Lester C. Newton Trucking Company v. United States

• Decision Date: 07 March 1967
• Docket Number: Civ. A. No. 2508.
• Citation: 264 F. Supp. 869
• Parties: LESTER C. NEWTON TRUCKING COMPANY, a corporation, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — District of Delaware

264 F. Supp. 869

LESTER C. NEWTON TRUCKING COMPANY, a corporation, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.

Civ. A. No. 2508.

United States District Court D. Delaware.

March 7, 1967.

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H. James Conaway, Jr., of Young, Conaway, Stargatt and Taylor, Wilmington, and H. Charles Ephraim, Washington, D. C., for plaintiff.

Alexander Greenfeld, U. S. Atty., Wilmington, John H. D. Wigger, Dept. of Justice, and Donald F. Turner, Washington, D. C., for defendant, the United States.

Robert W. Ginnane, Gen. Counsel, Betty Jo Christian and John E. Faulk, Washington, D. C., for defendant, I.C.C.

Before SEITZ, Circuit Judge, WRIGHT, Chief District Judge and STEEL, District Judge.

SEITZ, Circuit Judge.

Plaintiff corporation Lester C. Newton Trucking Company ("Newton") brings this action to set aside an order of the Interstate Commerce Commission and to remand the proceedings to the Commission for interpretation or amendment of its certificate of public convenience and necessity to include authority "enabling continued complete service by it throughout the territory in which it operates" as a motor carrier of frozen fruits, frozen berries, and frozen vegetables.¹ This is the decision of the district court which has jurisdiction under 28 U.S.C.A. § 1336 and which is composed of three judges as required by 28 U.S.C.A. § 2325 and as constituted pursuant to 28 U.S.C.A. § 2284.

The United States and the Interstate Commerce Commission, defendants, admit that Newton as required by 49 U.S.C.A. §§ 17(9), 305(g) and (h) has exhausted its administrative remedies through proceedings begun back in 1958. Newton filed with the Commission a "grandfather" application under § 7(c) of the Transportation Act of 1958 (P.L. 85-625; 72 Stat. 568), and later a second application pursuant to 49 U.S.C.A. § 307 seeking an extension of its authority in the event it was not satisfied with the scope of its existing authority as determined in the "grandfather" proceedings. The "grandfather" and extension proceedings were consolidated and division 1 of the Commission granted Newton limited authority under the "grandfather" provision (84 M.C.C. 759). Division 1 also granted certain new authority in the extension proceedings, but then reversed itself and denied Newton's extension application in its entirety (89 M.C.C. 269). Newton thereupon filed the present action. Thereafter, the Commission on its own motion reconsidered its prior orders, modifying the order on Newton's "grandfather" application and again denying Newton's extension application (98 M.C.C. 702). Still not satisfied, Newton filed a supplement to its original complaint by which it sought to set aside the latest Commission order. It is that order we now consider.

Newton advances three arguments in support of its contention that the Commission erred in refusing to grant broad authority for transportation of frozen fruits, berries, and vegetables throughout some sixteen Eastern states. Newton first declares that its present certificates should be construed to grant authority to transport frozen fruits, berries, and vegetables not only under the commodity descriptions "general commodities" and "frozen foods", as the Commission held, but also under the headings of "agricultural commodities" and "farm produce", which the Commission denied. If we accepted this first argument that Newton's present certificates already authorize the desired full scope of transportation, it would of course become unnecessary to proceed further to Newton's second and third arguments under the "grandfather" and extension provisions, respectively.

Newton's first argument based on its outstanding certificates requires reference to § 203(b) (6) of the Interstate Commerce Act. This section excepted from regulation under the Act

"motor vehicles used in carrying property consisting of * * * agricultural * * * commodities (not including manufactured products thereof), if such motor vehicles are not used in carrying any other property, or passengers, for compensation."

The Interstate Commerce Commission adopted a strict construction of this exception in two of its aspects. First, the Commission interpreted the exemption to apply only to the carrying of agricultural commodities in vehicles never used for carrying non-exempt products (i. e., in vehicles which were not "tainted"). Second, the Commission interpreted the exemption to apply only to agricultural commodities essentially in their natural state.

