M. & M. Transportation Co. v. United States (128 F. Supp. 296, 1955)

MAGRUDER, Circuit Judge.

This action was brought by two motor common carriers pursuant to 28 U.S.C. §§ 1336, 2321-2325 to set aside and enjoin enforcement of orders of the Interstate Commerce Commission authorizing the acquisition by St. Johnsbury Trucking Company, Inc., of St. Johns-bury, Vermont, of a portion of the operating rights of Hinsch Transportation Co., Inc., of New York, N. Y., and further authorizing acquisition of control of these operating rights by certain individuals, shareholders of St. Johns-bury. The effective date of the Commission’s orders authorizing the acquisition has been extended to 30 days after final judgment in the instant proceeding.

Briefly, prior to the acquisition St. Johnsbury was authorized by certificate No. MC-108473 to transport general commodities, with certain exceptions, over regular routes between Boston and Springfield, Mass., and a variety of points in Massachusetts, Vermont, New Hampshire, and Maine, and over irregular routes between points in Vermont and points in Rhode Island, Massachusetts, Connecticut, and New York. Under its certificate, No. MC-55888, Hinsch was authorized to operate as a motor common carrier of general commodities, with certain exceptions, over regular routes between the New York metropolitan area and Boston and Springfield, Mass., serving a variety of intermediate points.

On November 27, 1951, St. Johns-bury and Hinsch jointly applied for the Commission’s approval of the acquisition of Hinsch’s rights by St. Johnsbury for $75,000. The statutory provisions relevant to this acquisition are § 5(2) (a), (b), (c) and (e) of the Interstate Commerce Act, 49 U.S.C.A. § 5(2) (a), (b) , (c) and (e).

On December 18, 1951, the Commission granted St. Johnsbury temporary authority under 49 U.S.C.A. § 310a(b) to operate under the Hinsch rights for a period of 180 days. This temporary authority was later extended, and in a proceeding before this court the extension was held to have been without authority and was enjoined. Stone’s Express, Inc., v. United States, D. C., 1954, 122 F.Supp. 955. This injunction has been stayed pending appeal by the-Commission to the Supreme Court. St. Johnsbury is presently serving Hinsch points under this temporary authority and did so during the period when its application for permanent acquisition was being processed before the Commission.

An extended hearing on the application for permanent acquisition was held before a trial examiner at which many competing carriers throughout the New York to Maine area appeared to protest the proposed acquisition. The examiner recommended that approval not be given to acquisition of the major portion of the Hinsch rights, under which he found Hinsch had conducted almost no operations and which, if granted, would permit St. Johnsbury to perform a new and entirely different service in a territory now adequately served by existing carriers. The examiner recommended approval of acquisition of Hinsch rights between the New York metropolitan area and points in Maine, via Boston. As to this service, the examiner found that it would serve the needs of shippers, that it had not been sufficiently established by the protestante that St. Johns-bury’s entry into this area would substantially impair the financial position of existing carriers, and that Hinsch had interchanged some shipments with other carriers for delivery to points in Maine.

Upon review by Division 4 of the Commission, at which both the applicant and the protestant carriers filed exceptions to the examiner’s proposed report, it was held that the acquisition of any of the Hinsch rights by St. Johnsbury would not be consistent with the public interest and therefore should be denied. The Division accepted the examiner’s conclusions as to the major portion of the rights, but found that, as to the limited New York to Maine authority, the evidence of shipper convenience did not establish a need for such service, the service would bear little resemblance to that which Hinsch formerly rendered alone or by interchange, the purchase price would have little justification based on Hinsch’s past operations, it did not appear that the limited operation would be economically practicable, and entry of St. Johnsbury might jeopardize existing carriers, many of which already suffered high operating ratios (i. e., ratios of current expense to current income) .

Upon reconsideration by the full Commission, the decision by Division 4 was reversed and the acquisition found to be authorized by the Act. Certain relatively minor exclusions were made in the rights to be acquired. By a later order, the Commission excluded operations by St. Johnsbury between northern New England and certain intermediate Hinsch points in Connecticut and Rhode Island, finding that Hinsch had rendered little or no service to these points.

Petitioners have in their complaint assailed the order of the Commission on a number of grounds, but principally petitioners argue that the Commissioner’s “basic” findings underlying the “ultimate” statutory findings are inadequate to support the ultimate findings and that such basic findings as the Commission did make are not supported by substantial evidence on the whole record.

