Seatrain Lines v. United States

• Decision Date: 30 January 1946
• Docket Number: Civil Action No. 579.
• Citation: 64 F. Supp. 156
• Parties: SEATRAIN LINES, Inc., v. UNITED STATES.
• Court: U.S. District Court — District of Delaware

64 F. Supp. 156

SEATRAIN LINES, Inc., v. UNITED STATES.

Civil Action No. 579.

District Court, D. Delaware.

January 30, 1946.

Caleb R. Layton, 3rd (of Hastings, Stockly & Layton), of Wilmington, Del., Wilbur LaRoe, Jr., Frederick E. Brown, and Arthur L. Winn, all of Washington, D. C., and Parker McCollester, of New York City, for petitioner.

John J. Morris, Jr., U. S. Atty., of Wilmington Del., Wendell Berge, Asst. Atty. Gen., and Edward Dumbauld, Sp. Asst. to Atty. Gen., for the United States.

Daniel W. Knowlton, Chief Counsel, Interstate Commerce Commission, and Edward M. Reidy, Asst. Chief Counsel, Interstate Commerce Commission, both of Washington, D. C., for the Interstate Commerce Commission.

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

BIGGS, Circuit Judge.

The suit at bar presents vexatious problems. The plaintiff is Seatrain Lines, Inc. whose operations have been the subject of discussion and decisions by the courts¹ and by the Interstate Commerce Commission² on numerous occasions. Reference is made to these decisions for general and particular descriptions of Seatrain's business. Since October 1932 Seatrain has operated as a common carrier in the transportation of property by water. Seatrain ships carry standard gauge railroad tracks and are so designed that loaded freight cars may be lifted to or from the vessels by a cradle device. Commodities may thus be transported in freight cars from shore to ship and from ship to shore without breaking bulk. The cost of loading and unloading freight at the ports is thus reduced substantially. Prior to the war Seatrain took delivery of freight cars from the trunk line railroads at the Port of New York and delivered the cars to trunk line railroads at Belle Chasse, the Port of New Orleans. Seatrain also delivered liquid cargoes in bulk and transported commodities generally. A comparatively small part of the commodities shipped originating at Seatrain's own terminals. Most of the commodities transported were carried in railroad cars put on board the vessels by the peculiar Seatrain devices.³

In May 1940, Seatrain inaugurated substantially similar service between the port of New York and Texas City, Texas.

On May 28, 1941 Seatrain filed two applications with the Interstate Commerce Commission for certificates of convenience and necessity as a common carrier of commodities generally between New York and New Orleans and New York and Texas City, respectively. The "grandfather date" applicable to water carriers is January 1, 1940. See Section 309(a), Part III, Interstate Commerce Act, 49 U.S.C.A. § 909(a). One of Seatrain's two applications to the Commission was for a certificate as a common carrier of commodities generally between New York and New Orleans under the "grandfather" clause. Its second application was for a certificate for its New York and Texas City service as a common carrier of commodities generally, without benefit of the grandfather clause, pursuant to Section 309(a) and (c). Notice of these applications was given by the ICC to certain competing steamship lines, common carriers of commodities generally. On July 2, 1942 the ICC by Division 4 filed a decision⁴ granting Seatrain a single certificate as a common carrier by self-propelled vessels of commodities generally between New York and New Orleans and between New York and Texas City. The certificate contained a clause in the usual form stating that the carrier was authorized to perform the service specified subject "* * * to such terms, conditions, and limitations as are now, or may hereafter be, attached to the exercise of such authority by this Commission." The Division laid emphasis in its opinion on the peculiar value of the Seatrain service in that shipments were made in carload lots without breaking bulk and loading and unloading the cars at the ports.

