Shippers Cooperative, Inc. v. ICC

• Decision Date: 03 October 1962
• Docket Number: No. 17761.,17761.
• Citation: 308 F.2d 888
• Parties: SHIPPERS COOPERATIVE, INC., a Corporation, and Pierson-Corn, Inc., a Corporation, Appellants, v. INTERSTATE COMMERCE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

308 F.2d 888 (1962)

SHIPPERS COOPERATIVE, INC., a Corporation, and Pierson-Corn, Inc., a Corporation, Appellants, v. INTERSTATE COMMERCE COMMISSION, Appellee.

No. 17761.

United States Court of Appeals Ninth Circuit.

October 3, 1962.

Phil Jacobson, Los Angeles, Cal., for appellant.

Bernard A. Gould, Interstate Commerce Commission, Washington, D. C., and William L. Harrison, Regional Attorney, Bureau of Inquiry & Compliance, Interstate Commerce Commission, San Francisco, Cal., for appellee.

Before CHAMBERS and BARNES, Circuit Judges, and ROSS, District Judge.

BARNES, Circuit Judge.

This is an appeal from an injunction granted by the United States District Court against defendant-appellants Shippers Co-operative, Inc. (hereinafter referred to as "Coop") and against Pierson-Corn, Inc. (hereinafter referred to as "Pierson-Corn"). The action was started by the filing of a complaint in which the plaintiff-appellee Interstate Commerce Commission (hereinafter referred to as "Commission"), under Part II of the Interstate Commerce Act (hereinafter referred to as the "Act"), alleged that Coop had been and was transporting property for compensation in interstate commerce as a common or contract carrier without having been issued a certificate or permit by the Commission authorizing Coop to engage in such operations or business, and consequently, that defendant-Coop was in violation of § 206(a) or § 209(a) of the Act (49 U.S. C.A. §§ 306(a) and 309(a), respectively). Pierson-Corn was made a party defendant under 49 U.S.C.A. § 52; the Commission having alleged that Pierson-Corn had participated in the acts charged in the complaint and would be directly affected by any judgment entered by the court.

The case was tried to the court. The court found (1) that Coop had been and was transporting property by motor vehicle over public highways and in interstate commerce for compensation as a contract carrier in violation of § 209(a) of the Act; and (2) that Pierson-Corn had been and was participating in the violation. The court entered a judgment enjoining both Coop and Pierson-Corn. Execution of the judgment was stayed pending this appeal.

The district court had jurisdiction under § 222(b) of the Act (49 U.S.C.A. § 322(b)). A timely notice of appeal was filed. This court, therefore, has jurisdiction to review the judgment entered below under the provisions of § 1291 of Title 28 United States Code.

The question presented in this appeal is whether the district court erred in holding Coop to be a contract carrier rather than a private carrier.

Although the parties agree that the facts are not in dispute, each prefers to state them in its own words. We summarize them as follows:

Coop is a California nonprofit corporation whose stockholder-members are manufacturers, and the distributors and the processors of the manufacturers.¹ Coop is, according to the stipulated facts, "an association of such members organized on a non-profit basis, for the purpose of securing the benefits of an expeditious movement of each member's merchandise in truck-load, or less than truck-loads, for each said member." Manufacturer-members with their principal place of business in Georgia, South Carolina, or Tennessee have distributors and processors in California; vis-a-vis, manufacturer-members with their principal place of business in California have distributors and processors in the states east of the Mississippi River.²

"Shippers Coop is not engaged in manufacturing, processing, or marketing of merchandise in any manner whatever. Its only function is to perform a transportation service for the individual member." (Finding 11, Tr. 69.)

To perform this transportation service for its members, Coop has leased eighteen tractors and trailers which are operated under Coop's management and expense. Coop hired, supervised, and paid all its drivers; it maintained terminals in Los Angeles, California, and in Dalton, Georgia; the transporting between terminals is done in the vehicles managed by Coop. Coop does not own the merchandise it transports, and it requires the consignor to execute a bill of lading or receipt when it accepts merchandise to be transported and it requires a receipt from the consignee when the merchandise is delivered. Coop has published a schedule of rates and charges, and each shipper-member is assessed and pays for each of its shipments according to the published schedule.³ Coop provides public liability and property damage insurance, and it insures all the merchandise it transports. Coop pays all its expenses, and receives and accounts for all revenues in its corporate name.

Coop's books of account, its records of merchandise it has transported, and all of its office work are prepared and maintained by Pierson-Corn⁴ under a written contract the terms of which call for Coop to pay Pierson-Corn thirty cents for each one-hundred pounds of merchandise which Coop transports for its shipper-members.

