ICC v. Interstate Auto Shippers, Inc.

• Decision Date: 07 February 1963
• Citation: 214 F. Supp. 473
• Parties: INTERSTATE COMMERCE COMMISSION, Plaintiff, v. INTERSTATE AUTO SHIPPERS, INC. and Alfred M. Rappeport, Defendants.
• Court: U.S. District Court — Southern District of New York

214 F. Supp. 473

INTERSTATE COMMERCE COMMISSION, Plaintiff, v. INTERSTATE AUTO SHIPPERS, INC. and Alfred M. Rappeport, Defendants.

United States District Court S. D. New York.

February 7, 1963.

Seymour Glanzer, Larsh B. Mewhinney, New York City, for plaintiff.

H. Howard Friedman, New York City, for defendants.

LEVET, District Judge.

This is a motion for a preliminary injunction whereby the plaintiff seeks to restrain the defendants from transporting property in interstate commerce as a common carrier by motor vehicle in violation of Section 206(a) of the Interstate Commerce Act (49 U.S.C. § 306(a)). Following service of a verified complaint and verified answer, the plaintiff, by order to show cause, brought on an application for a temporary restraining order. This court conducted a hearing on plaintiff's application and evidence was adduced.

The proposed findings of fact, conclusions of law and briefs of the parties having been received, the court, after considering the pleadings, evidence, exhibits and the stipulation of the parties, now makes and files herein its Findings of Fact and Conclusions of Law, separately stated:

FINDINGS OF FACT

1. The defendant corporation, of which the individual defendant is the president and sole stockholder, maintains an office and place of business in the City and County of New York, New York, within the jurisdiction of this court.

2. From sometime in 1958 to the present the defendants have been engaged in the "driveaway" business in interstate commerce.

3. "Driveaway" is a service sought by owners of automobiles, traveling to a given destination by another mode of transportation, who wish their cars delivered to that destination.

4. The defendants advertise their business to the general public in the Manhattan Yellow Pages and in The New York Times (Pl. Exs. 3 and 4 and Exs. 3, 4 and 5 attached to Clark's affidavit in Pl. Ex. 7). The Yellow Pages advertisement is contained under the heading of "automobile transporting." A quarter page advertisement holds out "Agents in Principal Cities of U.S.A.," "Insurance Arranged Drivers' Bonds Posted," "Ship Your Car at Low Rates Nationwide & Overseas Via Steamer-Rail-Driveaway." The Commercial Notice Section of The New York Times contains the following sample: "Reliable drivers, Florida, Tucson, Denver, Chicago. Immediate."

5. In response to advertising or through word of mouth, those persons who wish their automobiles delivered to nationwide destination points via "driveaway" service communicate with the defendants. If the terms and arrangements are satisfactory, car owners enter into a series of written agreements with the defendants on printed forms provided by the defendants. While the circumstances may vary slightly depending on the car owner's needs, the transaction involving the shipment of an automobile owned by one Michael Nastacio is representative of all.

Nastacio sought to have his car transported from Brooklyn, New York to Colorado Springs, Colorado. On October 26, 1960 he entered into a driveaway agreement (Ex. 6 attached to Pl. Ex. 7) with the defendants. By its terms the defendants are authorized to act as agents for Nastacio to engage a driver for him and to deliver the automobile to destination. The agreement sets forth certain instructions to be given the driver by the defendants, including such items as the routes to be traveled, notification in case of accident, and authorization that the driver is to retain possession of the vehicle until he receives payment of the balance of delivery charges. In the event of accident the defendants agree to pay up to $50.00, if the car owner carries a collision insurance policy. Nastacio paid the defendants $115.00 on entering into the driveaway agreement.

