AL Root Transportation, Inc. v. United States, Civ. A. No. 4916.

• Decision Date: 06 February 1968
• Docket Number: Civ. A. No. 4916.
• Citation: 280 F. Supp. 152
• Court: U.S. District Court — District of Vermont
• Parties: A. L. ROOT TRANSPORTATION, INC., Michael Zaluzny, Raymond H. Puffer, Inc., and Decato Bros. Trucking Co. v. The UNITED STATES of America and the Interstate Commerce Commission and Hanson Savage d/b/a Savage Trucking Company, Intervenor.

280 F. Supp. 152

A. L. ROOT TRANSPORTATION, INC., Michael Zaluzny, Raymond H. Puffer, Inc., and Decato Bros. Trucking Co. v. The UNITED STATES of America and the Interstate Commerce Commission and Hanson Savage d/b/a Savage Trucking Company, Intervenor.

Civ. A. No. 4916.

United States District Court D. Vermont.

February 6, 1968.

Robert H. Gibson, of Gibson & Gibson, Brattleboro, Vt., and Arthur M. Marshall and David M. Marshall, Springfield, Mass., for A. L. Root Transportation, Inc., Michael Zaluzny, Raymond H. Puffer, Inc., and Decato Bros. Trucking Co.

Edwin M. Zimmerman, Acting Asst. Atty. Gen., John H. D. Wigger, Dept. of Justice, Washington, D. C., and Joseph F. Radigan, U. S. Atty., District of Vermont, for the United States.

Robert W. Ginnane, and Jerome Nelson, I.C.C., Washington, D. C., for the I.C.C.

Frederick J. Glover, Ludlow, Vt., for Hanson Savage d/b/a Savage Trucking Company.

Before WATERMAN, Circuit Judge, and CLARIE and LEDDY, District Judges.

LEDDY, District Judge.

STATEMENT OF FACTS

On September 21, 1966, a joint application was filed with the Interstate Commerce Commission whereby Hanson M. Savage doing business as Savage Trucking Company of Chester Depot, Vermont, sought authority from the Commission to acquire all of the operating rights of Aubrey E. Stratton doing business as E. A. Stratton and Son, West Townshend, Vermont, as described in certificate of public convenience and necessity number MC-94937.

The application stated that the transferee owned, leased, controlled or normally operated seven tractors and ten full trailers and the transferor ten trucks. The application further stated that the transferor was conducting operations under the operating rights involved in the transfer. The total consideration for the proposed transfer was $2,500, to be paid upon its consummation.

The application also provided certain information regarding the financial condition and extent of operations of the transferee and the following paragraph appeared on page 2 immediately preceding the signature of the applicants:

Each person by whom this application is signed certifies that the representations appearing in said application and exhibits attached thereto (including any accompanying schedules or statements) are, to the best of his knowledge and belief, true, correct and complete, based on all the information required to be included therein, of which he has any knowledge, and these representations are made in good faith.

On October 27, 1966, the application for transfer was approved ex parte by the Interstate Commerce Commission, Transfer Board, notice to the parties was given November 4, 1966, and the order was published in the Federal Register November 5, 1966, to become effective November 30, 1966.

The transfer was consummated by the parties on December 5, 1966. At the time of the Commission's order, it had before it the transferor's financial statement dated August 1, 1966, covering the calendar year 1965, showing total operating revenue from motor carrier operations of $95,355.29.

By petition for reconsideration received by the Commission on February 6, 1967, some 68 days after the effective date of its order, A. L. Root Transportation, Inc., Brattleboro, Vermont, Michael Zaluzny, Vernon, Vermont, Raymond H. Puffer, Inc., Brattleboro, Vermont, and Decato Bros. Trucking Co., Lebanon, New Hampshire, all competing carriers, requested the Commission to waive the time provisions of Rule 1.225(e),¹ moved for a stay of the order of October 27, 1966, and requested an oral hearing on the ground that the evidence in the case could not reasonably be submitted in affidavit form because "the burden of proof in connection with the past operations of the proposed Transferor and the fitness of the proposed Transferee rests upon the Applicants and cannot be properly and effectively counteracted without cross-examination."

In their petition, plaintiffs alleged upon information and belief that the transferred operating rights had been dormant within the meaning of 49 C.F.R. § 179.5(b)² and were thus not susceptible of transfer. This allegation was unsupported by evidence.

On April 12, 1967, Division 3 of the Commission, acting as an Appellate Division, granted the requested waiver of Rule 1.225(e) and, in the same order, denied the plaintiffs' petition in all other respects on the ground, that:

the petition sets forth no facts or arguments which were not previously considered by the Board or which would establish that the transfer was not properly approved under the Rules and Regulations Governing Transfers of Rights to Operate as a Motor Carrier in Interstate or Foreign Commerce, 49 C.F.R. Part 179, including Section 179.5(b) thereof; and that an oral hearing is not necessary.

