Callanan Road Imp. Co. v. United States

• Decision Date: 15 September 1952
• Docket Number: Civ. No. 4273.
• Parties: CALLANAN ROAD IMP. CO. v. UNITED STATES et al.
• Court: U.S. District Court — Northern District of New York

107 F. Supp. 184

CALLANAN ROAD IMP. CO. v. UNITED STATES et al.

Civ. No. 4273.

United States District Court N. D. New York.

Argued August 12, 1952.

Decided September 15, 1952.

James E. Wilson, Washington, D. C. (Thomas W. Cantwell, Albany, N. Y., on the brief), for plaintiff.

William J. Hickey, Sp. Asst. to Atty. Gen. (Newell A. Clapp, Acting Asst. Atty. Gen., James E. Kilday, Sp. Asst. to Atty. Gen., and Edmund Port, U. S. Atty., Syracuse, N. Y., on the brief), for the United States.

H. Neil Garson, Atty., Interstate Commerce Commission, Washington, D. C. (Edward M. Reidy, Chief Counsel, Interstate Commerce Commission, Washington, D. C., on the brief), for Interstate Commerce Commission.

R. Granville Curry, Washington, D. C. (Curry & Dolan and Frederick M. Dolan, Washington, D. C., Thacher, Proffitt, Prizer & Crawley and Paul L. Clugston, all of New York City, and Reilly & Reilly and Desmond F. Reilly, all of Albany, N. Y., on the brief), for Cornell Steamboat Co.

Before CLARK, Circuit Judge, BRENNAN, Chief Judge, and FOLEY, District Judge.

CLARK, Circuit Judge.

This is an action in usual form and course, 28 U.S.C.A. §§ 1336, 1398, 2284, 2321-2325, 49 U.S.C.A. §§ 17(9), 916(a), to set aside and enjoin the enforcement of an order of the Interstate Commerce Commission which regulates the competition between certain common carriers by water on the Hudson River in New York and New Jersey. The plaintiff, holding the Commission's certificate of public convenience and necessity for "freighting," is endeavoring to extend this to include "towing," basing its contention on several points, of which the most far-reaching is the assertion of lack of power in the Commission to limit its certificate so as to exclude towing. Several competitors intervened before the Commission, but the brunt of the opposition was borne by the initial objector to plaintiff's activities, Cornell Steamboat Company. Cornell's opposition has continued to this action wherein it has been granted intervention and has been an active defendant. The Commission's decision has been against the plaintiff. We think the Commission was right.

Consideration of the case must start with the enactment in 1940 of Part III of the Interstate Commerce Act dealing with "Water Carriers," wherein no common carrier by water is permitted to engage in transportation under the Act unless it holds a certificate of public convenience and necessity issued by the Commission, but with "grandfather" rights, to be established by and before the Commission, to those in business on January 1, 1940. § 309(a), 49 U.S.C.A § 909(a). The Commission held Cornell's tugboats to be "water carriers" and Cornell itself a common carrier under Part III of the Act in decisions reported in 250 I.C.C. 301, 577, which were sustained on appeal to the courts. Cornell Steamboat Co. v. United States, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978, affirming D.C.S.D.N.Y., 53 F.Supp. 349. The Commission did, however, grant Cornell a certificate of public covenience and necessity for towing, based on its grandfather rights, for it had been in the towage business on the Hudson River for 115 years. This certificate it still holds and on this basis it conducts its business.

The basis for plaintiff's asserted rights requires a more extensive statement. Plaintiff's predecessor in interest was one Joseph R. Hutton, who, during the crucial grandfather period prior to January 1, 1940, owned and managed one steam-power boat of about 240 horsepower, and four barges, all of which were operated as a unit. The power boat was used in towing the barges and constructed so as to carry also about 150 gross tons of freight. On occasions other barges were rented or chartered for operation in Hutton's fleet, and they transported items running all the way from wheat and wastepaper to pig and scrap iron and fertilizer from or to points in New York Harbor up the Hudson River and the State Barge Canal as far as the Niagara River. Hutton, having failed to secure complete exemption from the Commission, then sought a certificate based on grandfather rights; and this the Commission granted on July 17, 1942. Hutton Contract Carrier Application, 250 I.C.C. 804. In this report, Division 4 made definite findings, as just stated, of the extent of Hutton's prior operations — he had been in business for 37 years, and his ancestors had operated before him — and found that he was a common carrier, and not a contract carrier, "of commodities generally" between the points named. Its "Certificate and Order" incorporated this report as a part of itself and inter alia ordered that the applicant be "authorized to continue operation as specified above, subject, however, to such terms, conditions, and limitations as are now, or may hereafter be, attached to the exercise of such authority by this Commission."

