Interstate Common Carrier Council v. United States

• Decision Date: 13 April 1949
• Docket Number: No. 3959.,3959.
• Parties: INTERSTATE COMMON CARRIER COUNCIL OF MARYLAND, Inc., et al. v. UNITED STATES et al.
• Court: U.S. District Court — District of Maryland

84 F. Supp. 414

INTERSTATE COMMON CARRIER COUNCIL OF MARYLAND, Inc., et al. v. UNITED STATES et al.

No. 3959.

United States District Court D. Maryland. Civil Division.

April 13, 1949.

John R. Norris, James J. Doherty, Baltimore, Maryland (Baldwin, Jarman & Norris, Baltimore, Maryland, of counsel), for plaintiff.

H. L. Underwood, Gordon C. Locke, Washington, D. C. (Daniel W. Knowlton, Chief Counsel, Washington, D. C., of counsel), for Interstate Commerce Comm.

Wm. D. McFarlane, Sp. Asst. to Atty. Gen., Herbert A. Bergson, Asst. Atty. Gen., Bernard J. Flynn, U. S. Atty., Baltimore, Md., for United States.

Before SOPER, Circuit Judge, COLEMAN, Chief Judge, and CHESNUT, District Judge.

CHESNUT, District Judge.

The Interstate Commerce Commission granted a certificate of authority to Samuel Schreiber and Mrs. Harry Schreiber, proprietors of a common carrier motor transportation business, to operate an alternate route from Baltimore, Maryland, to Philadelphia, Pennsylvania, over U. S. Highway No. 1, for operating convenience only. The complaint in this case is brought to set aside the order of the Commission as invalid because not based on sufficient evidence to justify a finding that the grant of authority was required by public convenience and necessity.¹

The Schreibers have been engaged in the trucking business for more than twelve years past. They operate a fleet of 225 vehicles which includes tractor-trailer units, pick-up trucks and straight trucks and have about 200 full-time employees. Terminals are maintained at Pittsburgh, Chicago and Baltimore, Rochester, N. Y., and Washington, D. C. They are fit and able, financially and otherwise, to conduct their operations.

Prior to 1945 they held certificates of authority from the Commission for various motor routes from Chicago to or through Washington, Baltimore, Philadelphia and New York. One of these routes from Pittsburgh easterly to New York runs over U. S. Highway No. 22 from Pittsburgh through Armagh and Harrisburg, Pa., and Allentown to New York; another runs in a more southerly direction from Pittsburgh over U. S. Highway No. 30 through Breezewood, Chambersburg and York to Philadelphia, Pa., and from Philadelphia over U. S. Highway No. 1 to New York. From Breezewood, Pa., another route runs down into Maryland over U. S. Highway No. 40 to Hagerstown and Frederick dividing there with one route going to Washington and another to Baltimore. Prior to 1945 the Schreibers did not have any route authorized by the Commission from Baltimore to New York except by reversing the route from Baltimore to Breezewood, Pa., and there joining the route from Breezewood easterly through Chambersburg to Harrisburg or through York to Philadelphia. This was an impracticable route from Baltimore to New York by reason of the distance, 360 miles, as compared with 183 miles from Baltimore to New York via Philadelphia, or 245 miles via Harrisburg.

In 1945 on the application of the Schreibers for various changes and extensions or alternate routes the Commission by order dated March 19, 1945 granted authority to them for an additional route designated as route 4C, between Harrisburg, Pa., and Baltimore, Md., over U. S. Highway No. 111 for operating convenience only. It will be noted that this additional route from Baltimore to Harrisburg joined at the latter place the prior route for which the Schreibers did hold authority over U. S. Highway No. 22 from Pittsburgh through Harrisburg to New York.

