Nashua Motor Express, Inc. v. United States

• Decision Date: 30 April 1964
• Docket Number: Civ. A. No. 2409.
• Parties: NASHUA MOTOR EXPRESS, INC., Plaintiff, v. UNITED STATES of America, Defendant, and Interstate Commerce Commission, Intervening Defendant.
• Court: U.S. District Court — District of New Hampshire

230 F. Supp. 646

NASHUA MOTOR EXPRESS, INC., Plaintiff, v. UNITED STATES of America, Defendant, and Interstate Commerce Commission, Intervening Defendant.

Civ. A. No. 2409.

United States District Court D. New Hampshire.

April 30, 1964.

COPYRIGHT MATERIAL OMITTED

McLane, Carleton, Graf, Greene & Brown, Arthur A. Greene, Jr., Manchester, N. H., Foley, Hoag & Eliot, Loyd M. Starrett, Mary E. Kelley, Boston, Mass., for plaintiff.

Louis M. Janelle, U. S. Atty., Concord, N. H., Francis A. Silver, Assoc. Gen. Counsel, Interstate Commerce Commission, Washington, D. C., for defendant.

Before HARTIGAN, Circuit Judge, and SWEENEY and CONNOR, District Judges.

CONNOR, District Judge.

Plaintiff brings this suit pursuant to 49 U.S.C. §§ 17(9) and 305(g), and 5 U.S.C. § 1009, to annul, enjoin, and set aside certain orders of the Interstate Commerce Commission denying both its petition for modification of its grandfather certificate to include various extended operations, and its application for certification of said extended operations on the basis of public convenience and necessity. Jurisdiction and venue are founded on 28 U.S.C. §§ 1336 and 1398. A three-judge district court has been convened pursuant to 28 U.S.C. chs. 155 and 157.

The precise facts of the case are not at all clear. They are nowhere fully set forth in the reports of the Commission made a part of the record herein; and, as the evidence before the Commission has not been laid before us, it is not the function of this court on review to make findings of fact here. In order to indicate the nature of the controversy, however, we refer to so much of the allegation in plaintiff's complaint as appears pertinent.

Plaintiff alleges that it holds a certificate of public convenience and necessity which was originally issued to plaintiff's predecessor, Philip Michael, pursuant to the "grandfather" provision now contained in 49 U.S.C. § 306(a) (1). Michael, a Greek immigrant whose formal education ended in the grammar schools of Greece, had founded a small trucking business in 1921 and carried on this operation under the name "Nashua Motor Express." He received assistance from his wife, Carrie, who can neither read nor write, and later from his daughters, who did office work as teenagers.

Plaintiff further alleges that by June 1, 1935, Michael was operating six trucks carrying general commodities on a regular basis between Boston, Massachusetts, Manchester and Nashua, New Hampshire, and points as far north as Laconia and Lakeport, New Hampshire. Early in 1936, Michael applied for a grandfather certificate with respect to the routes described. The grandfather certificate was not issued until March, 1942, and, when issued, it granted the requested authority as between the Boston and Manchester areas, but restricted deliveries north of Nashua to a limited number of commodities and to irregular routes.

Plaintiff further alleges that Michael handled all dealings with the Commission without the advice of counsel and that there is no indication either that anyone apprised him of the differences between the authority to which he was entitled and the certificate which he received, or that he himself was aware of these differences. Michael never raised any protest or question with respect to the certificate, but, rather, continued openly and consistently to advertise and perform his services as he had prior to the issuance of the certificate. His right so to operate was never challenged either by the Commission or by any of his numerous competitors.

Plaintiff further alleges that, upon the death of Philip Michael in 1952, his widow, Carrie, who can neither read nor write, carried on the business until the incorporation of the plaintiff in 1953. Since that time, Carrie Michael has been the majority stockholder and assistant treasurer of the plaintiff. Her daughter, Alpy, is a stockholder and is its treasurer and clerk. Alpy's husband, George A. Juris, is plaintiff's president and general manager. Joseph Descoteaux, who began as a driver for Philip Michael in 1936, was the owner of the remainder of plaintiff's stock and served as its vice-president until his death in April, 1963, after which his stock was redeemed by the plaintiff.

