Northern Valley Transfer, Inc. v. ICC

• Decision Date: 24 March 1961
• Docket Number: Civ. A. No. 329-60.
• Citation: 192 F. Supp. 600
• Parties: NORTHERN VALLEY TRANSFER, INC., Plaintiff, v. INTERSTATE COMMERCE COMMISSION and United States of America, Defendants.
• Court: U.S. District Court — District of New Jersey

192 F. Supp. 600

NORTHERN VALLEY TRANSFER, INC., Plaintiff, v. INTERSTATE COMMERCE COMMISSION and United States of America, Defendants.

Civ. A. No. 329-60.

United States District Court D. New Jersey.

March 24, 1961.

Leo N. Knoblauch, Jersey City, N. J., for plaintiff.

Chester A. Weidenburner, U. S. Atty., by Charles H. Hoens, Jr., Asst. U. S. Atty., Newark, N. J., and Fritz R. Kahn, Office of Atty. Gen., Washington, D. C., for Interstate Commerce Commission.

Arthur H. Fribourg, Dept. of Justice, Washington, D. C., for the United States.

Before FORMAN, Circuit Judge, WILLIAM F. SMITH, Chief Judge, and WORTENDYKE, District Judge.

WORTENDYKE, District Judge.

In this action under 28 U.S.C. §§ 1336 and 1398, the court is asked to enjoin and set aside orders of the Interstate Commerce Commission, dated respectively March 16, 1959 and February 3, 1960, which denied plaintiff's petition for reconsideration of the Commission's decision of September 24, 1958 in Carlee Corporation vs. Northern Valley Transfer, Inc., Docket No. 32353. The procedure prescribed by Chapter 157 of Title 28 of the U.S.C. has been followed, and this opinion embodies the decision of the three-judge court which heard the application and which was constituted in accordance with 28 U.S.C.A. § 2284. Plaintiff asserts that the Commission's denial of the petition for reconsideration deprived plaintiff of due process of law guaranteed by the Fourteenth amendment to the United States Constitution.

Plaintiff (Northern Valley), is a New Jersey corporation, a common motor carrier of freight in interstate commerce, operating under Certificate No. MC-106209 issued by the Commission as required by 49 U.S.C.A. § 306. On January 9, 1958, Carlee Corporation (Carlee), a manufacturer of wadding and a shipper in this case, filed with the Commission a complaint charging that the rates charged by Northern Valley on and between June 19, 1956 and January 14, 1957 for shipments of wadding, were inapplicable, unjust and unreasonable and in violation of Sections 216 and 217 of the Interstate Commerce Act (Act), 49 U.S.C.A. §§ 316 and 317. Hearing upon Carlee's complaint was held before the Commission's examiner, and plaintiff appeared and participated therein.

The Examiner found and reported as follows:

(1) The shipper's operations were those of a converter.

(2) The commodities shipped consisted of cotton, carded and combed by machine, and its fibers expanded and oriented in relationship to each other to produce a fluffy web of material. This web constituted a non-woven product well within the dictionary definition of wadding. The product's strands were sprayed with acetone as a bonding agent. It was described in the shipping papers as wadding and was intended to be used as padding by the textile industry. A sample submitted to the United States Testing Company, Inc., a commercial laboratory, was found to be 100% cellulose acetate.

(3) The commodity was cellulose wadding.

(4) The shipper had no knowledge of what the classification of the commodity should be, and no application was made to the National Classification Board for a rating.

(5) The freight bills contained the names of shipper and consignee, number of pieces or rolls, width and length of the wadding, and its total yardage. The rates charged were 0.5 cent, 0.75 cent or 6.75 mills per lineal yard. No weights were shown but each roll was stamped with a code number which would reveal the weight per yard. The total weight of the shipment could be computed from the yardage.

(6) Shipper priced the wadding to its customer upon a per ounce delivered basis. This price was projected successively to a per pound and then to a per yard basis for purposes of arriving at the carrier's charges. Because of the thin margin of profit, shipper advised carrier that the shipper could not pay over a certain amount per lineal yard for transportation. Accordingly the shipping rates upon a lineal yard basis were orally agreed upon by shipper and carrier.

(7) The agreed upon shipping charges were outside the scope of the published tariff.