The courts, however, adopted a more liberal approach toward this exception. As to the first aspect, the courts held that the exemption extended to all transportation of exempt agricultural commodities even in "tainted" vehicles except in mixed loads with non-exempt products. Interstate Commerce Commission v. Dunn, 166 F.2d 116 (5th Cir. 1948); Interstate Commerce Commission v. Service Trucking Co., Inc., 186 F.2d 400 (3rd Cir. 1951). This judicial interpretation has not been altered by later judicial or Congressional developments and remains the law today. As to the second aspect, the courts held in a series of decisions that various degrees of processing did not remove agricultural products from the agricultural commodities exception. For example, it was held that the exemption covered otherwise exempt agricultural commodities in a fresh frozen state. Home Transfer & Storage Co. v. United States, 141 F.Supp. 599 (D.C.Wash.1956), affd. per. cur., 352 U.S. 884, 77 S.Ct. 129, 1 L.Ed.2d 82 (1956); Frozen Food Express v. United States, 148 F.Supp. 399 (D.C.Texas 1956), affd. per cur. 355 U.S. 6, 78 S.Ct. 38, 2 L.Ed.2d 22 (1957).

In order to halt the continued expansion of the agricultural commodities exemption and to return to regulation some eleven items including frozen fruits, berries, and vegetables, Congress passed the Transportation Act of 1958.² A saving clause was provided to give effect to certain certificates which the Commission had issued under its assumption of jurisdiction but which contrary judicial decisions prior to the Transportation Act had held were not required.³ In addition, a "grandfather" clause was provided to protect carriers who had been engaged without certificates of authority in the bona fide transportation of commodities theretofore exempt from regulation but thereafter to be subject to the Commission's jurisdiction.⁴

The specific problem raised by Newton's first argument is to determine as a matter of statutory construction of section 7(b) of the Transportation Act of 1958 the extent to which Newton may transport frozen fruits, berries, and vegetables under the certificates it held before the effective date of the Act in 1958. In the 1930s Lester C. Newton, the proprietor of the business which later was incorporated, obtained a certificate authorizing the transportation of numerous special products and agricultural commodities. After the development of processes for the freezing of foods, Newton in the early 1940s sought permission to transport fresh frozen berries, fruits and vegetables and other frozen products under its then existing "agricultural commodities" authority. In Newton Extension-Frozen Foods, 43 M.C.C. 787 (1944), the Commission denied that these frozen items were exempt agricultural commodities, but granted Newton certain new authority to transport frozen products under "general commodities" and "frozen foods" clauses. It is this "general commodities" and "frozen foods" authority which Newton under the Commission's construction of § 7(b) retains after the Transportation Act of 1958 removed the exemption of frozen fruits, berries and vegetables.

Newton argues that a re-evaluation of its certificates is required as a result of the judicial interpretations of the agricultural commodities exemption subsequent to the Commission's ruling in the Newton extension case of 1944. Newton contends that the moment before the effective date of the Act the "agricultural commodities" clause in its certificates included frozen fruits, berries, and vegetables. Therefore, Newton concludes, it may continue to engage in the transportation of these frozen products under its "agricultural commodities" and "farm produce" authorities which are preserved by § 7(b).

The Commission responds to Newton's argument by attacking the proposition that the moment before the effective date of the Act the "agricultural commodities" clause in Newton's certificates encompassed frozen fruits, berries, and vegetables. Division 1 argued that Newton's "agricultural commodities" certificates were issued at a time when frozen fruits, berries, and vegetables were not considered to be within that class:

"In view of this Commission's past interpretation of Section 203(b) (6) of the act, there is no doubt but that Newton's certificates authorizing the transportation of agricultural commodities or farm produce were not, at the time of their issuance, intended to authorize the transportation of frozen fruits, berries, or vegetables." (84 M.C.C. 759, 768, confirmed 98 M.C.C. 702, 706).

The implication of the Commission's argument is that "agricultural commodities" certificates would be saved by section 7(b) if issued after the 1956 judicial decisions which held that frozen fruits, berries, and vegetables were within that class. In fact, the Commission has so held, citing the Newton proceedings, in Chesapeake Motor Lines, Inc., Common Carrier "Grandfather" Application, 89 M.C.C. 237 (1962).

We find some difficulty in accepting the Commission's interpretation that the coverage of the "agricultural commodities" class remains fixed as of the time of issuance of such a certificate. "Agricultural commodities" are those products, whatever they might be at any point in time, which are exempt under § 203(b) (6) of the Interstate Commerce Act when carried in straight loads. Therefore, the purpose of a...