The courts have continually asserted that the discretion of the Commission in a § 5 proceeding is sweeping, Congress intending that the Commission exercise its expert knowledge in assuring consistency with the public interest, and the exercise of this discretion will not be disturbed if the Commission’s findings are adequate in view of the statutory requirements. See, e. g., McLean Trucking Co. v. United States, 1944, 321 U.S. 67, 86-88, 64 S.Ct. 370, 88 L.Ed. 544; Herrin Transp. Co. v. United States, D.C.E.D.La.1952, 108 F.Supp. 89, 93-95, affirmed Per Curiam 1953, 344 U.S. 925, 73 S.Ct. 497, 97 L.Ed. 712; cf. United States v. Pierce Auto Freight Lines, Inc., 1946, 327 U.S. 515, 530-533, 535-536, 66 S.Ct. 687, 90 L.Ed. 821. But it is not enough that the Commission find, as it did find, the ultimate facts required by § 5 (i. e., that “the proposed transaction is within the scope of subparagraph (a) and will be consistent with the public interest,” that the terms and conditions of acquisition are “just and reasonable”, and that the transaction will not “result in an increase of total fixed charges, except upon a specific finding by the Commission that such increase would not be contrary to public interest”). On review, an order should be set aside if it does not contain the “basic” or “essential” or “quasi-jurisdictional” findings necessary to support its conclusions. E. g., State of Florida v. United States, 1931, 282 U.S. 194, 208-209, 212-215, 51 S.Ct. 119, 75 L.Ed. 291; United States v. Chicago, M., St. P. & Pac. R. Co., 1935, 294 U.S. 499, 504-505, 510-511, 55 S.Ct. 462, 79 L.Ed. 1023; United States v. Pierce Auto Freight Lines, Inc., supra, 327 U.S. at 533, 66 S.Ct. at page 696; Secretary of Agriculture v. United States, 1954, 347 U.S. 645, 652-654, 74 S.Ct. 826, 98 L.Ed. 1015. Compare Beaumont, S. L. & W. Ry. Co. v. United States, 1930, 282 U.S. 74, 86-87, 51 S.Ct. 1, 75 L.Ed. 221. See our reference to this matter in New York Central R. Co. v. United States, D.C.1951, 99 F.Supp. 394, 400-401.

The nature of the required basic findings is in part stated, in part suggested, by the statute. Section 5(2) (c) prescribes that the Commission should give weight to, among other considerations, “(1) The effect of the proposed transaction upon adequate transportation service to the public; * * * (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected.” And by requiring ultimate findings of “public advantage” or “public convenience and necessity” to support similar transactions, Congress by implication has indicated that these findings need not be made in an acquisition proceeding involving only motor carriers. The Supreme Court has several times mentioned other factors which should be reflected in the Commission’s basic findings in a § 5 proceeding. New York Central Securities Corp. v. United States, 1932, 287 U.S. 12, 23, 25, 53 S.Ct. 45, 47, 48, 77 L.Ed. 138 (“economy and efficiency in operation”; “adequacy of transportation service”) ; McLean Trucking Co. v. United States, 1944, 321 U.S. 67, 86-88, 64 S.Ct. 370, 88 L.Ed. 544 (improving adequacy of service, but' Commission need not find that existing service is inadequate; Commission should consider diminution of competition).

Here the Commission made extensive basic findings which clearly meet the requirements established under the statute. With regard to the promotion of efficient operations by the acquisition, it found that although St. Johnsbury’s interchange with other carriers of full truckloads had, with some delays, been generally satisfactory, interchange of less than truckloads had not been satisfactory and attempts made by St. Johnsbury to remedy this situation had not succeeded; that Hinsch’s preponderance of north-bound traffic and St. Johnsbury’s preponderance of southbound traffic, if unified, were expected to afford a balanced operation and provide a unified service, operating more efficiently, eliminating facility duplication, without materially increasing operating costs; that St. Johnsbury’s earnings were greater on shipments between Vermont and the New York metropolitan area via Springfield or Albany, which would be permitted under the Hinseh license, than via Boston, its only gateway for present regular service; and that St. Johnsbury was financially more sound and a more efficient operator than Hinseh. As to the scope of the Hinseh operations, the Commission found that Hinseh operated primarily between New York City and Boston but participated in shipments to and from points in Massachusetts, Connecticut, Rhode Island, and the New York metropolitan area; that Hinseh operated on a scale commensurate with its resources and facilities; and that Hinseh interchanged some shipments both at New York City and Boston and at intermediate points. With regard to the desires of shippers in the area in question, the Commission found that, if the acquisition were approved, St. Johns-bury would institute overnight through service between New England and the New York metropolitan area in response to the requests of shippers; and that shippers’ testimony was generally that they would continue to utilize St. Johns-bury’s through single-line service if the acquisition were approved. With regard to the reasonableness of the purchase price for the Hinseh rights, the Commission found that Hinseh had continually conducted some operations within its authority, from which it derived annual gross operating revenues in excess