Thereupon, on October 28, 1960, the defendants entered into a Driver Agreement with one Edward Bonville, to deliver Nastacio's car to destination. (Ex. 7 attached to Pl. Ex. 7) The agreement is signed by defendant Alfred M. Rappeport, as dispatcher for the corporate defendant. It sets forth the routes to be traveled, time allowed for delivery and defines the driver's duties and responsibility. The driver agrees to deposit $50.00 as a "bond" to be refunded upon delivery of the car, but which may be forfeited due to driver's negligence. The driver is required to telephone the defendants in case of accident or major service and await further instructions. After the allowed time for delivery has elapsed, the defendants are permitted to take all steps necessary to recover the vehicle and the driver may forfeit his "bond."

Upon entering into the driver agreement, Rappeport and the driver signed a form entitled "Temporary In Transit Authorization", which had previously been signed by the car owner. (Pl. Ex. 5) Simultaneously, Bonville was given a post-dated check drawn by the defendants, in the sum of $50.00, as a return of his "bond" deposit.

6. On March 9, 1959, District Supervisor Tomany, plaintiff's representative, advised the defendants, in writing, that its activities were those of an interstate motor common carrier of property for compensation and required authority from the Commission. (Ex. 1 attached to Pl. Ex. 7) On March 11, 1959, Mr. Rappeport advised the supervisor that he would apply to the Commission for authority and until such authority was granted he would cease all driveaway activities. On March 16, 1959, Mr. Rappeport wrote to Mr. Tomany in partial confirmation of the advice given the supervisor at the conference. (Ex. 2 attached to Pl. Ex. 7) For at least two weeks thereafter the defendants ceased to advertise their driveaway business in New York newspapers. However, Mr. Rappeport testified that the defendants never terminated their driveaway operations.

7. Rappeport testified that during 1962 the defendants entered into about 1,500 "driveaway" agreements, of which a substantial number involved interstate transactions. In many instances, unlike the Nastacio "driveaway," the car owner did not pay the entire fee in advance. On those occasions the defendants collected the difference between the agreed-upon fee and the "bond" to be deposited by the driver. When the car was delivered, the owner would reimburse the driver in the amount of his "bond" and the defendants would retain the bond. For example, the usual fee for "driveaway" from New York City to Miami, Florida is $75.00. The owner pays $25.00 in advance to the defendants and the driver deposits $50.00 with the defendants. Upon delivery, the owner pays the driver $50.00 and the defendants retain the "bond" deposit.

8. The defendants will continue to engage in the "driveaway" business in interstate commerce without there being in force and effect a certificate of public convenience and necessity authorizing them or either of them to conduct such operations, unless restrained by this court.

DISCUSSION

The plaintiff contends that the "driveaway" operations conducted by the defendants are those of a "common carrier by motor vehicle" as defined in Section 203(a) (14) of the Interstate Commerce Act (49 U.S.C. § 303(a) (14)) and that under the provisions of Section 206(a) (1) of said Act (49 U.S.C. § 306(a) (1)), no common carrier by motor vehicle shall engage in any interstate or foreign operations unless there is in force and effect a certificate of public convenience and necessity issued by the Interstate Commerce Commission authorizing such operations. Neither defendant has been issued any authority by the Commission.

The defendants contend they are not engaged in the business of transportation of property by motor vehicle but that their business is of such a nature as not to require authority from the plaintiff.

Rappeport claims that the defendants' fee is earned solely for "screening" drivers. The "screening" service consists primarily of photographing and fingerprinting drivers, examining identification and being furnished with references. In order to secure drivers, the defendants advertise in the newspapers (Pl. Ex. 6) or rely upon drivers seeing their "driveaway" advertisement in the Yellow Pages. Sometimes the driver is not introduced to the owner and has no dealing with the owner until delivery at destination. On other occasions, at the owner's request, the defendants introduce the driver to the owner.

Although Rappeport claims the defendants' fee is solely for "screening," it is noted that the fee varies in accordance with the distance to be traveled. The New York to Miami fee is about $75.00; the New York to Colorado fee was $115.00 in the...