Schenley Distillers Corporation v. United States

• Decision Date: 16 June 1943
• Docket Number: Civil Action No. 300.
• Parties: SCHENLEY DISTILLERS CORPORATION et al. v. UNITED STATES et al.
• Court: U.S. District Court — District of Delaware

50 F. Supp. 491

SCHENLEY DISTILLERS CORPORATION et al. v. UNITED STATES et al.

Civil Action No. 300.

District Court, D. Delaware.

June 16, 1943.

Charles E. Cotterill, of New York City, and Charles F. Richards (of Richards, Layton & Finger) of Wilmington, Del., for plaintiffs.

Robert L. Pierce, Sp. Asst. to Atty. Gen., Dept. of Justice, and Stewart Lynch, U. S. Atty., of Wilmington, Del., for the United States.

J. Stanley Payne, Asst. Chief Counsel, ICC, of Washington, D. C., for the Interstate Commerce Commission.

Before BIGGS and MARIS, Circuit Judges, and LEAHY, District Judge.

BIGGS, Circuit Judge.

The petitioners have filed suit against the United States of America and the Interstate Commerce Commission and pray this court to determine whether certain motor vehicle operations of Schenley Distilleries Motor Division, Incorporated, (hereinafter called Motor Division), do or do not constitute carriage of property for hire by motor vehicle in interstate commerce so as to be subject to the provisions of part II of the Interstate Commerce Act, the Motor Carrier Act 1935, 49 Stat. 543, as amended, 49 U.S.C.A. §§ 301-327; and to adjudicate the question whether the approval of the Interstate Commerce Commission of these operations is or is not required by law. It is requested further that this court determine "* * * that the action of the Commission in concluding otherwise and requiring * * * Motor Division not to engage in such operations without its approval was and is beyond the authority of the Commission and that the order or orders of the Commission to that effect¹ be annulled and set aside * * *" and that the Commission be enjoined from enforcing its order. The petition concludes with a prayer in the usual form for a temporary injunction and for such other relief as the facts may warrant.

The suit is brought pursuant to the provisions of the Urgent Deficiencies Act, 28 U.S.C.A. § 41(27), (28) and Secs. 43-48. Upon the filing of the petition the District Judge constituted this court by calling to his assistance two other judges, both of whom are circuit judges, to hear and determine the cause. The Interstate Commerce Commission has filed an answer in which the United States has joined. The last paragraph of this answer is a motion to dismiss the petition on the ground that its allegations present no justiciable controversy within the jurisdiction of this court as it is at present constituted under the Urgent Deficiencies Act. This motion was argued at length and the Court refused to receive the proffered testimony of petitioners' witnesses. The allegations of the petition and its accompanying exhibits must therefore be treated as if true for the purposes of the motion.

It appears from the petition that Schenley Distillers Corporation (hereinafter called Schenley) is engaged in the sale of alcoholic beverages at wholesale. It is the parent corporation or has control of a number of other corporations engaged in the manufacture of alcohol and liquor. Motor Division, a Delaware corporation, a wholly owned subsidiary of Schenley, was formed to enable Schenley and its subsidiaries to continue the distribution of their products and to procure supplies for manufacturing alcohol and liquor by truck under war conditions. The petition alleges that the title to all freight carried by Motor Division is and will remain, in Schenley or its subsidiaries and that no bills of lading are or will be issued by Motor Division. The petition alleges that the Schenley management does not consider the proposed carriage to be carriage for hire, but none the less an application for temporary authority to engage in these operations as a contract carrier was filed with the Interstate Commerce Commission and it was prayed that the Commission issue a temporary order authorizing the operations if they were within the purview of the Motor Carrier Act of 1935, as amended September 18, 1940, 49 U.S.C.A. §§ 301-327. Motor Division also prayed the Commission to dismiss its application since, allegedly, its transportation operations constitute private carriage and are beyond the purview of the statute.

