North Carolina Utilities Commission v. United States

• Decision Date: 29 March 1966
• Docket Number: Civ. No. 1079.
• Citation: 253 F. Supp. 930
• Parties: The NORTH CAROLINA UTILITIES COMMISSION, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Eastern District of North Carolina

253 F. Supp. 930

The NORTH CAROLINA UTILITIES COMMISSION, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.

Civ. No. 1079.

United States District Court E. D. North Carolina, Wilmington Division.

March 29, 1966.

Edward B. Hipp, Commission Attorney N. C. Utilities Commission, Raleigh, N. C., for plaintiff.

John H. D. Wigger, Attorney, Dept. of Justice, Washington, D. C., Robert H. Cowen, U. S. Atty., Raleigh, N. C., for the United States.

Robert S. Burk, Nahum Litt, Attys., I. C. C., Washington, D. C., for I. C. C.

Before BELL, Circuit Judge, and BUTLER and LARKINS, District Judges.

BUTLER, District Judge:

This action was brought¹ to enjoin and set aside a report and order² of the defendant, Interstate Commerce Commission (hereafter I.C.C.), adjudging that certain shipments by truck of iron and steel products from the port of Wilmington, North Carolina, to certain inland cities of North Carolina, were foreign in character, and prohibiting future shipments of said commodities at rates other than those on file with the I.C.C. A three-judge court was convened, pursuant to the provisions of 28 U.S.C.A. § 2284, to hear and determine the proceedings herein.³

The question presented is whether, under the facts of this case, the transportation by truck of imported commodities from the port at Wilmington to inland North Carolina cities is intrastate in character or a continuation of foreign commerce. We deem it to be the latter.

The scope of this court's review of the administrative decision is limited to determining whether there is warrant in law and fact for the Commission's action. Administrative Procedure Act § 10, 5 U.S.C.A. § 1009(e); Motor Truck Supply Co. v. United States, 238 F.Supp. 645 (D.C.Minn.1965). We are not here to substitute our view of the facts for that of the Commission, but to inquire whether the I.C.C. order was capricious or arbitrary, or contrary to statutory authority, or unsupported by substantial evidence. Omaha Grain Exchange v. United States, 194 F.Supp. 929 (D.C.Neb.1961). Moreover, the burden of showing an invalidating infirmity in the order rests upon the plaintiff suing to enjoin it. W. J. Dillner Transfer Co. v. Interstate Commerce Commission, 193 F.Supp. 823 (D.C.Pa.), affirmed, 368 U.S. 6, 82 S.Ct. 16, 7 L.Ed.2d 16 (1961), Carolina Scenic Coal Lines v. United States, 59 F.Supp. 336 (D.C.N.C.), affirmed, 326 U.S. 680, 66 S.Ct. 37, 90 L. Ed. 398 (1945).

Plaintiff, North Carolina Utilities Commission, is an agency of the State of North Carolina whose powers and duties include the fixing of regulations and rates for transportation by motor carrier in intrastate commerce. N.C.Gen.Stat. §§ 62-1 to 62-325. Plaintiff seeks by this action to annul the decision of the I.C.C.⁴ that certain shipments by truck of iron and steel products from the port at Wilmington, North Carolina, to other cities in North Carolina are in foreign commerce and hence subject to regulation by the I.C.C., and a determination that such shipments are in intrastate commerce subject to regulation by the North Carolina Utilities Commission.

The goods involved are nails, barbed wire, fencing, pipe, and similar iron and steel products manufactured at locations outside the United States, primarily in Belgium.⁵ They are ordered by Lowe's Companies, Inc.,⁶ of North Wilkesboro, N. C. (hereafter Lowe's), from the foreign producers. Lowe's is a retail hardware chain with stores in North Carolina and other southeastern states. There are eight such stores in North Carolina, each being separately incorporated but wholly owned by Lowe's, and the affairs of each being so conducted as to make it merely an instrumentality of Lowe's. The inventory needs of the individual stores are determined prospectively by the parent company, Lowe's, and the various demands of the several stores are aggregated for a determination of the total anticipated need in the chain. Based on this total, Lowe's, through its agent, Buchan Supply Company, places an order with the foreign producer. Some six months later the goods arrive at the port of Wilmington.

The foreign producer ships the goods by ocean bill of lading to its own order at the port of Wilmington. When the goods arrive at Wilmington, the bill of lading, with sight draft and invoice attached, is sent to Lowe's bank at North Wilkesboro. The draft is paid and the bill of lading and invoice are returned to the shipping agent for Lowe's at Wilmington. The agent claims the goods and has them stored in sheds owned by the State Ports Authority. Storage without cost is permitted there for a five-day period, excluding Saturdays, Sundays, and holidays.

