Drum Transport, Inc. v. United States

• Decision Date: 07 April 1969
• Docket Number: No. P-3001.,P-3001.
• Citation: 298 F. Supp. 667
• Court: U.S. District Court — Southern District of Illinois
• Parties: DRUM TRANSPORT, INC., a corporation, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and Ayers & Maddux, Inc., Intervenor.

298 F. Supp. 667

DRUM TRANSPORT, INC., a corporation, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants and Ayers & Maddux, Inc., Intervenor.

No. P-3001.

United States District Court S. D. Illinois, N. D.

April 7, 1969.

Donald L. Stern, Omaha, Neb., David A. Nicoll, Peoria, Ill., for plaintiff.

Richard E. Eagleton, U. S. Atty., Peoria, Ill., Steven Kazan, Interstate Commerce Commission, Office of the General Counsel, Washington, D. C., for defendants.

Donald Murchison, Beverly Hills, Cal., Gary Peplow, Peoria, Ill., for intervenor.

Before KERNER, Circuit Judge, POOS and MORGAN, District Judges.

MEMORANDUM DECISION AND ORDER

PER CURIAM.

Plaintiff, sometimes herein referred to as Drum, filed this action for judicial review of the final order of the Interstate Commerce Commission, hereinafter I.C.C., granting operating rights to intervenor, hereinafter Maddux, in Docket No. MC-129262, Ayers & Maddux, Inc., Common Carrier Application.

Maddux filed its application with the I.C.C., seeking authority to operate as a common carrier by motor vehicle, in interstate or foreign commerce, over irregular routes, transporting "alcoholic beverages or alcoholic liquors, in bulk, in tank vehicles * * * from all United States ports of entry on the International Boundary Line between the United States and Mexico, to points in California, Michigan, Illinois and Ohio." That application requested that the grant of authority contain the express restriction, "with no authorization to transfer property from one vehicle to another."¹

Drum and Ringsby-Pacific, Ltd., both motor carriers engaged in the transportation of alcoholic liquors, in bulk, in tank vehicles, from such ports of entry to points within the United States, opposed the Maddux application. Drum requested an oral hearing and the right to cross-examine witnesses supporting the Maddux application. The I.C.C. rejected that request. The application was considered under the Commission's rules for modified procedure upon the written pleadings and supporting written documents alone.

The I.C.C. report and order found that public convenience and necessity required that Maddux be granted authority to operate as a common carrier, and to undertake the requested transportation from ports of entry at Laredo and El Paso, Texas, and ports of entry in Arizona and California, to Los Angeles, Menlo Park and San Francisco, California, Detroit, Michigan, Peoria, Illinois, and Cincinnati, Ohio. The requested restriction against transfer of lading between vehicles was omitted from the order upon the Commission's statement that such a restriction would be "difficult of enforcement and administratively undesirable."

After the I.C.C. denied Drum's Petition for Reconsideration, the instant complaint was filed seeking judicial review.

Drum has authority to operate as a common carrier, over irregular routes, transporting alcoholic liquors, in bulk, in tank vehicles, from all ports of entry on the United States-Mexico border in Texas, New Mexico, Arizona and California, except San Ysidro, California, to points located in the 48 adjacent states of the United States. Since 1959, its equipment has been used exclusively for the transportation of alcohol and alcoholic liquors.

Operating from its East Peoria, Illinois, home office, Drum transports, as here pertinent, tequila and kahlua of Mexican origin, in stainless steel tank vehicles, from such ports of entry to consignees throughout the 48 adjacent states. Liquor is transported by Mexican carriers in tank vehicles to the given International Border port. A Drum vehicle meets the Mexican carrier at the port of entry, and the liquor is pumped from the Mexican tanker to a Drum tanker for transport within the United States.

A like service, employing the same change of lading procedure, is provided by Ringsby from the port of entry at San Ysidro, California, to Los Angeles, Menlo Park, and San Francisco, California.

Neither Drum nor Ringsby has authority to operate as a common carrier within Mexico. Thus, a change of lading between connecting carriers, the one Mexican and the other domestic, is necessary in all transportation operations undertaken by both.