(8) Shipper's bills of lading were matched with carrier's freight bills by code numbers. No weight, rate or charge appeared on any freight bills, but indicated thereon was the shipper's number of the type of material and its code number. For example, in the code number 2300, the first digit signified blend of fibers or type of material, and the remaining three digits signified 3 ounces per lineal yard. The number of yards ordered was multiplied by 3, giving the total number of ounces and the product of that total divided by 16 gave the number of pounds. This poundage weight was then multiplied by the amount of the first-class rate, and that product was the charge to be applied to the shipment.

(9) The density of the wadding averaged 1.34 pounds per cubic foot. The material was not plastic and therefore classification Item 77682 was not applicable to the material.

(10) The oral shipping rate agreement, based upon a charge per yard, was illegal because such charge was not on file with the Commission, as required by the Act.

(11) There being no legal basis for the oral agreement, it was found void and its terms unenforceable.

(12) Rates for the future were not prescribed because they had then been already published on cellulose wadding, n. o. i. (not otherwise indexed), between the shipping points.

(13) The Commission was without jurisdiction to adjudicate the rights and responsibilities of the parties to the shipping contracts.

To the Examiner's report Northern Valley filed exceptions on June 23, 1958. After hearing upon those exceptions, in which Northern Valley actively participated, the report of the Examiner was adopted by Division 3 of the Commission. The report of the Commission (304 I.C.C. 775, at pp. 778-779) reads, in part, as follows:

"The basic part of the article (shipped) consists of fibers. These synthetic fibers of cellulose acetate are derived from cellulose. * * * The record is clear that the material shipped is not plastic. Upon consideration of all the evidence, we conclude that the considered commodity is cellulose wadding, not machine pressed, and in packages weighing less than 15 pounds per cubic foot. The classification description contained in item 20740 embraces such shipments. We find that the * * * shipments were covered by the description in item 20740 of the classification, and that the applicable rates were and are those specified in that item. We further find that the applicable rates are not shown to have been or to be unjust, unreasonable, or otherwise unlawful. * * * Not only were the orally-agreed-upon rates based upon the mistaken premise that the commodity was a plastic, but the defendant, as a common carrier was charged with the knowledge that the agreed charges were illegal for failure to publish and file them as required by the act."

This report was filed September 24, 1958 and served upon the parties on October 7, 1958.

Applications for rehearing, reargument or reconsideration of a decision, order or requirement of the Commission or a division thereof may be made as provided by such general rules as the Commission may establish. See Section 17(6) of the Act, 49 U.S.C.A. § 17(6). Rule 101(e) of the Commission's General Rules of Practice, 49 C.F.R. § 1.101(e) adopted under the authority of the above cited section, provides that "Except for good cause shown, and upon leave granted" a petition for rehearing, reargument, or reconsideration "must be filed within 30 days after the date of service of a decision or order." This rule was not complied with. On January 5, 1959, 90 days after service of the Commission's report, Northern Valley filed with the Commission its petition for waiver of Rule 1.101, and for rehearing, reopening and reconsideration of the Commission's report. The full Commission denied the latter petition by its order of March 16, 1959 for failure "to show good cause for failure to file said petition within the 30-day period specified in Rule 1.101(e) or to show substantial and material reasons warranting the granting of said petition." Having been advised that Northern Valley no longer was participating in the movement of the related traffic, and that it had published rates applicable to future shipments of similar wadding, the Commission, on May 20, 1959, ordered the pending proceeding discontinued. Under the Commission's rules Northern Valley had until June 27, 1959 to petition the Commission for rehearing or reconsideration of its last preceding petition, but no such action was taken within that period. However, on November 2, 1959, Northern Valley filed another petition for waiver of the Commission's rule 1.101. The latter petition was denied by the Commission's order of February 3, 1960, served on Northern Valley on February 25, 1960, upon the ground that the petition was tendered more than a year after service of the Commission's report and more than five months after service of the Commission's order of May 20, 1959, discontinuing the proceeding, and that the petition had failed to show good cause for failure to file the petition within the period specified in Rule 1.101(e) or to show substantial and material reasons warranting the granting of the petition. Northern Valley commenced the present action on March 31, 1960.

Two principal questions are presented for the decision of this Court, viz.: (1) Does the Commission's report of September 24, 1958 find support in substantial evidence? and (2) Were the actions of the Commission denying plaintiff's successive petitions for rehearing an abuse of discretion?

Plaintiff also complains that one of the three Commissioners, constituting Division 3 of the Commission, was absent from the proceedings because of illness and did not participate in the Commission's decision. Plaintiff contends that it was deprived of a full hearing by reason of the absence of one of the three...