Lowe's takes title to the goods by honoring the sight draft and accepting delivery, whereupon Lowe's makes an electronic examination by computers of the current inventory at each store to determine whether the demands of the individual stores have changed since the original computation six months earlier.⁷ The entire transaction rarely if ever requires more than three days, during which time the goods are stored without cost in the warehouses of the State Ports Authority. On the basis of this latest computation, precise distribution of the total order to the individual stores⁸ is determined; the goods are loaded on trucks owned by General Motor Lines, Inc.; and delivery is made under new bills of lading to each of the eight stores.

It is this transportation by General Motor Lines, Inc. from the port at Wilmington to the eight inland cities which plaintiff contends is intrastate commerce subject to its control, and which defendants contend is a continuation of foreign commerce subject to their control.

Congress has vested the I.C.C. with the regulation of the transportation of passengers or property in interstate or foreign commerce. 49 U.S.C.A. § 302(a).

"The term `foreign commerce' means commerce, whether such commerce moves wholly by motor vehicle or partly by motor vehicle and partly by rail, express, or water, (A) between any place in the United States and any place in a foreign country * * *" 49 U.S.C.A. § 303(a) (11).

Of course, a determination of what constitutes foreign commerce cannot be made by a mechanical application of the pertinent statute, for this would lead to the undesirable result that the subsequent transportation of every imported commodity would be foreign in character. The courts, therefore, have taken the realistic—if more difficult— approach of weighing the totality of circumstances against the intent of Congress and the words of the statute to determine the essential characteristics of particular commerce when its nature is brought into dispute. "The determination of the character of the commerce is a matter of weighing the whole group of facts in respect to it." Atlantic Coast Line Railroad Co. v. Standard Oil Co. of Ky., 275 U.S. 257, 268-269, 48 S.Ct. 107, 72 L.Ed. 270 (1927).

Because the totality of facts must control in a particular case, both state and federal courts have considered commerce questions involving the finest distinctions. Illustrative of some of these factual variations are the numerous cases cited in the annotation in 60 A.L.R. at 1479 and 155 A.L.R. 944. The general import of the decisions is that isolated factors are themselves not controlling, but that enough single factors added together to manifest an overall intent that goods be shipped in interstate or foreign commerce will bring the commerce within the federal domain. It has been said that the intention existing at the time the movement in commerce begins governs and fixes the character of the shipment. State of Texas v. Anderson, Clayton & Co., 92 F.2d 104 (5 Cir.), cert. denied, 302 U.S. 747, 58 S.Ct. 265, 82 L.Ed. 578 (1937).

It is less difficult in the close case to say what is not determinative of the character of the commerce than to say what factors, added together, determine its nature. The following conclusions appear from the reported decisions: (1) the mere form of a bill of lading or contract is not decisive, Atlantic Coast Line Railroad Co. v. Standard Oil Co. of Ky., 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270 (1927); (2) the reshipment of imported goods within the same state does not necessarily establish a continuity of movement placing the goods in foreign commerce. Ibid.; (3) the nature of the shipment is not dependent upon the question when or to whom title passes, Pennsylvania Railway Co. v. Clark Bros. Coal Min. Co., 238 U.S. 456, 35 S.Ct. 896, 59 L.Ed. 1406 (1914); (4) that the shipment involved is wholly on an intrastate bill of lading is not conclusive, Railroad Commission of Ohio v. Worthington, 225 U.S. 101, 32 S.Ct. 653, 56 L.Ed. 1004 (1911); (5) nor is continuity in movement terminated by the transfer of goods from one mode of transportation to another. Dallum v. Farmers Cooperative Trucking Association, 46 F.Supp. 785 (D.C.Minn.1942).

The more general statements appear with respect to the controlling factors. Thus, (1) the nature of the shipment "is determined by the essential character of the commerce", United States v. Erie Railroad Co., 280 U.S. 98, 101-102, 50 S.Ct. 51, 74 L.Ed. 187; (2) "It is the intention formed prior to shipment, pursuant to which property is carried to a selected destination by a continuous or unified movement, which fixes its essential character", Great Northern Railway Co. v. Thompson, 222 F.Supp. 573, 582 (D.C.N.D.1963), citing Buckingham Transportation Co. of Colorado, Inc. v. Black Hills Transportation Co., 66 S.D. 230, 281 N.W. 94, 95 (1938), where it was said, "When the intention which produces the movement is known, the incidents of the transportation become insignificant and need not be considered in determining whether the transportation is of the one order or the other."

There is no significant dispute over the facts of the instant case. Plaintiff contends, however, that the I.C.C. order is erroneous because unsupported by...