Court Opinion

ID: 9626725
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:22:23.928788+00
Date Added: 2024-06-11T15:11:30.778969
License: Public Domain

THOMAS F. MURPHY, District Judge
(dissenting).
The issuance of a certificate is dependent upon a finding that the “applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules, and regulations of the Commission thereunder.” 49 U.S.C.A. § 307. Such a finding was made in the instant case but plaintiff alleges that there is no evidence to support it. I agree.
The Examiner found, and Division I agreed, that the service proposed to be rendered by United Parcel is “required by the present or future public convenience and necessity.” According to the Examiner the service offered by the applicant “has been designed and developed to accomplish the expeditious delivery of small packages of the type for which Parcel Post is now generally utilized, at rates comparable with Parcel Post * * * ” and he found that “the record establishes an urgent need on the part of the shipping public for a small package service such as that proposed and which is now effectively available only through the medium of the Parcel Post System.” These findings are not here disputed. Both from these excerpts, and a reading of the reports as a whole, it is abundantly clear that the requisite finding of convenience and necessity depended chiefly upon United Parcel’s proposal to operate on the basis of Parcel Post rates. Thus, while rates are not usually relevant or pertinent in application proceedings, in the instant case rates wei*e the predominant factor which led to the issuance of a certificate.
Turning now to the question of fitness and ability, it becomes clear that the necessary finding must go further than a simple determination that United Parcel is fit, willing and able to pick up, transport and deliver packages. The finding now must be to the effect that United Parcel is fit, willing and able to perform the above-mentioned physical operations at Parcel Post rates and in conformity with the Commission’s rules and regulations.
An integral part of the applicant’s proposal is the practice of charging shippers $2 a week for pick-up service five days a week whether or not the shipper requires a pick-up on any particular day. Shippers who do not wish or need daily pick-ups must either pay the fiat rate or deliver their packages to applicant’s terminal themselves. Only 1% of applicant’s business is done by the latter method. Plaintiff urges that this is illegal and in violation of 49 U.S.C.A. § 316(d). The Examiner rej ected this contention as being prematurely raised and asserted that the applicant would be required to, and indeed had agreed to, comply with the Commission’s rules and regulations with respect to rates and charges for services performed. Earlier in the report he assumed that the applicant would conduct his proposed operations in a manner similar to the intrastate operations presently conducted in the Chicago area, i.e., the flat $2 a week pick-up charge would be carried over into the interstate operations. Division I agreed. However, the order denying plaintiff’s petition to the full Commission for a reconsideration stated that “such denial does not constitute approval of the protested schedules.” It is apparent plaintiff’s objection was treated as a rate question and therefore inappropriate to an application proceeding.
While it is true plaintiff’s objection raises a question of rates, it goes far deeper than that. This is not the usual case since the main justification for issuing the certificate was based on the rates United Parcel proposed to charge. “Although the rates and charges for a proposed motor carrier operation are not in issue in an application proceed*743ing, the economics of such an operation are definitely in issue. Sufficient facts should be shown to establish that adequate revenues will be earned by the applicant, that its operating costs will not exceed the prospective revenues and that the proposed operation can be conducted in a feasible, economical and efficient manner under the Commission’s rules and regulations.” L.P.M. Corporation Extension, Docket No. M.C.-111015.
The importance of plaintiff’s objection becomes clear when we examine the reports with reference to United Parcel’s fitness and ability. The Examiner’s sole finding on the question of applicant’s financial ability to perform at Parcel Post rates is “All of these companies1 are in good financial condition. A pro forma balance sheet giving effect to the proposed merger of the Illinois company into applicant indicates assets of almost $3,000,000 and a similar statement giving effect to all the above described mergers indicates assets of almost $4,-000,000.” Surely, an asset figure without reference to liabilities or net income is completely meaningless. The Division I report goes into slightly more detail and finds that applicant had assets of $480,603, and net income for the first nine months of 1955 of $15,125. It concludes by saying United Parcel is “fit and able, financially and otherwise, to perform the proposed operation” and that it was “not convinced that it cannot operate in conformity with our requirements and still render an efficient service responsive to the public need.”
Both findings of fitness and ability are predicated upon applicant’s past use of the complained of pick-up charge, and on the presumed use of the same allegedly illegal charge in the future. There is not a shred of evidence in the record pertaining to United Parcel’s financial ability to perform at low rates without this charge.
There is, however, considerable financial data in the record. The figures are most complete with respect to Illinois. It makes daily pickups from 1294 consignors. Multiply this by $2 a week for 52 weeks and it appears that $134,576 of its total 1955 revenue of $189,433,2 or better than 70% of it is obtained by use of the allegedly illegal practice. Consider, then, that Illinois would net, without the pick-up charge, only $54,857 after gross revenues of $6,991,964 and assets of $2,292,438, and it becomes obvious that a determination of the legality or illegality of the pick-up charge vitally affects the ability to perform. The fig-*744tires with respect to the applicant are even more striking — assets of $480,603, gross revenue $1,800,192, net income without the pick-up charge, $6,053. The slightest rise in wages or other operating expenses could wipe its profit out completely. Applicant would then be forced either to discontinue operations or to raise its rates above the Parcel Post level, although the main justification for convenience or necessity rests on its proposal to operate at Parcel Post rates. Examined in the light of these considerations it is obvious that the Commission was arbitrary and capricious in declining to determine the legality of the pickup charge. It is logically impossible for the Commission to make a finding of ability to perform in conformity with the regulations when it refuses to interpret these regulations with respect to a practice whereby the applicant derives 70% of its revenues.
This court has jurisdiction to review the order of the I.C.C. to determine whether such order has support in the law and in the record. United States v. Pierce Auto Lines, 1945, 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821.
Unless and until the Commission determines the legality of the complained of practice it is impossible for us to tell if the record supports a finding of financial ability to perform in accordance with the rules and regulations. While it is true Railway Express can challenge the legality of United Parcel’s rate schedule pursuant to § 316(e) of the Act, success in that proceeding would still have no effect on the issuance of the certificate. Yet if Railway Express is successful there is no evidence in the record to support the Commission’s finding.
Accordingly, I would remand the case to the Commission for a determination of the legality of the pick-up charge. In the event said charge is found to be illegal the Commission should be directed to reconsider the applicant’s ability to perform at Parcel Post rates on the present record or to reopen the hearings for further testimony.

. The proposal contemplated a merger of United Parcel of Illinois, Milwaukee and Cleveland into the applicant.

. Applicant Illinois Consolidated
Assets $480,603 $2,292,438 $2,773,041
Gross Revenue $1,350,144-$1,800,192* $5,243,973-$6,991,964* $8,594,117-$8,792,156*
Net Income $15,125-$20,165* $142,075-$189,433* $157,200-$209,598*
Net Income Less Pick-up Charge $6,053b $54,857a $60,910b
Milwaukee Cleveland Consolidated
Assets $284,492 $767,230 $3,824,763
Gross Revenue $864,647 — $1,152,862* $934,613-$1,246,150* 8,393,337-$ll,191,168*
Net Income $17,171-$22,894* $16,337-$21,782* $190,708-$254,274*
Net Income Less Pick-up Charge $6,871» $6,536b $74,317b
* — Projected yearly figures based on the nine month figures contained in the record,
a — Computed as follows: Projected yearly income of $189,433 less income from pick-up charge — 1294 consignors at $2 a week for 52 weeks or $134,576.
b — Computed by deducting 70% of projected net income. This figure was used, in the absence of any others, because it approximated the percentage of net income derived from the pick-up charge determined in the case of Illinois.