ICC v. Southwest Marketing Association

• Decision Date: 07 July 1970
• Docket Number: Civ. A. No. 4-1181.
• Citation: 315 F. Supp. 805
• Parties: INTERSTATE COMMERCE COMMISSION, Consolidated Copperstate Lines, Riss & Company, Texas Oklahoma Express, Inc., Tri-State Motor Transit Co., Yellow Freight System, Western Gillette, Inc., and intervening Plaintiff, Consolidated Freightways Corporation of Delaware, Plaintiffs, v. SOUTHWEST MARKETING ASSOCIATION and Jack R. Cobb, Defendants.
• Court: U.S. District Court — Northern District of Texas

315 F. Supp. 805

INTERSTATE COMMERCE COMMISSION, Consolidated Copperstate Lines, Riss & Company, Texas Oklahoma Express, Inc., Tri-State Motor Transit Co., Yellow Freight System, Western Gillette, Inc., and intervening Plaintiff, Consolidated Freightways Corporation of Delaware, Plaintiffs, v. SOUTHWEST MARKETING ASSOCIATION and Jack R. Cobb, Defendants.

Civ. A. No. 4-1181.

United States District Court, N. D. Texas, Fort Worth Division.

July 7, 1970.

Rawlings, Sayers & Scurlock, by Clayte Binion, Fort Worth, Tex., Wrape & Hernley, Memphis, Tenn., Harry Horak, Regional Counsel, I.C.C., Ft. Worth, Tex., for plaintiffs.

Lipscomb & Renfro, by Cue Lipscomb, Fort Worth, Tex., for defendants.

MEMORANDUM OPINION AND JUDGMENT

WILLIAM M. TAYLOR, Jr., District Judge.

The Interstate Commerce Commission, hereinafter referred to as the Commission, filed its complaint herein on November 21, 1968, seeking an injunction against the defendants by virtue of Title 49, Section 322(b) (1), U.S.Code, to permanently enjoin them from transporting property in interstate or foreign commerce by motor vehicle, for compensation, without appropriate authority from the Commission, and alleging that certain transportation performed by them was in violation of Title 49, Sections 303(c), 306(a) or 309(a), U.S. Code. A consent preliminary injunction was entered in that action, No. CA-4-1115, on February 7, 1969, restraining Defendant Southwest Marketing Association, hereinafter referred to as "SMA", during the pendency of this action from transporting property, other than commodities exempt under Title 49, Section 303(b) (6), U.S.Code, on public highways, as a for-hire, common, or contract carrier by motor vehicle, for nonmembers, unless same is coordinated with the movement of membership shipments in the reverse direction on the same round trip by the same vehicles, and from transporting such property by claiming the "agricultural cooperative exemption" as set forth in Title 49, Section 303(b) (5), U.S.Code, for nonmembers, for compensation, the dollar volume of which equals or exceeds the dollar volume of transportation revenue derived from members. A permanent injunction, similar to the preliminary injunction, was entered on March 23, 1970, by consent, against SMA, Jack R. Cobb and Charles Colvin, defendants in said action.

On February 26, 1969, Consolidated Copperstate Lines and other motor carriers filed their bill of complaint in Civil Action No. 4-1181 against Southwest Marketing Association and Jack R. Cobb, such filing being pursuant to Title 49, Section 322(b) (2), U.S.Code, and seeking relief similar to that sought by the Commission. The Commission has intervened in the latter action. Answers and other pleadings have been filed and on May 28, 1969, the two actions were consolidated into one case and styled as Docket CA 4-1181. Trial was held and evidence adduced before this Court and an advisory jury pursuant to Rule 39(c) of the Federal Rules of Civil Procedure. On March 31, 1970, the advisory jury found (1) that SMA is a bona fide agricultural cooperative association; (2) that it has performed transportation services for nonmembers which are not incidental and necessary to its services for members; and (3) that such services did not deprive the motor carrier plaintiffs of revenue as a result of the transportation performed by SMA. The Commission has moved for judgment notwithstanding the advisory jury verdict, particularly with respect to its finding No. (1). Motor carrier plaintiffs have filed a brief for findings and conclusions with respect to the advisory jury's findings Nos. (1) and (3). (Reply brief has been filed by defendants.)