Plaintiff further alleges that there was transferred to the incorporated plaintiff the operating authority of Philip Michael, and that, consequently, the Commission in 1953 caused to be issued in the name of the plaintiff a certificate of public convenience and necessity embracing that authority. From 1953 to 1960, plaintiff conducted essentially the same operations as had been conducted prior to Philip Michael's death. Volume continued to increase. Throughout the period from 1942 to 1960, about one-third of all shipments handled were general commodity shipments over regular routes north of Manchester, i. e., shipments as to which the 1942 certificate had granted only limited authority over irregular routes. Yet, until near the end of 1960, no suggestion was made to the plaintiff that these latter shipments exceeded the authority originally conferred in the 1942 certificate. In November or December of 1960, however, a representative of the Commission did so advise the plaintiff. Plaintiff retained counsel, and, pending the advice of counsel, suspended temporarily its service north of Manchester. Counsel then filed the two pleadings which initiated the proceedings before the Commission, and advised the plaintiff to resume the suspended operations. Plaintiff did resume said operations and was continuing to so operate at the time the present complaint was filed in this court.

Turning from the allegations of plaintiff's complaint to the record before us, it appears that, on April 12, 1961, counsel for plaintiff instituted two proceedings before the Commission. The first, hereinafter referred to as the petition proceeding, was a petition to reopen and reconsider the proceeding on Philip Michael's application for his grandfather certificate, and to modify the grandfather rights to include the routes and services disputed herein. The second, hereinafter referred to as the application proceeding, was an application for the same disputed rights on the grounds of public convenience and necessity, as if they were new services. The application proceeding was referred to Joint Board No. 186, which held hearings at Concord, New Hampshire, in late July, 1961, and served its recommended report and order on October 2, 1961. On March 12, 1962, the Commission directed that both the application proceeding and the petition proceeding be consolidated for decision by Division 1 on the record made by Joint Board No. 186 in the application proceeding. The report of Joint Board No. 186 found, among other things, that plaintiff's services (here in dispute) with respect to certain shippers were "satisfactory," "very satisfactory," or "superior," and that "such operations were conducted under a misapprehension as to the scope of applicant's certificate," and "do not appear to have been wilful." The Board recommended the granting of the application on the grounds of public convenience and necessity. Division 1 found the Board's statement of facts to be "correct in all material respects," and, with certain supplementation, adopted it as its own. Division 1 declined to follow the recommendation of the Board, however, and concluded that the application must be denied "since no inadequacy was shown in protestants' services," and that the petition must likewise be denied for lack of bona fide operation since prior to June 1, 1935. The Commission formally denied both the petition and the application in an order dated December 14, 1962. Plaintiff's petition for reconsideration was denied by an order of the Commission dated May 13, 1963.

Plaintiff seeks review of these two orders on the ground that certain findings in the report and order of December 14, 1962, are arbitrary, unreasonable, and contrary to law. At the outset, it should be noted that it is not the proper function of this court on review to substitute its judgment for that of the Commission on matters of fact or even upon such mixed questions of fact and law as may have been committed by law to agency discretion. Nor are findings of fact by the Commission to be disturbed if based upon substantial evidence. On the other hand, this court is bound to inquire into every aspect of the proceedings below wherein it may appear that the Commission has otherwise applied an erroneous standard of law, or has made arbitrary findings, or has reached ultimate conclusions without adequate subordinate findings, or has failed in any other way to observe those procedures of investigation and elaboration which have become the hallmarks of proper administrative determination.

We turn first to the Commission's disposition of the petition proceeding.

Division 1 denied plaintiff's petition for modification of the grandfather certificate to include the services alleged to have been performed continuously since prior to June 1, 1935, because it was "unable to find that such operations have been bona fide since that time." 92 M.C.C. 642, 649. The factor which Division 1 considered to be dispositive of the issue of bona fide operation was the reading of the grandfather certificate by the plaintiff. Division 1 rendered its decision in alternative form and found an absence of bona fide operation under either alternative:

"If read, the involved operations could only have been conducted in wilfull violation of section 206(a) (1) or section 209(a) (1) of the act. If not read, the involved operations could hardly be considered to have been performed in good faith." 92 M.C.C. at 650.

We find this alternative disposition by Division 1 inadequate in three respects. The first objection is that Division 1 has failed to make adequate subsidiary findings. It nowhere makes a finding that the plaintiff did or did not read the certificate....