Daniels v. United States, Civ. No. 896.

• Decision Date: 14 December 1962
• Docket Number: Civ. No. 896.
• Citation: 210 F. Supp. 942
• Parties: W. M. DANIELS, Plaintiff, v. UNITED STATES of America, Defendant, and Interstate Commerce Commission, and Great Northern Railway Company, Intervening Defendants.
• Court: U.S. District Court — District of Montana

210 F. Supp. 942

W. M. DANIELS, Plaintiff, v. UNITED STATES of America, Defendant and Interstate Commerce Commission, and Great Northern Railway Company, Intervening Defendants.

Civ. No. 896.

United States District Court D. Montana, Butte Division.

October 19, 1962.

Rehearing Denied in Supplemental Opinion December 14, 1962.

John W. Bonner and Sidney O. Smith Helena, Mont., for plaintiff.

Lee Loevinger, Asst. Atty. Gen., and John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., and Moody Brickett, U. S. Atty., for the District of Montana, Butte, Mont., for defendant, the United States.

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

Weir, Gough & Booth and Ward A. Shanahan, Helena, Mont., for intervening defendant, Great Northern Ry. Co.

Before JERTBERG and BROWNING, Circuit Judges, and JAMESON, District Judge.

PER CURIAM.

This is an action to review an order of the Interstate Commerce Commission dated November 21, 1961, in Docket No. MC-C-2507, W. M. Daniels-Investigation of Second Proviso Eligibility. The sole question presented is whether plaintiff's interstate operations in Montana, pursuant to his Montana Interstate Permit M.R.C. No. 284, fall within the partial exemption of the second proviso of section 206(a) (1) of the Interstate Commerce Act.

Under section 206 (a) (1) (49 U.S.C.A. § 306(a) (1)), except as otherwise provided therein "* * * no common carrier by motor vehicle * * * shall 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". The first proviso contains a "grandfather" clause which authorizes the issuance of certificates to carriers in operation prior to June 1, 1935.¹ Plaintiff does not claim any rights under this proviso. The second proviso reads in pertinent part:

"provided further, That this paragraph shall not be so construed as to require any such carrier lawfully engaged in operation solely within any State to obtain from the Commission a certificate authorizing the transportation by such carrier of passengers or property in interstate or foreign commerce between places within such State if there be a board in such State having authority to grant or approve such certificates and if such carrier has obtained such certificate from such board. Such transportation shall, however, be otherwise subject to the jurisdiction of the Commission under this part."

By statement filed February 3, 1958, plaintiff gave notice of his intention to engage in the transportation of property, in interstate or foreign commerce in Montana, under the second proviso of section 206(a) (1), in operations corresponding to those authorized in his Montana Interstate Permit, M.R.C. No. 284. Plaintiff's statement was rejected by the Commission, the Commission finding (1) that plaintiff had failed to establish that his operations in interstate commerce in Montana would come within the partial exemption of this proviso; and (2) that plaintiff was not authorized to engage in interstate commerce by virtue of the permit issued by the Montana Board.²

Prior to the enactment of the Motor Carrier Act of 1935 plaintiff obtained a certificate from the Board of Railroad Commissioners of the State of Montana authorizing interstate as well as intrastate operations.³ On January 22, 1936, the Board reissued the certificate, with all amendments, in one document, M.R.C. No. 284, which authorized the transportation of property as a Class A carrier, in intrastate and interstate service, between the following Montana points:

(1) Butte and Philipsburg, via Anaconda;

(2) (a) Missoula and Helena,

(b) Missoula and Butte,

(c) Butte and Miles City,

(d) Butte and Great Falls,

as a connecting carrier in interstate commerce.

(3) Butte and Missoula, via Garrison and Deer Lodge, in intrastate commerce, with a limitation that no service shall be given between Butte and Anaconda.

At plaintiff's request the Montana Board on March 8, 1943, ordered that plaintiff's operating rights be segregated into three certificates, as follows:

(1) Intrastate Certificate of Public Convenience and Necessity M.R.C. No. 284 (reissued) authorizing plaintiff to transport property as a common carrier by motor vehicle in intrastate service, Class A, between Butte and Missoula, via Anaconda and Philipsburg, together with the same right or rights between Butte and Missoula, via Deer Lodge and Garrison, except that service between Butte and Anaconda in intrastate service is prohibited.