The function of the advisory jury is to enlighten the trial court but the jury's verdict has no binding effect upon the court. (American) Lumbermens Mutual Casualty Co. v. Timms & Howard, Inc., CCA 2d, 108 F.2d 497. If the trial court does not accept the jury's advice, it may proceed to make its own independent findings of fact and conclusions of law, and its rejection of the advisory verdict is not subject to appellate review. Hargrove v. American Central Insurance Co., CCA 10th, 125 F.2d 225. The review on appeal is from the court's judgment as though no jury had been present. The responsibility for decision in the lower court is upon the trial judge. Mahon v. Bennett, W.D.Mo., 81 F.Supp. 901. Rule 52(a) of the Federal Rules of Civil Procedure provides that in "all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment." The Court, in reaching its findings and conclusions herein, has considered the pleadings, evidence, stipulations, arguments and briefs of counsel, and the verdicts of the advisory jury.

In addition to the matters contained in the permanent injunction entered herein on March 23, 1970, on behalf of the Commission, the latter contends that SMA is not a bona fide agricultural cooperative association and is, in fact, a sham which enables Cobb to perform the interstate transportation of nonexempt commodities without appropriate authority from the Commission. The motor carrier plaintiffs also make this contention.

The exemption provision of the Interstate Commerce Act accorded cooperative associations is found in Title 49, Section 303(b), U.S.Code, which reads as follows:

Nothing in this chapter, except the provisions of section 304 relative to qualifications and maximum hours of service of employees and safety of operations or standards of equipment shall be construed to include * * * (5) motor vehicles controlled and operated by a cooperative association as defined in sections 1141-1141j of Title 12, as amended, or by a federation of such cooperative associations, if such federation possessed no greater powers or purposes than cooperative associations so defined * * *.

The cooperative association, in order to be eligible to perform for-hire transportation service in interstate commerce by motor vehicle under Title 49, Section 303(b) (5), U.S.Code, must meet the definition of such an association and comply with the provisions of Title 12, Sections 1141 to 1141j, known as the Agricultural Marketing Act and particularly with Section 1141j thereof, which provides:

(a) As used in this subchapter, the term `cooperative association' means any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services: provided, however, That such associations are operated for the mutual benefit of the members thereof as such producers or purchasers and conform to one or both of the following requirements:

First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; and

Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum.

And in any case to the following:

Third. That the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association. (Emphasis added)

SMA does not deal in farm products or farm supplies. It performs transportation as a for-hire carrier by motor vehicle in interstate commerce. Transportation is a service. In order to be accorded this exemption, the cooperative association must control and operate the vehicles, must be an association of farmers operated for their mutual benefit as producers, such transportation must be a farm business service, and the association must meet the third requirement of said Section 1141j.

The facts in this case are similar to those outlined in Interstate Commerce Commission v. Iowa Cooperative Association, D.C., 236 F.Supp. 873. Later, this Court, in Agricultural Transportation Association of Texas v. United States and I.C.C., D.C., 274 F.Supp. 528, said:

"* * * Without the scope of `producer marketing' and within the purview of `other industries' are the processors of farm produced materials. This is evident from a reading of § 1141j(a) wherein Congress authorized the cooperative association, composed of producers, to act together in processing and distributing their produce, while the processing and distributing industries were excluded from the declaration of policy in § 1141. We hold, therefore, that a `farmer' within the Agricultural Marketing Act is a producer of agricultural commodities."

* * * * * *

"Nothing we have herein said is to be construed so as to prohibit members of a cooperative association from organizing, managing and controlling their own processing and distributing facilities. So long as such activities remain a cooperative effort by the members for their mutual benefit, the association is given specific statutory authority to undertake such a pursuit." § 1141j(a), 12 U.S.C.A. (Emphasis supplied)

Under the applicable statutes, the activities, in this case transportation, must remain a cooperative effort by the members. The evidence shows that this cooperative effort does not exist as far as the members of SMA are concerned. Cobb and others under his supervision solicit the members and it is evident that the purpose of such solicitation is to obtain traffic to keep Cobb's vehicles busy. He has filed tenders by SMA to the Government, soliciting the movement of Government...