In 1947 the Schreibers applied to the Commission for a further extension of certain routes and for an alternate route between Baltimore, Md., and New York over alternate routes for operating convenience only. Extended evidence was submitted on behalf of the applicants and numerous protestants including various rail and motor carriers. An extended report was filed by the Examiners, to which both the applicants and some of the protestants filed exceptions. With respect to the alternate route from Baltimore to New York the Examiners reported unfavorably, but Division 5 of the Commission after hearing, on December 8, 1947, made a finding from the evidence that authority for the alternate route from Baltimore to Philadelphia over U.S. Highway No. 1 was required by public convenience and necessity. As the carrier already had an authorized route from Philadelphia to New York over U. S. Highway No. 1, it was unnecessary to duplicate that in the order. The Division submitted a very lengthy report including a summarization of the evidence for and against the application and ordered the certificate to issue. Thereupon the Interstate Common Carrier Council of Maryland, Inc., membership in which included a number of competing motor carriers, requested reconsideration of the order by the full Commission, but upon consideration of the record by the full Commission the petition for reconsideration was denied on March 1, 1948. On April 2, 1948 the Interstate Common Carrier Council filed its complaint in this case to set aside the order of the Commission. On February 15, 1949 the complaint was amended by the addition of two other complainants, the Baltimore Transfer Company and the Davidson Transfer and Storage Company, competitors of the Schreibers who, however, had not theretofore been protesting intervenors before the Commission.

After the filing of the complaint a three-judge court, as required by 28 U.S.C.A. §§ 2284 and 2325, was assembled, and counsel were heard. The case has been submitted for determination on the pleadings including the extended report of the Commission in the 1947 case, and also the report in the 1945 case, but without inclusion of any evidence before the Commission other than that summarized in the report.

In support of the complaint to set aside the order of the Commission it is contended that the evidence summarized by the Commission did not support the finding that the grant of the alternate route for operating convenience was required by public convenience and necessity. The heart of the Commission's conclusion will be found on sheet 13 of its report (last paragraph) reading as follows:

"Essentially, the fact to be determined is whether applicants are engaged in transporting a substantial amount of traffic between the termini of the proposed direct routes and effectively competing with other carriers for such traffic or whether the new route will enable them to institute a new service not now conducted, or a service so different from that now provided as to materially alter the competitive situation to the injury of existing carriers. In the former instance, following Dixie Ohio Exp. Co., Extension of Operations-Bristol, 30 M. C. C. 291, we are justified in granting the authority sought solely upon proof that the proposed operation would result in operating economies, but in the latter case, when the alleged alternate route amounts to the institution of a new service, we must insist upon the same measure of proof of public convenience and necessity as in any other extension application."

The Commission concluded that the case presented was in the former category and therefore required no further evidence of public convenience and necessity than proof of operating economies in actual transportation, which it was shown would amount to approximately $3700 a year. This conclusion of the Commission was based on two affirmative premises; (1) that for ten years past the Schreibers had in fact been transporting commodities as a common carrier between Baltimore and New York by way of York and Philadelphia, Pa., and (2) that, although this carrier route was unauthorized, nevertheless that fact was immaterial because the operations had been conducted in good faith on the mistaken advice of counsel, and the Schreibers did have by the 1945 order an authorized route between Baltimore and New York via Harrisburg and Allentown, although they had not in fact used it. The complainants attack the latter premise as unsound and unfounded. They do not dispute the fact that the Schreibers had previously used the route from Baltimore to New York by way of York, but they say that the fact is immaterial because the Schreibers had never established any rights under the "grandfather clause" and had never received any authority from the Commission to use it. They also say that the conclusion of the Commission that the Schreibers had an authorized route from Baltimore to New York via Harrisburg is a plain misreading of what the Commission had ordered in the 1945 proceeding. They therefore contend that the present order of the Commission for the alternate shorter route from Baltimore to New York by way of Philadelphia constitutes really a new service not supported by any evidence of public convenience and necessity, and is therefore invalid, discriminatory and prejudicial to existing competitors. After careful study and consideration of the report of the Commission and an analysis of what was granted by the Commission in the 1945 proceeding, we are forced to conclude that this contention of the complainants is correct.

With respect to user of the route from Baltimore to Philadelphia and New York by way of York, Pa., the reports, both of the Examiner and of the Commission, determined that it was an unauthorized use. We take it to be clear that the carrier could acquire no prescriptive rights by virtue of an unauthorized use; and indeed the report of the Commission attributes significance to the fact of such user only in connection with its determination that the carrier had an authorized route from Baltimore to New York via Harrisburg. It follows that questions as to the correctness of this latter determination constitutes the crux of the case.

To understand the reasoning of the Commission in reaching the conclusion that the carrier had an authorized route from Baltimore to New York via Harrisburg, we must refer to a principle previously established by the Commission with respect to the...