Court Opinion

ID: 9884074
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:34:54.650554+00
Date Added: 2024-06-11T07:48:35.210151
License: Public Domain

LARKINS, District Judge,
(dissenting).
This cause is before a three-judge court upon a “Complaint To Set Aside And Annul A Report And Order Of The Interstate Commerce Commission.” I respectfully disagree with the conclusions of my two brethren on this three-judge court and submit the following memorandum, findings and conclusions in support of my dissent.
The complaint has been filed by the North Carolina Utilities Commission naming the United States and the Interstate Commerce Commission as the defendants. Plaintiff states that Chapter 62 of the North Carolina General Statutes provides for the regulation and control of intrastate rates and services of common carriers by motor vehicles, these being established by the plaintiff.
Plaintiff alleges that a common carrier, General Motor Lines, Inc., of Charlotte, North Carolina, is a carrier of iron and steel articles of commerce in truckload lots from Wilmington, North Carolina, to points in North Carolina. Plaintiff insists such loads are in intrastate commerce and the regulation thereof is subject to the jurisdiction of intrastate commerce, namely, the North Carolina Utilities Commission.
A conflict of enforcement developed, however, when the carrier petitioned the Interstate Commerce Commission for a hearing, and after the plaintiff intervened therein, the Interstate Commerce Commission examiner, on August 20, 1964, found the movement of the loads in question to be in interstate commerce and subject to regulation by the Interstate Commerce Commission and not of the plaintiff.
Plaintiff states that the decision of the examiner is based on the opinion and conclusion of law that iron and steel articles were imported from Europe by ocean-going yessels to the port of Wilmington, North Carolina, and that thereafter, reshipment to points in North Carolina by the purchaser did not constitute an interruption of foreign commerce.
Plaintiff and the Carrier filed exceptions to the report of the examiner, but on February 8, 1965, the Interstate Commerce Commission, Division 2, issued its Report and Order which, in effect, affirmed the examiner. Plaintiff and the Carrier continued to pursue their prescribed administrative remedies until they were exhausted.
Plaintiff states that it has regulated these same shipments for several years and insists that the Interstate Commerce Commission has acted unlawfully and arbitrarily in that it has erroneously asserted jurisdiction in excess of its powers and authority. Prayer is for a three-judge court decree enjoining the operation of the Interstate Commerce Commission Report and Order — setting the same *938aside — and remanding the matter to the Commission for further action consistent with the prayer for relief.
The defendants have filed a joint Answer denying their actions are unlawful, and they pray the action be dismissed.
FINDINGS
Lowe’s Hardware Company is a corporation with offices and operations in the State of North Carolina, and it has numerous retail outlets in this State, as well as in neighboring states. Each retail outlet is an independently incorporated entity, but the parent corporation, Lowe’s, does the bulk of the foreign purchasing for each and all of the retail outlets.
Involved in this action are some eight or ten of the North Carolina outlets, and the processes of shipping certain of the foreign-made hardware goods to them, such as nails and barbed wire.
It appears that each outlet contacts Lowe’s and advises the parent corporation of its predicted needs as anticipated six months thereafter. Lowe’s in turn, operating through another subsidiary, Buchan Supply Company, makes the necessary purchases in Europe for shipments by ocean-going vessels to Buchan at Wilmington, North Carolina, a port of entry.
The nails, barbed wire and related hardware items are then delivered to Buchan at Wilmington, approximately six months after the original orders from the various outlets were placed with Lowe’s. Buchan then takes these items and places them in warehouses provided by the North Carolina Ports Authority. These warehouses are provided importers on a rent-free basis for the first five days the imported items remain stored in them.
The warehouses have numerous bins set aside for Buchan as the shipper, and they are earmarked for the above stated items. The incoming shipments are, therefore, placed in these bins and intermingled with related items previously stored in them. Of course, shipments are continuously coming in at frequent intervals, so generally there are quantities of these items in the bins awaiting reshipment at all times.
