Court Opinion

ID: 8741941
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:51:37.282042+00
Date Added: 2024-06-11T17:00:26.896717
License: Public Domain

SWAN, Circuit Judge:
This case is before a three-judge court convened pursuant to applicable statutory provisions. 28 U.S.C. §§ 1336,1398, 2284, 2321-2325.1 It has been heard upon the complaint, the answers thereto, the record made in an administrative proceeding before the Interstate Commerce Commission and the briefs and arguments of counsel.
Lombard Bros., Inc., an interstate motor carrier operating from Philadelphia to Boston, and Everett M. Millis, doing business as Ayer Motor Express in the Boston area, herein referred to as “Ayer,” seek to set aside orders of the Interstate Commerce Commission denying their application for purchase by Lombard of Ayer’s rights and terminal facilities, and Lombard’s application for a corresponding change in its own operating authority. They also object to a Commission order denying them a rehearing for the purpose of introducing additional evidence.
Ayer has a certificate of public convenience and necessity from the Corn-*907mission that entitles it to operate as a common carrier on a regular service in general commodities over Massachusetts highway 2 between Boston and Fitch-burg, a route running west and slightly north from Boston. In addition, Ayer possesses rights under the second proviso of the then section 206(a) (1) of the Interstate Commerce Act, 49 Stat. 551 (1935), as amended, 49 U.S.C. § 306(a) (1) (1958), whereby it can operate in interstate commerce over the same routes authorized by the Massachusetts Department of Public Utilities for intrastate commerce. These “proviso rights” include (1) regular-route authority over the same Route 2 as the I.C.C. certificate, but extending farther west to Williams-town; and (2) irregular-route authority to pick up and deliver general commodities, with certain exceptions, within 50 miles of the State House at Boston.
In January 1961 plaintiffs entered into a contract for the sale of Ayer’s rights to Lombard. They have since disclaimed any rights to operations west of Orange, Mass, (about 50 miles east of Williams-town), on the regular route, or south of Massachusetts highway 106, on the irregular authority, since plaintiffs stipulated that Ayer’s services in these areas had “lacked continuity.” Lombard has been operating under Ayer’s rights since March 1961 pursuant to temporary authority granted by the Commission pending final disposition of the applications.
In July 1960, Lombard entered into an interlining agreement with Ayer, whereby almost all freight carried interstate by Lombard, but coming from or destined for Boston-area points not on Lombard’s routes, would be carried locally by Ayer. The freight would be “interlined” at Lombard’s or Ayer’s terminals in either Boston or Worcester. In support of their application for approval of the purchase, plaintiffs submitted a schedule of representative shipments carried by both carriers for the six months prior to the contract of sale; that is, from August 1,1960 through January 1961. This schedule is required by Commission regulations. Various motor carriers in the Boston area filed objections and requested a hearing, which was held in Boston in July 1961.
In their letters of opposition the protestants had asserted that large parts of Ayer’s authority had been dormant before its interline agreement with Lombard. They attempted to prove this by testimony from protestants’ employees that Ayer had not served the area northeast or south of Boston, and had in fact refused requests to render service in these areas. They also tried on cross-examination of Millis to get an admission that Ayer had not served these areas. Millis made no such admission, but his statements about the frequency of the irregular-route service in the questioned areas were rather vague and unemphatic. The only documentary evidence of Ayer’s service was the abstract of shipments from August 1 through January, mentioned above.
From this abstract the trial examiner noted that Ayer’s operations expanded noticeably after August 12; for example, the Lowell-Lawrence-Haverhill area (northeast of Boston) did not appear in any shipments made during the first eleven days of August. From this evidence and from the oral testimony, the trial examiner concluded that Ayer’s irregular-route authority had been partially dormant, with service only in the area west of U.S. highway 3 (running north to Lowell) and north of U.S. highway 20 (running west to Worcester). There was un-controverted testimony that Lombard had leased to Ayer two tractor units, driven by former Lombard employees; that these drivers regularly called the Lombard dispatcher in Boston for orders on pick-ups by Ayer in the northeast area; that shippers in the disputed areas usually called Lombard directly instead of Ayer; that when Ayer collected C.O.D. charges from consignees for freight derived from Lombard for local delivery, Ayer always endorsed the checks directly to Lombard, rather than depositing them and drawing its own check, as was its custom with respect to other carriers with which Ayer interlined; that Lom*908bard itself billed directly the consignees or shippers that Ayer served. In addition, all freight carried by Ayer in the disputed areas was interlined with Lombard. From all this the trial examiner concluded that Lombard had “controlled” Ayer in violation of section 5(4) of the Interstate Commerce Act, 49 U.S.C. § 5(4), and that the interline agreement of July 1960 had been made for the purpose of building up Ayer’s dormant rights.