Meanwhile the Commission had had occasion to state the distinction between freightage and towage. Cornell Steamboat Co. Contract Carrier Application, supra, 250 I.C.C. 301, 304, 305; Eastern Transp. Co. Contract Carrier Application, 250 I.C. C. 505, 508. This was not a new idea; it went back to well-known differences in admiralty shown by the difference in liability of a tower and of a common carrier of freight. Stevens v. White City, 285 U.S. 195, 200, 52 S.Ct. 347, 76 L.Ed. 699. In these decisions in 1942 the Commission, while noting the distinction, did not require a distinct specification as to each in its certificates. That came in Campbell Transp. Co., Common Carrier Application, 260 I.C. C. 107, Dec. 14, 1943, wherein the Commission definitely established that "Towage is a distinct type of service or field of operation. Many carriers perform only towage, and others which were engaged in freighting by barges and towboats did not perform such towage service for shippers during the `grandfather period.' Carriers whose certificates or permits do not specifically authorize the performance of towage are without authority to engage in such service."

On March 4, 1944, the Commission of its own motion ordered the Hutton application opened for reconsideration and filed a report and amended certificate and order. Hutton Contract Carrier Application, 260 I.C.C. 804. Herein Division 4 of the Commission pointed out that in its prior report it had not specified the "type of vessels" to be used by the applicant in the exercise of the authority granted, and that in the absence of any limits in the certificate, "applicant would be free to extend its operations and perform services different from those performed by him on and since the statutory date." Accordingly it modified the authority previously granted to the vessels then operated by the applicant, and again it recited the plaintiff's flotilla as above set out and made findings accordingly. And the amended certificate and order certified, "That public convenience and necessity require the continuance of operation by applicant as a common carrier by water, by self-propelled vessels and by non-self-propelled vessels with the use of separate towing vessels in interstate or foreign commerce, in the transportation of commodities generally between points in the area" substantially as defined before, and ordered that the said carrier be "authorized to continue operation as specified above, subject, however, to such terms, conditions, and limitations as are now, or may hereafter be, attached to the exercise of such authority by this Commission." The previous certificate and order was superseded and cancelled.

Hutton accepted the new certificate apparently without any question and certainly without any formal objection, either within the time permitted or otherwise. He died in January, 1945, and his widow as administratrix sold and transferred his operating rights to the plaintiff for $2,750 by a transaction approved by the Commission's Division 4 on August 18, 1947. Hutton Certificate Transfer (not printed in full), 265 I.C.C. 813. Because an association of water carriers operating on the State Canal Systems protested and because plaintiff was not then operating in the Canal, the certificate transfer granted plaintiff only the right of operation on the Hudson from Waterford (the point of intersection with the Canal) to New York Harbor. As the report herein below, 285 I.C.C. 75, shows, the sale was consummated in September, 1947; and an amended certificate, limited to the Hudson, but otherwise authorizing the same operations as were permitted in the amended Hutton certificate, was issued to plaintiff on February 5, 1948. Plaintiff owns two towboats and charters others. It produces crushed stone at Kingston, N. Y., and transports it down the Hudson in its vessels for sale and delivery in the New York Harbor area. In the same tows it also operates as a carrier for hire in the movement of brick loaded on its own or chartered scows. As to these activities no question is raised; the issue arises as to its movement also of scows of the shippers, for which it makes allowance in accordance with its tariff, I.C.C. No. 2, which it initiated in 1949 and which became effective April 17, 1949. The shippers' scows have a captain on board responsible to the shipper or scow owner and paid by him. The plaintiff also returns the empty scows, where required, and does not claim the right itself to fill them or use them on return.

On May 11, 1949, Cornell complained to the Commission that this tariff embodied rates which contemplated the service of mere towage in violation of the plaintiff's certificate. On September 19, 1950, a representative of the Commission notified plaintiff that the towage operations would be unlawful, citing Dixie Carriers, Inc., Rates and Allowances, 278 I.C.C. 417, wherein Division 2 of the Commission had reiterated the previous rulings of the Commission that towage was not permitted unless specifically authorized in the enabling certificate. On January 2, 1951, plaintiff filed a petition...