(2) Interstate Permit M.R.C. No. 284 (reissued) authorizing plaintiff to transport property as a common carrier by motor vehicle, Class A, in interstate service between Butte and Missoula, via Anaconda and Philipsburg, together with the same right or rights between Butte and Missoula, via Deer Lodge and Garrison.

(3) Interstate Permit M.R.C. No. 284 (reissued) authorizing plaintiff to transport property as a common carrier by motor vehicle, Class A, in interstate service between Missoula and Helena; Missoula and Miles City, via Butte; and between Butte and Great Falls.⁴

This proceeding relates to the interstate permit described in subparagraph 3.⁵ With respect to operations between Butte and Great Falls, plaintiff applied for a certificate under section 207(a)⁶ of the Interstate Commerce Act, which was granted March 21, 1942, and subsequently sold by plaintiff.⁷ By application for registration filed December 31, 1938, and by Form B.M.C. 75, Statement of Intent filed March 8, 1957, and February 3, 1958, plaintiff has sought registration pursuant to § 206(a) (1). Each application was rejected by the Commission.

On May 18, 1951, the Montana Board cancelled plaintiff's certificate or permit without notice or an opportunity to appear or to show cause why it should not be cancelled. The Supreme Court of Montana held that plaintiff accordingly was deprived of a property right without due process of law.⁸

As noted supra, the certificate or permit in question was issued by the Board of Railroad Commissioners of the State of Montana and authorizes interstate operations only and does not cover any intrastate operations. Nor does plaintiff hold any other intrastate rights over the same route. Plaintiff has not conducted any operations under the permit involved in this action.

Plaintiff contends that the certificate or permit having been issued by the Montana Board authorizing interstate operations within the state, he is entitled to the benefit of the exemption set forth in the second proviso of § 206(a) (1) and that the phrase "such certificates" obviously refers back to the phrase "a certificate authorizing the transportation by such carrier of passengers or property in interstate or foreign commerce between places within such State". Defendants contend that the second proviso of § 206 (a) (1) refers to intrastate certificates of public convenience and necessity; that the phrase "such certificates" means certificates of public convenience and necessity covering intrastate and not interstate operations, and that Congress did not intend by the second proviso to give state boards the right to issue interstate certificates of public convenience and necessity which would entitle them to automatic registration.

We are concerned first with the authority of a state, through its regulatory bodies, to issue interstate certificates of public convenience and necessity prior to the Motor Carrier Act of 1935. It is clear that in the absence of legislation by Congress dealing specifically with the subject, a state could (1) adopt regulations "to promote safety upon the highways and conservation in their use, * * * where the indirect burden imposed upon interstate commerce is not unreasonable";⁹ and (2) impose "a fair and reasonable nondiscriminatory tax as compensation for the use of its highways".¹⁰ It is equally clear that the state did not have authority to issue interstate certificates of public convenience and necessity, in that this would "resort, through state officials, to a test which is peculiarly within the province of federal action — the existence of adequate facilities for conducting interstate commerce".¹¹

In the Motor Carrier Act of 1935, "Congress * * * adopted a comprehensive plan for regulating the carriage of goods by motor truck in interstate commerce. The federal plan of control was so all-embracing that former power of states over interstate motor carriers was greatly reduced. No power at all was left in states to determine what carriers could or could not operate in interstate commerce. Exclusive power of the Federal Government to make this determination is shown by § 306 of 49 U.S.C. A. (§ 206 of Interstate Commerce Act) which describes the conditions under which the Interstate Commerce Commission can issue certificates of convenience and necessity."¹²

It was, of course, within the power of Congress to grant to a state the right to determine whether public convenience and necessity required interstate authority within that state and to make state issued interstate certificates eligible for filing under the second proviso of § 206 (a) (1).¹³ This power, however, has not been granted unless it was conferred by the proviso itself.

In determining congressional intent with respect to this proviso, both parties rely to some extent upon legislative history. With reference to the Act itself, the only other provision which might bear upon the intent of Congress is contained in § 203(a) (2) defining "board" and "state board" as the regulatory body or official having jurisdiction "to grant or approve certificates of public convenience and necessity or permits to motor carriers, or otherwise to regulate the business of transportation to motor vehicles, in...