The certificate was ordered to take effect from and after August 10, 1942. Seatrain asserts and has proved, as will hereinafter appear, that acting upon the authority granted by the certificate it has made substantial expenditures and important commitments for the future.⁵

On December 18, 1943, however, Division 4 ordered reconsideration of Seatrain's applications and of the applications for certificates of the Foss Launch & Tug Co. See 260 I.C.C. 103. The division thereafter amended the certificate first issued to the Foss Company on August 26, 1942. The certificate originally issued by the Commission to the Foss Company authorized it to transport commodities generally. The amended certificate issued to the Foss Company eliminated the company's authority to "transport freight cars, loaded or empty, in the performance of a freight-car-ferry service." The course pursued by Division 4, and hence by the Commission, in respect to the Foss company had repercussions on the Seatrain certificate. See also the decision of the Commission in Newtex S. S. Corporation Common Carrier Application, 260 I.C.C. 418. On February 6, 1945, having granted Seatrain an opportunity for the presentation of evidence of which Seatrain did not avail itself and after certain intermediate steps which need not be recited here, the full Commission, one member only being absent, over the protests of Seatrain in respect to the Commission's jurisdiction, ordered Seatrain's original certificate cancelled and a new certificate issued in lieu thereof.

The new certificate limited Seatrain to the service of "a common carrier by self-propelled vessels * * * in the transportation of liquid cargoes in bulk; of empty railroad cars; and of property loaded in freight cars received from and delivered to rail carriers and transported without transfer from railroad cars between the Ports" of New York and New Orleans on the one hand and New York and Texas City on the other.⁶ Mr. Brush, the president of Seatrain, testified before this court that the limitations placed upon Seatrain's service by this amendment to its certificate will substantially impair the business of Seatrain, will render useless the expenditures and commitments heretofore made by Seatrain and will result in serious losses to the company.

Seatrain has petitioned this court⁷ to set aside the order of the Commission entered February 6, 1945 and the corrected certificate of public convenience and necessity embodied in that order.

The Commission was not unanimous in the views expressed in its opinion of February 6, 1945.⁸ One Commissioner concurred in a separate opinion and three Commissioners dissented in separate opinions. The Commissioners who joined in the majority opinion and the concurring Commissioner took the position that in granting the original certificate to Seatrain authorizing it to transport commodities generally the Division had committed an inadvertent error or a mistake which should be corrected by the amended certificate. The dissenting Commissioners took the view that the action of Division 4 in granting the original certificate to Seatrain was not the result of inadvertence or a mistake but represented the studied policy of the Commission until the reopening of, and the issuance of the amended certificate in, the Foss case. One Commissioner was of the opinion that when a certificate of convenience and necessity has been issued to a common carrier by water that certificate is a franchise and may not be revoked.⁹

The principal issue which we must decide is the authority of the Commission to alter drastically its original certificate. The original certificate permitted the petitioner, as we have stated, to engage in the transportation of commodities generally as a common carrier by water. The amended certificate limiting transportation to property loaded in freight cars received from and delivered to rail carriers without transfer, in effect reduces Seatrain to the status of a car-ferry. It may not initiate or terminate traffic; it may not deliver freight to a truck or any receiver other than a railroad. Such a change in status scarcely can be considered to lie within the permissible rights reserved in the former certificate to change "terms, conditions and limitations * * attached to the exercise" of the authority. This clause is based on the provisions of Section 309(d) of the Act, 49 U.S.C.A. § 909(d), but the "terms, conditions, and limitations" contemplated by Congress were of the kind that were before the Supreme Court in Crescent Express Lines, Inc., v. United States, 320 U.S. 401, 64 S.Ct. 167, 88 L.Ed. 127, and in Noble v. United States, 319 U.S. 88, 63 S.Ct. 950, 87 L.Ed. 1277. The terms or conditions or limitations which may be imposed by the Commission under the authority of the section cited cannot sanction the radical step which the Commission has taken of transmuting a common carrier by water of commodities generally into a car-ferry.

There is no statutory authority for the revocation or alteration of a certificate. The Commission relies on Sections 17(7) and 315(c) of the Act, 49 U.S.C.A. §§ 17(7) and 915(c). The first subsection referred to is from Part I of the Act relating by reference to common carriers by water. That subsection makes determinations by the Commission subject to rehearing and reconsideration and provides that the Commission or a division of the Commission may change or modify any decision, order or requirement made by a division. Subsection (c) of Section 315 provides that "The Commission may suspend, modify, or set aside its orders under this part upon such notice and in such manner as it shall deem proper." The provision last quoted is intended to apply to regulatory orders of the Commission and not to permit the cancellation of orders authorizing the issuance of certificates of public convenience and necessity. It is our opinion that these statutory provisions do not aid the standing of the Commission's order of February 6, 1945.

Section 212(a), Part II of the Act, 49 U.S.C.A. § 312(a), dealing with Motor Carriers, provides a...