Rock Island Motor Transit Co. v. United States

• Decision Date: 29 November 1949
• Docket Number: Civ. A. No. 49-C-1005.
• Citation: 90 F. Supp. 516
• Parties: ROCK ISLAND MOTOR TRANSIT CO. v. UNITED STATES et al.
• Court: U.S. District Court — Northern District of Illinois

90 F. Supp. 516

ROCK ISLAND MOTOR TRANSIT CO. v. UNITED STATES et al.

Civ. A. No. 49-C-1005.

United States District Court N. D. Illinois, E. D.

November 29, 1949.

Harry E. Boe and Martin L. Cassell, Jr., Chicago, Ill., for the plaintiff.

Otto Kerner, Jr., U. S. Atty., Chicago, Ill., for the defendant.

Henry E. Sasso, Chicago, Ill., Geo. Cosson, Jr., Des Moines, Iowa, for the intervenors State of Iowa and others.

Before DUFFY, Circuit Judge, and IGOE and SHAW, District Judges.

PER CURIAM.

By this complaint plaintiff seeks to set aside, annul and enjoin an order of the Interstate Commerce Commission by which it is proposed to modify certificates of public convenience and necessity issued and to be issued to plaintiff as a motor common carrier of property in interstate commerce. This suit is brought under Sections 1336, 2284, 2322, 2323, and 2325, Title 28 U.S. C.A. The State of Iowa by the Iowa State Commerce Commission, and the Omaha Chamber of Commerce, a non-profit organization composed of shippers, manufacturers and wholesalers located at Omaha, Nebraska, were granted leave to intervene, Section 2323, Title 28, U.S.C.A., and they appear in support of the complaint. The Court has jurisdiction of the parties and subject-matter. It has had the benefit of evidence consisting of transcripts of the record of proceedings before the Commission in the cases, out of which the challenged order comes as well as other pertinent proceedings before that agency.

This complaint presents the question whether the Commission has the power, apart from Section 212 of the Interstate Commerce Act, 49 U.S.C.A. § 312, materially to change or modify — in effect partially to revoke — certificates and operating rights lawfully acquired in appropriate proceedings under Section 213 of the Motor Carrier Act of August 9, 1935, 49 Stat.L. 543, 49 U.S.C.A. § 313, and Section 5(2) (a) (b) of the Interstate Commerce Act, 49 U.S.C.A. § 5(2) (a, b). The Commission makes no claim that it is here acting under Section 212, and the Court so finds. As a common carrier by motor vehicle plaintiff has been and now is transporting property over the highways in and between the states of Illinois, Iowa, and Nebraska, among other states. This service results from certificates and operating rights purchased in April, 1938, by plaintiff from White Line Motor Freight Company and White Line Trucking Company of Des Moines, Iowa. These companies were motor common carriers possessed of routes between Chicago, Illinois, and Omaha, Nebraska, and many intermediate points, with segments extending to Cedar Rapids and Muscatine, Iowa. In November, 1943, plaintiff also purchased the certificate and operating rights of J. H. and D. H. Frederickson, doing business as J. H. Frederickson and Son, this partnership being a motor common carrier with a route located in western Iowa extending to Omaha, Nebraska. All points located on the White Line and Frederickson routes were stations on the line of railroad of Chicago, Rock Island and Pacific Railroad Company, a common carrier by railroad. At all times here involved plaintiff is and was a subsidiary of that railroad and predecessors in interest. Both plaintiff, as successor in interest to the White Line companies, and Fredericksons on their own account, had "grandfather" rights under a proviso in Section 206(a) of the Motor Carrier Act of August 9, 1935, 49 Stat.L. 551, 49 U.S. C.A. § 306(a). Certificates in accordance therewith were issued in due course to plaintiff, as successor to the White Line companies, and to the Fredericksons.¹