At this stage then, the items ordered six months previously, and according to the predicted needs of each North Carolina outlet, have arrived at the port of entry. They are placed in temporary storage under the control of Lowe’s subsidiary, Buchan, awaiting reshipment out to an outlet within the five-day rent-free period.
It is crucial to note, however, that the predicted order of six-months previous no longer controls the amount, nature, identity or destination of any of the hardware items originally ordered by the outlet. In fact, entire lots have become intermingled with the previously shipped items of similar nature and previously stored and binned in the rent-free warehouse facilities provided by the State Ports Authority.
In order for Lowe’s to go about reshipping these goods from the warehouses at Wilmington, N. C., General Motor Lines, Inc., on separate bills of lading from Lowe’s picks up truck-load orders of these items and hauls the same to the outlet which has a need for them at the time of shipment.
The time and manner of this last determination is also of significance. This decision is made by means of Lowe’s electronic computer. The decision is made after Buchan has received and stored the overseas items in the North Carolina Ports Authority warehouses. The items are retained at Wilmington approximately three days. It is during these three days that the ultimate decision as to where any particular items of commerce will be shipped, as to what outlet will receive the nails and barbed wire.
Of course, Lowe’s from the very beginning intends that all those items shipped by ocean-going vessels will enter the commerce of this country. No importer of like disposition would intelligently import items of commerce without a similar intent. But no shipment is specifically *939earmarked for any store when the order is first placed in Europe. Nor is it so earmarked when it is unloaded and warehoused at Wilmington, the port of entry in this State. The intent does not, at these moments, mature, and does not do so until the Lowe’s electronic computer goes to work and reaches its “rapid-fire” conclusions. Thereafter, the final decision to reship to a particular outlet is made, and the intent is then matured as the final decision is made.
CONCLUSIONS
The factual situation of the case at hand is similar to the case of Atlantic Coast Line Railroad Co. v. Standard Oil Co. of Ky., 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 279 (1927) in important particulars. Standard Oil Company of Kentucky shipped oil products from Louisiana and Mexico by means of ocean-going vessels to its storage facilities at ports in Florida. The petroleum products were then piped off the ships into large storage tanks and intermingled with that product already in the storage tanks. As demand called, railroad tank cars were loaded from the large storage tank facilities and reshipment then was made to Standard’s numerous outlets throughout the State of Florida.
The railroad sought to increase its shipping charges which it has been assessing from those established by the State under intrastate jurisdiction to those established by the Interstate Commerce Commission for interstate shipments. Standard had been paying the intrastate rate for some years.
The Supreme Court held that the basic question was not when title to the product passed from the shipper to Standard, although Standard obtained title at the port of entry, “but the intention of the parties, as shown throughout their course of business, governs.” It was held that the railroad was not entitled to charge the higher interstate rate. It was noted by the Court that there was no through rate or joint arrangement existing between ship and railroad, and the business was conducted in the manner established by the facts for some years with no attempt on Standard’s part to conduct its business in a manner designed to avoid paying the higher rate.
The Court recognized the fact that Standard’s business could not be conveniently conducted without the use of storage facilities and related reshipment procedures. It was the conclusion of the Court that, “[t]here is no destination intended and arranged for with the ship carriers in Florida at any point beyond the deliveries from .the vessels to the storage tanks or tank cars of the plaintiff. There is no designation of any particular oil for any particular place * * * ” is made. The controlling fact in Standard’s plan was, “to arrange deliveries of all of its oil purchases on the seaboard of Florida so that they may all be there stored for convenient distribution. * * * ” It is, therefore, my opinion that the facts as found by the examiner establish that such are also the facts in the case at hand.