Neither Coop nor Pierson-Corn held a certificate, permit, or any other authority from the Commission to transport property in interstate commerce.

The Commission alleged that Coop's transportation activities have been and are those of a contract carrier by motor within the meaning of § 203(a) (15) of the Act; and that since Pierson-Corn is participating in Coop's violations, the Commission is entitled to an injunction against both Coop and Pierson-Corn. The district court agreed, and it entered a judgment granting the injunctions sought by the Commission. Coop and Pierson-Corn then brought this timely appeal.

Appellants' single specification of error is that the district court erred, "both in respect to the law and the evidence, in ruling that appellants were `contract carriers' requiring authorization from the Interstate Commerce Commission."

Appellants contend that Coop is a private carrier within the meaning of § 203 (a) (17) of the Act; and that the district court, in holding otherwise, erred in both fact and law. We believe the district court was correct in both respects and we affirm.

Appellants' contention is that the Act, read as a whole, shows that Congress did not intend to include a group or association of shippers acting on a nonprofit basis. Appellants rely primarily upon § 402(c) of the Act and upon Pacific Coast Wholesalers Ass'n v. United States, S.D. Calif.1949, 81 F.Supp. 991, affirmed 338 U.S. 689, 70 S.Ct. 411, 94 L.Ed. 474.

Chapter 13 of the Interstate Commerce Act may be cited as Part IV of the Act (49 U.S.C.A. § 1001). Section 402 (c) of the Act (49 U.S.C.A. § 1002(c) (1)) reads:

"(c) The provisions of this chapter shall not be construed to apply (1) to the operations of a shipper, or a group or association of shippers, in consolidating or distributing freight for themselves or for the members thereof, on a nonprofit basis, for the purpose of securing the benefits of carload, truckload, or other volume rates, or (2) to the operations of a warehouseman or other shippers\' agent, in consolidating of distributing pool cars, whose services and responsibilities to shippers in connection with such operations are confined to the terminal area in which such operations are performed." (Emphasis added.) (49 U.S.C.A. § 1002(c).)

From the above language, appellants contend:

"The fact that the language just quoted is found in Section 402(c) of the * * * Act relating to freight forwarding rather than to transportation by `groups or associations of shippers,\' nowise detracts from its illumination of general legislative intent. Emphasis added. There is, of course, no contention that Section 402(c) directly emphasis appellants\' applies to the section under which this proceeding is brought i. e., § 209(a) of the Act, Chapter 8, Part II; 49 U.S.C. § 309(a); it is, however, claimed that the language there in § 402(c) used indicates a clear intent that shippers may safely engage in such cooperative, nonprofit operations without running afoul with the Commission." (Rep.Br. 5.)

We cannot agree. That appellants' contention is without merit is shown by the specific language in § 402(a) (5) and 402(c).

Section 402(a) (5)⁵ says that a "freight forwarder",

"means any person which (otherwise than as a carrier subject to chapters 1, 8, or 12 of this title) holds itself out to the general public as a common carrier * * * and (C) utilizes, for whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to chapters 1, 8, or 12 of this title."⁶ (Emphasis added.)

Thus, to be a freight forwarder — the subject of Chapter 13 — one cannot be a carrier subject to Chapter 8 (Part II of the Act; "Motor Carriers") and to be a freight forwarder within Chapter 13 one must utilize the services of carriers subject to Chapter 8.

Furthermore, § 402(c), supra, specifically exempts from Chapter 13 only an "association of shippers * * * consolidating or distributing freight for * * * members * * * on a nonprofit basis, for the purpose of securing the benefits of * * * volume rates * * *." Thus the exemption is restricted to an association of freight forwarders; it does not extend to an association of carriers.

Appellants would have this court believe that what is good for freight forwarders is good for motor carriers. This is not necessarily so. Freight forwarders and motor carriers are not the same. United States v. Chicago Heights Trucking Co., 1940, 310 U.S. 344, 60 S.Ct. 931, 84 L.Ed. 1243; Acme Fast Freight, Inc. v. United States, S.D.N.Y.1940, 30 F. Supp. 968, affirmed, 309 U.S. 638, 60 S.Ct. 810, 84 L.Ed. 993. A freight forwarder is one who hires independent common or contract carriers. Ibid.

Appellants rest their other foot on Pacific Coast Wholesalers Ass'n v. United States, supra. The case gives appellants no more support than does the statute. (1) Pacific Coast Wholesalers was brought under § 402(c) (1) of the Act; the case at bar was brought under §§ 206(a) and 209(a) of the Act. (2) In ...