In October, 1937, plaintiff entered into an agreement to acquire the certificates, operating rights, equipment and terminal facilities, and good will of the White Line companies. As this transaction was subject to the approval of the Interstate Commerce Commission plaintiff filed its application² with the Commission. The application was assigned to an Examiner for hearing and on February 12, 1938, the Examiner issued his recommended report and order, recommending approval of the transaction subject to conditions among which was a condition that the plaintiff's motor operation be restricted to the rail rates and bills of lading of plaintiff's railroad affiliate. Plaintiff filed exceptions to this restriction, pointing out that its proposed method of operation included not only service auxiliary to its railroad affiliate, but also a motor common carrier service at motor rates similar to that rendered by its predecessors in interest. In its exceptions plaintiff advised the Commission that it would not go through with the transaction unless this restriction were eliminated. On April 1, 1938, the Commission entered a report and order by which it approved the transaction, making the statutory findings required by Section 213 of the Motor Carrier Act of August 9, 1935, which became Part II of the Interstate Commerce Act, 49 Stat.L. 543. It eliminated the objectionable restriction from its order. With the Commission's authorization therefore the transaction was consummated, and plaintiff commenced operating upon the White Line routes on April 5, 1938, rendering a service at "all-motor" rates as a common carrier by motor vehicle and also a service coordinated with its affiliated railroad. As a condition precedent to consummation, and as required by the Commission's tariff publishing regulations issued under Sections 216 and 217 of Part II of the Interstate Commerce Act, 49 U.S.C.A. §§ 316, 317, plaintiff was obliged to and it did adopt the "all-motor" tariffs and rates of its predecessors in interest. Since April 5, 1938, plaintiff has continuously engaged in such operations. With respect to the Frederickson route plaintiff entered into an agreement to acquire this partnership's certificate of public convenience and necessity and operating rights, and on September 29, 1943, filed its application³ with the Commission for approval of the transaction under Section 5(2) (a) (b) of the Interstate Commerce Act, 54 Stat.L. 905. Section 213 of Part II had in the meantime been repealed by the transportation Act of September 1, 1940, 54 Stat.L. 919, and its substance was re-enacted into Section 5(2) (a) (b). As in the White Line case, plaintiff advised the Commission that it proposed to conduct a trucking service on the Frederickson route auxiliary to the affiliated railroad and also a service at all-motor tariffs and rates similar to that conducted by the Fredericksons. On November 28, 1944, the Commission approved the Frederickson transaction without any restrictions. On January 22, 1945, plaintiff consummated the transaction, and since that time plaintiff has operated continuously upon the Frederickson route and unified that route with the White Line route acquired pursuant to the Commission's order of April 1, 1938. As in the White Line proceeding, the Commission's order of November 28, 1944, in the Frederickson proceeding made the statutory findings required by Section 5(2) (a) (b) of the Interstate Commerce Act. It provided further that plaintiff was entitled to the certificate of public convenience and necessity previously granted to the Fredericksons, and that the operating rights evidenced by said certificate could be unified with rights otherwise confirmed in plaintiff. In reliance upon the Commission's orders of April 1, 1938, and November 28, 1944, plaintiff paid the respective purchase prices of $59,400 and $6500 called for by its agreements, and also committed itself to large expenditures in the development of its business.

The order here challenged affirms the Commission's report and order of March 4, 1946,⁴ by which the Commission upon its own motion in the acquisition proceedings referred to and on present records proposes materially to modify plaintiff's certificates by means of the imposition of new restrictions, as follows: (1) that henceforth plaintiff is without authority to perform service under "all-motor" local and "all-motor" joint rates with connecting motor carriers, and (2) that plaintiff shall not transport any shipments between any of the following points, or through or to or from more than one of said points: Omaha, Nebraska, Des Moines, Iowa, and collectively Davenport and Bettendorf, Iowa, and Rock Island and Moline, Illinois — this restriction being known as a "key-point" restriction. The first restriction would limit plaintiff's operations to the railroad rates and billing of its railroad affiliate, and the key-point restriction would substantially limit its physical operations and place added burdens on those that remain. The net effect would be materially to impair and destroy the value of the operating rights acquired by plaintiff from the White Line companies and Fredericksons. This action reflects a change of policy as stated or expressed by the Commission in Texas & Pacific M. Transport Co. Com. Car. Application, 41 M. C.C. 721, to which repeated reference has been made in the report on reopening of March 4, 1946, and the one now challenged of April 11, 1949. As regards plaintiff and as applied to it, this change of policy came eight years after it had consummated the White Line transaction, and more than a year after consummation of the Frederickson transaction. The report and order of March 4, 1946, were the first notice that plaintiff had that this new policy would be applied to it in connection with the certificates acquired by plaintiff in the White Line and Frederickson proceedings.

The operating rights acquired by plaintiff, and the certificates evidencing such rights, obtained in pursuance of the final orders of the Commission of April 1, 1938, in Docket No. MC-F-445, and November 28, 1944, in Docket No. MC-F-2327, are in the nature of franchise rights and can only be changed or revoked as provided by law. The condition in the White Line order of April 1, 1938, as carried into the certificate of December 3, 1941, issued to plaintiff, that the...