The questions of law involved, and simply stated would be: (1) An overseas shipment which is unloaded and reshipped to an inland destination as an uninterrupted shipment to such inland destination is in interstate commerce. The determination of whether or not the reshipment involves part of an interrupted shipment depends upon whether or not there is an essential continuity of shipment. (2) Goods imported and later reshipped to a previously unpredetermined destination are in intrastate commerce during the in-state portion of the shipment. Continuity of shipment is again involved, but it is mere continuity of shipment in this case in order to fall within the intrastate rule.
It is defendants’ position that resolving these questions is essentially a matter of fact because the whole question ultimately terminates on resolving the question of intent. Thus, it is argued that if there is substantial evidence to support an examiner’s ultimate conclusions relating to facts, nothing else should be considered by the court. But *940such an argument oversimplifies the statement of the duty of the court, because findings of facts and related conclusions are not resolved in a vacuum. The examiner’s findings of fact need not be disputed, but they may be erroneously applied to the standards of law so as to arrive at an improper result. The findings of fact must be applied according to those standards and rules of law established by judicial precedent in order to have a correct conclusion. It is at this latter stage, the stage of application of the law to the facts found, that the examiner went awry.
It is my opinion that the conclusion of the examiner, based upon the facts found by him, flies directly in the face of the principal case of Atlantic Coast Line Railroad Co. v. Standard Oil Co. of Ky., 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270, supra.
Another case almost identical to the principal case is that of Atlantic Coast Line Railroad Co. v. Standard Oil Co. of N. J., 12 F.2d 541 (4th Cir., 1926). Judge Parker, in affirming the decision of the district court, was impressed with the fact that the oil products which arrived at the port of Wilmington by oceangoing vessels, “lost its identity” in the storage facilities in Wilmington. Judge Parker stated that Standard had a “general stock” from which it made shipments “as a distribution from the general stock and not as a mere means of continuing the transportation begun with the tank steamers. * * * the shipments out constitute new movements, which are separate and distinct from the movement to the warehouse.” This is an appropriate case factually in considering the case at hand. (Id. @ p. 544).
Yet another case of import and factual similarity is that of Seaboard Air Line Ry. Co. v. Lee, 14 F.2d 439 (E.D.N.C.1926). Nitrates were imported by ships from Chile, and were intended for use in the interior of North Carolina as fertilizer. The Court stated that the importer’s purpose is “fully carried out, and his purposes fully subserved, when the cargo is delivered to him in Wilmington.” (Id. @ p. 442). This was so in spite of the fact that the railroad insisted the importer could have readily contracted for inland shipments from the moment of shipment if he had wished to do so. The Court noted that there was a break in the shipment’s journey, and that this break occurred for bona fide reasons and “not for some purpose purely incidental to the transportation covered by transit or consignment privileges in the contract of transportation.” (Id. @ p. 442).
In line with these decisions is an opinion by the Ninth Circuit Court of Appeals, based on facts substantially similar to those of the case at hand in certain important particulars. It was argued in that case that a shipper’s intention to continue transportation beyond the dock sight was such an intention as to require imposition of the jurisdiction of the Interstate Commerce Commission, although the destination was actually undesignated. The Court stated, however, “an intention, when an ocean shipment begins, to distribute on landing and to reship to various points, as yet undetermined, within the state, is insufficient to unite the links into a single carriage chain.” Southern Pac. Co. v. Van Hoosear, 72 F.2d 903, 908 (9th Cir., 1934). The Court then cited both Atlantic C.L.R.R. cases above.
The controlling element in the factual determination is the intention of the shipper. A determination that the intent needed to sustain Interstate Commerce Commission jurisdiction was formed prior to the time the results of Lowe’s computer computations were known to Lowe’s cannot be supported by substantial evidence. To hold that the intent needed to sustain Interstate Commerce Commission jurisdiction was formed after that time flies in the face of a long line of decisions, including decisions of the Supreme Court of the United States, of the Fourth Circuit Court of Appeals and of the United States District Court for the Eastern District of North Carolina.
For the reasons stated, I would grant the relief prayed for in plaintiff’s Complaint.