It is settled I.C.C. policy that transfer of authority will not be granted where the two carriers have been guilty of violating the control provisions unless some overriding public need for the service is shown. The hearing examiner recognized that some advantage might accrue to shippers but concluded that the new service would unnecessarily increase competition, already keen in eastern Massachusetts, and that adequate, and substantially equivalent, service already existed. This policy has been recently sustained by the Supreme Court in Gilbertville Trucking Co. v. United States, 371 U.S. 115, 128-129, 83 S.Ct. 217, 225, 9 L.Ed.2d 177:
“ * * * To approve a merger in the face of a § 5(4) violation may encourage others whose merger may or may not be consistent with the public interest to either present the Commission with a fait accompli or avoid its jurisdiction altogether. As the Commission pointed out in Central of Georgia, if such practices were encouraged, ‘our administration of the statute in the public interest would be seriously hindered, if not defeated.’ 307 I.C.C., at 44. This additional interest in the proper administration of the statute places upon the applicant a heavier burden than may be the case for other regulatory violations, and mere lack of willfulness or alleged innocence need not suffice.
“In fact, the Commission’s rule is not automatic and will give way to a clear showing of public interest in .approval.”
Plaintiffs’ assertion that the Commission’s denial of the transfer of the admittedly active rights constitutes a “punishment” is immaterial, as the quotation above shows, since the hearing examiner found a deliberate attempt to build up dormant rights for the purpose of passing them off as bona fide and further found, on adequate evidence, no clear public need for the proposed service.
Plaintiffs further object that if the denial is based upon the “bad character” of Lombard, then the Commission has been inconsistent in granting Lombard permission to acquire certain other motor carriers in contemporaneous proceedings. If the Commission feels that denial of only the instant application will be sufficient punishment to keep Lombard from flirting close to the line of illegality, we can see no reason why its judgment should be disturbed.
Plaintiffs contend that the Commission’s findings of dormancy and control are not based on substantial evidence. We think it sufficient. They also argue that the Commission should have made specific findings with respect to the issues enumerated in section 5(2) (c) of the Act, 49 U.S.C. § 5(2) (c), to which the Commission is required to “give weight” when passing on a proposed acquisition. In particular, plaintiffs claim that the Commission did not consider the fate of Ayer’s employees, who will almost certainly be put out of work if the application is denied, since Ayer is insolvent and cannot continue operations on its own. The Commission and the hearing examiner did indeed note the probable effects of decision upon the employees, but obviously did not consider them sufficient to warrant a contrary result.
Plaintiffs’ primary contention is that the Commission abused its discretion by refusing their application to reopen the hearing for the limited purpose of showing lack of control and dormancy. In their application they included an abstract of representative shipments by Ayer from June 1959 to May 1960. They contend that this evidence is “newly relevant” and establishes that Ayer’s opera*909tions over the irregular-route territory were not dormant.
 The Commission is entrusted with broad discretion with respect to new evidence. The Commission denied the request for further hearing with the observation that plaintiffs had failed to avail themselves of their prior opportunity at the hearing. Plaintiffs assert that the question of control was not raised until the hearing, and that they thus had no reason to prepare in advance of the hearing the evidence respecting shipments. But control by Lombard was charged by protestants at the hearing, so that plaintiffs could have asked then for leave to prove prior operations, when only a continuance would have been required. Moreover, if we take plaintiffs’ abstract of shipments as an offer of proof, we find no convincing demonstration that they prove continuity of operations in the challenged areas. It is true that the trial examiner had only sketchy evidence on which to base his conclusions as to Ayer’s bona fide operations, but the offer of plaintiffs fails to undermine his findings.
As already stated, we think the hearing examiner’s findings as to dormancy of the rights in certain areas finds sufficient support in the evidence, as does his finding of control. It is true that plaintiffs were careful not to engage in certain of the practices that have previously led the Commission to find “control,” but the very concept defies a hard-and-fast definition where the influence is exerted informally and orally.
The orders of the Commission should not be disturbed; accordingly the complaint is dismissed.

. As originally constituted Judge Charles E.' Clark was a member of the court. Because of Judge Clark’s death before the case was decided, Judge Smith was appointed in Ms place. See Ayrshire Collieries Corp. v. United States, 331 U.S. 132, 67 S.Ct. 1168, 91 L.Ed. 1391.