In fact two applications are attached to the petition in this case and both were filed with the Commission by Motor Division. One,² the first, is for a permit under Section 209 of the Motor Carrier Act, 49 U.S.C.A. § 309. This was not acted upon by the Commission for reasons that will be immediately apparent. The second application was a request for temporary authority under Section 210a(a) of the Motor Carrier Act, 49 U.S.C.A. Sec. 310a(a). Both applications were filed by Motor Division on June 3, 1942. On July 15, 1942, the Commission notified Motor Division by letter, stating that it would construe the applications as a request for temporary authority to engage in motor transport pursuant to the provisions of Section 210a(a) of the Act.³ The course proposed by the Commission was acquiesced in by Motor Division. On July 24, 1942, the Commission by Division 5, arriving at its conclusions from the allegations of the application without hearings or other proceedings, denied the request of Motor Division for a certificate of temporary authority. This is the order which the petitioners seek to have set aside. It is set out in the margin.⁴ An application for rehearing was denied on October 23, 1942, by the full Commission.

As we have stated, the application on which the Commission acted was one requesting "temporary authority" to conduct the operations described in the application.⁵ Section 210a(a) gave the Commission power to pass upon applications arising because of emergency. The section provides that the Commission may pass upon an application and grant or dismiss it "* * * in its discretion and without hearings or other proceedings * * *".⁶ The application set forth no facts which show or disclose "an immediate and urgent need" for motor carriage "to a point or points within a territory having no carrier service capable of meeting such need."⁷ The Commission found that there was no such need and it is a fact that there are many railroads and motor carriers serving those points in the United States to which the application was directed. But the real gravamen of the petitioners' complaint, as stated by their counsel at the argument, was that the Commission made no determination of the question of whether or not the operations described in the applications constituted contract carriage or private carriage. The petitioners contend, relying on the decisions of the Supreme Court in Rochester Tel. Corp. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, and Mitchell v. United States, 313 U.S. 80, 61 S.Ct. 873, 85 L.Ed. 1201, that because the Commission failed to determine that Motor Division is either a contract carrier or a private carrier, they are compelled to take the risk of operating illegally, incurring penalties if it be subsequently determined that Motor Division is engaged in contract carriage within the purview of the Motor Carrier Act. We will discuss this contention at a later point in this opinion.

The petitioners go further, however. They say that the Commission in denying Motor Division's application for a certificate of temporary authority had to pass on the nature of Motor Division's contemplated operations, since otherwise it would not have had authority either to grant or to deny the applications. The Commission did not make an order denying Motor Division the right to carry on the operations described in the application based on Section 209 of the Motor Carrier Act. For the reasons heretofore stated it did not pass upon that application of Motor Division which requested the permit authorized by Section 209. It merely denied Motor Division a certificate of temporary authority under Section 210a(a).

It was not necessary for the Commission to determine Motor Division's status as either a private carrier or a contract carrier or to determine that it had jurisdiction of Motor Division under the Motor Carrier Act in order to deny to it a certificate of temporary authority. From the words of Section 210a(a) one must conclude that Congress intended the Commission to consider an application based on Section 210a(a), as if the jurisdiction of the Commission under the Act was in fact conceded by the applicant. If it were not so, the Commission, without hearings or proceedings, could not pass on such applications with the dispatch which an emergency requires. Congress contemplated that a contract or common carrier would come forward and request the Commission to grant a certificate of temporary authority and make a showing on the face of the application that existing carrier facilities within the area are inadequate. The Commission must assume that the applicant is either a common or a contract carrier and is required to pass only on the question of the existence of an emergency requiring additional service by motor carrier. This is the jurisdiction granted to the Commission by Congress by Section 210a(a).⁸

The United States and the Commission contend that this court, as now constituted of three judges under the provisions of the Urgent Deficiencies Act and possessing only limited jurisdiction,⁹ cannot set aside the order of the Commission complained of. Our jurisdiction depends on whether the the order of the Commission is one which can be set aside or suspended within the purview of the Act of October 22, 1913. The order of the Commission is a "negative" order in that it denies a certificate of temporary authority to Motor Division. The tests governing judicial review of orders under the Urgent Deficiencies Act were defined by the Supreme Court in United States v. Los Angeles & S.L.R. Co., 273 U.S. 299, 309, 310, 47 S.Ct. 413, 414, 71 L.Ed. 651. The question which was before the Commission and which came before the three-judge court in the cited case was the accuracy of the valuation of railroad property...