On April 21, 1967, the Commission issued a certificate of public convenience and necessity number MC-127616 sub. 5 to Hanson M. Savage doing business as Savage Trucking Company which incorporated all of the operating authority and rights formerly held by A. E. Stratton and Son under certificate number MC-94937.

By complaint filed in the United States District Court for the District of Vermont on July 13, 1967, the plaintiffs petitioned this Court to enjoin permanently, set aside, annul and suspend the order of the Interstate Commerce Commission of April 12, 1967, and for such other and further relief as may be proper including, as indicated in oral argument, a remand of the matter to the Commission for hearing and oral argument. Savage Trucking Company's petition to intervene was granted and the matter came on for hearing before a Three-Judge Court in Brattleboro, Vermont, on December 21, 1967.

STATEMENT OF LAW

The jurisdiction of this Court is founded upon the provisions of the following titles and sections of the United States Code: 5 U.S.C. §§ 701-706; 28 U.S.C. §§ 1336, 1398, 2284 and 2321 through 2325; and 49 U.S.C. §§ 17(9) and 305(g).

The plaintiffs contend:

(a) That the Commission erred in failing to schedule an oral hearing upon the petition for reconsideration;

(b) That the Commission's order of April 12, 1967, was unsupported by basic findings and that the Commission's conclusion that the transfer was properly approved under its rules and regulations was unsupported by substantial evidence, both in violation of the Administrative Procedure Act;

(c) That if the transfer order was warranted, the Commission erred in failing to impose commodity and territorial restrictions.

Plaintiffs failed to request number (c) in their original petition to the Interstate Commerce Commission. Failure to raise this issue before the Commission precludes the plaintiffs from raising it for the first time in this proceeding. Studna v. United States, 225 F.Supp. 973 (W.D.Mo.1964). Thus, plaintiffs' last contention is not properly before us for consideration and they are deemed to have abandoned it. Gateway Transportation Co. v. United States, 173 F.Supp. 822 (W.D.Wis.1959).

We must determine whether in this factual context the Commission erred in failing to grant an oral hearing upon plaintiffs' petition for reconsideration. The provisions of the Administrative Procedure Act governing hearings, findings and substantial evidence apply only when a hearing is required. In this case, the requirement of a hearing must have as its source the Interstate Commerce Act, a rule or regulation promulgated pursuant thereto, or the due process clause of the United States Constitution.

Section 212(b) of the Interstate Commerce Act, 49 U.S.C. § 312(b) provides that:

Except as provided in section 5 of this title, any certificate or permit may be transferred, pursuant to such rules and regulations as the Commission may prescribe.

The Section 5 reference (49 U.S.C. § 5 (2)) provides stringent requirements for certain unifications, mergers or acquisitions of control of two or more carriers.

However, 49 U.S.C. § 5(10) exempts from the operation of Section 5(2) certain small transfers. The intent of Congress in enacting the Section 5 (10) exemption was "to provide a means whereby such transfers could be effected easily and without delay under such rules as the Commission deemed appropriate." Atwood's Transport Line-Lease-John A. Clarke, 52 M.C.C. 97, 107 (1950).

It is undisputed that the instant transfer is within the Section 5(10) exemption. Thus, the sole governing statute is Section 312(b) and the rules and regulations pursuant thereto. United States v. Resler, 313 U.S. 57, 61 S.Ct. 820, 85 L.Ed. 1185 (1941); Ship-By-Truck Company v. United States, 208 F.Supp. 847 (D.Kan.1962), aff'd per curiam, 373 U.S. 376, 83 S.Ct. 1312, 10 L.Ed.2d 420 (1963).

The rules and regulations of the Commission have been promulgated in 49 C.F.R. Part 179. These provide that transfers within the Section 5(10) exemption shall be approved upon application if the proposed transferee is willing and able to perform the service authorized under the transferred operating rights and to conform to the provisions of the Interstate Commerce Act and the Commission's rules and regulations thereunder.³ Cessation of operating rights by the transferor (dormancy) may be a ground for denial of the transfer.⁴

Neither the Interstate Commerce Act nor the rules and regulations pursuant thereto requires a hearing upon the initial application for a transfer within the Section 5(10) exemption and it may be approved ex parte. Chemical Leaman Tank Lines, Inc. v. United States, 251 F.Supp. 269 (E.D.Pa.1965). "(T)he Congress evidently thought the public concern to be too slight to demand the close scrutiny of a full dress inquiry." Brooks Transportation Company et al. v. United States, 12 F.Carr.Cas. 50158, 50160 (E.D.Va.1957).

But after notice of an order approving a transfer, an interested person may file a petition for reconsideration. If the petition contains a request for oral hearing, the request must be supported by an explanation as to why the evidence sought to be presented...