorized operations were continued, even after the hearing in the instant application was held. * * *"

The corporation is a form of business enterprise in which change of management and improvement in systems and controls may result in a radical change in the corporate capability to perform its operations. It would appear impractical and unrealistic to conclude that the I.C.C. lacks discretionary authority to determine whether a corporation is presently "fit" to perform its proffered services. The argument that past willful violations should, per se, bar a grant of authority in the present and for the future is one that looks backward and appears transfixed. Examination of the past should only be useful in assessing the prospective conduct of the applicant. Such assessment is one peculiarly within the expertise of the I.C.C. and should not be interfered with unless found to be arbitrary and capricious.

Accordingly, we find that past willful misconduct is not, as a matter of law, sufficient to bar a grant of authority. Rather, the I.C.C. is to consider such willful misconduct as an element in assessing the applicant's present and prospective "fitness" within the Act.

II. The Commission's failure to make a specific finding on the issue of "willfulness".

Section 14(1) of Title 49, U. S.C. provides:

Whenever an investigation shall be made by said Commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclusions of the Commission, together with its decision, order, or requirement in the premises; and in case damages are awarded, such report shall include the findings of fact on which the award is made.

Under this section and section 8(b) of the Administrative Procedure Act 5 U. S.C. § 1007(b) the Commission must make a written report setting out its findings, conclusions and decisions, together with its reasons therefor. It is, however, not required to make the detailed findings of fact required by Rule 52(a) of the Federal Rules of Civil Procedure. See Chicago & E. I. R. R. v. United States, 1952, S.D.Ind., 107 F. Supp. 118, aff'd mem., 1953, 344 U.S. 917, 73 S.Ct. 346, 97 L.Ed. 707 (per curiam). Thus, if the report contains subsidiary findings of fact sufficient to lend adequate and rational support to the order, the Court must uphold the Commission's conclusions. Alabama Great So. R. R. v. United States, 1951, 340 U.S. 216, 71 S.Ct. 264, 95 L.Ed. 225; see United States v. Pierce Auto Freight Lines, Inc., 1946, 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821; State of Florida v. United States, 1931, 282 U.S. 194, 51 S. Ct. 119, 75 L.Ed. 291.

The Commission made the following subsidiary findings of fact relevant to the ultimate determination of "fitness":

(1) That the unauthorized operations were inadvertently commenced;

(2) That the unauthorized operations performed in the five counties in question were in B.D.C.'s direct line of haul between Chicago and the fifteen counties in which it was authorized to operate since 1956 (3) That B.D.C. initially thought that it had been granted authority to serve the five counties in question along with the other fifteen counties;

(4) That one of the five counties in question, i.e., Kenosha, was named in B.D.C.'s 1956 application and, for an unexplained reason, excluded from the grant of authority therein;

(5) That B.D.C. is financially fit to conduct operations in the five counties in question;

(6) That B.D.C. carries adequate insurance, including reconstruction insurance;

(7) That B.D.C. furnishes vaults to its customers;

(8) That B.D.C. operates on a regular daily schedule, six days per week; and

(9) That the supporting shippers find B.D.C.'s services satisfactory and desire their continuance.

The Commission did not make specific subsidiary findings in respect of the issue of willfulness. Plaintiff argues that since it had raised that issue before the Commission and that since the alleged willfulness of B.D.C.'s misconduct forms the basis for its complaint, the Commission must make specific subsidiary findings on that issue; plaintiff concludes that absent such finding the Commission's report cannot lend adequate support to its Order. To complement this argument, plaintiff also contends that absent such a finding a reviewing court would be unable to comprehend the basis for the Commission's ultimate determination.

In Southern Kan. Greyhound Lines, Inc. v. United States, 1955, W.D.Mo., 134 F.Supp. 502, aff'd mem., 1956, 351 U.S. 921, 76 S.Ct. 779, 100 L.Ed. 1453 (per curiam) plaintiff argued:

* * * though the Commission's report took notice of their contentions that they are operating on such a close margin that they cannot stand any diversion of traffic without deterioration in the standards of their service, and that the proposed new service by Trails would result in a competitive situation destructive to them and their service, it did not make a specific subordinate finding upon that issue, * * * but made only the ultimate finding that the proposed service `is or will be required by

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