The I.C.C. found that Maddux owned six tractors and two stainless steel tank trailers, and that it had four additional stainless steel tank trailers on order. Its existing equipment is licensed for operation both in Mexico and the United States. The president of Maddux owns a substantial interest in Arrendadora "AMA", S.A., a Mexican corporation and common carrier by motor vehicle, located in Nogales, Sonora, Mexico.

The Maddux application proposed a through service, provided jointly by Maddux and AMA. The Maddux equipment would be operated in Mexico by AMA, thereby enabling shippers to load tequila and kahlua into the Maddux tankers at points of origin within Mexico for shipment to points within the United States without the necessity for a change of lading between vehicles. The loaded vehicle would be transported by AMA to a port of entry, at which point the equipment would be taken over by Maddux for the necessary transportation within the United States.

The I.C.C. found that neither Drum nor Ringsby was willing or able to provide a like through service. It further found that the service proposed by Maddux was a substantially better service than that provided by existing carriers, and a new and unique service not presently available to shippers. There was no finding that the present service was inadequate.

In the view which we take of this case, we need not consider Drum's principal argument that the case must be remanded to the I.C.C. for a formal hearing for the general purpose of permitting cross-examination. We think the Commission's findings are supported by substantial evidence under the approved modified procedure, and that the findings are adequate to support the grant of operating rights to Maddux, if the authority granted is restricted in accordance with the proposal in the Maddux application. However, with that restriction removed, we believe the grant of a new certificate requires a finding, upon sufficient evidence, that existing service is inadequate. No such evidence or finding appears in the record before this court.

The Congress has stated the guidelines for the promotion of adequate systems of transportation, and the avoidance of ruinous competition, by its adoption of the National Transportation Policy, 49 U.S.C.A., Ch. 1, Hist. Note, p. 9, as follows:

"It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act (chapters 1, 8, 12, 13, and 19 of this title), so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions; — all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act chapters 1, 8, 12, 13, and 19 of this title shall be administered and enforced with a view to carrying out the above declaration of policy." (Emphasis added.)

The emphasized language reflects a concern over fair competition in the transportation industry which was voiced by the courts even before the Policy was enacted. See, e. g., Pennsylvania R. R. Co. v. Pittsburgh, L. & W. R. R. Co., 83 F.2d 861, 863 (6th Cir. 1936). Since the enactment of the Policy, many courts have held that it is a guide for the I.C.C. and its decisions and the Act must be read in the light of the Policy. See, e. g., McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544 (1944); American Trucking Associations, Inc. v. United States, 170 F. Supp. 38 (D.D.C.1959), rev'd on other grounds, 364 U.S. 1, 6-7, 80 S.Ct. 1570, 4 L.Ed.2d 1527 (1960); New York S. & W. R. R. Co. v. United States, 200 F.Supp. 860 (D.N.J.1961), rev'd on other grounds, 372 U.S. 1, 83 S.Ct. 614, 9 L.Ed.2d 541 (1963); Roadway Exp., Inc. v. United States, 213 F.Supp. 868 (D.Del.1963); and Southern Pac. Co. v. United States, 277 F.Supp. 671 (D.Neb.1967), aff'd per curiam, 390 U.S. 744, 88 S.Ct. 1442, 20 L.Ed.2d 275 (1968).

Generally, in the absence of a presently competing carrier, the I.C.C. may authorize new service upon a showing that shippers need the service and this will satisfy the Policy and the public interest. Cf. Acme Fast Freight, Inc. v. United States, 281 F.Supp. 314, 319 (D. Del.1967, supp. opinion 1968). Where there is existing service, it may even authorize competition in order to compel adequate service. Atlanta-New Orleans Motor Freight Co. v. United States, 197 F.Supp. 364 (N.D.Ga.1961). However, the I.C.C.'s powers over competition are not all-inclusive, and, if destructive competition arises by virtue of a grant of authority, it may give rise to a private antitrust action. Marnell v. United Parcel Serv. of Amer., Inc., 260 F.Supp. 391 (N.D.Cal.1966).

Maddux asks us to hold that the I.C.C. may grant a certificate of public convenience and necessity whenever it finds that a proposed service would be a "substantial improvement" over existing service or constitute "a new and unique service not presently available to the shipping public." Texas Mexican Ry. Co. v. United States, 250 F.Supp. 946, 949...