Court Opinion

ID: 8720065
Source: CourtListenerOpinion
Date Created: 2022-11-26 08:22:19.052546+00
Date Added: 2024-06-11T16:59:00.415987
License: Public Domain

MURPHY, District Judge
(dissenting).
A reviewing court cannot substitute its own judgment for that of an administrative agency. But it should not accept a determination merely because made by such agency. The statutory scope of judicial review of administrative action is not at all confined to such action found to be “arbitrary, capricious, an abuse of discretion, * * 1 Such scope includes the higher hurdle that administrative action must surmount, viz., whether or not it is “unsupported by substantial evidence.” 2 And “ ‘substantial evidence is more than a mere scintilla * * * ’ it ‘must do more than create a suspicion of the existence of the fact to be established.’ ” 3
*930' Apparently upon the sole ground that the freight forwarding activities of Florida Shippers Association were carried on without a required permit by the Interstate Commerce Commission and that this Association was the alter ego of plaintiff ABC Freight Forwarding Corporation, the Commission vacated a prior order granting the ABC extension of its permit as freight forwarder to include six additional states (Florida being one of these) 4 The order granting the permit was made on November 20, 1951, and found that ABC met every statutory requirement.5 In effect the Commission revoked the permit by its subsequent order of April 21, 1953. Careful compliance with that part of the Interstate Commerce Act added in 1942 dealing with freight forwarders explicitly requires “That no such permit shall be revoked (except upon application of the holder) unless' the holder thereof fails to comply, within a reasonable time, not less than thirty days, to be fixed by the Commission, with a lawful order of the Commission, commanding obedience to the provision of this chapter, or to the rule or regulation of the Commission thereunder, or to the term, condition, or limitation of such permit, found by the Commission to have been violated by such holder * * 6
. Under provisions of the Act, enacted earlier than the part dealing with freight forwarders, and concerned generally with Commission procedure, no such preliminary warning is necessary. If, as in the instant case, the “order * * * has not yet become effective, the * * * order * * *. shall be stayed'or postponed pending disposition of the matter by the Commission * * *,” upon the application for reconsideration of an order.7 Whether or not in the case of a freight forwarding permit granted but not yet effective, preliminary warning is prerequisite to revocation or suspension may be a question of “excess of statutory jurisdiction, authority, or limitations, or short of statutory right” within the scope of review of this court.8 More in point, however, is the question whether the Commission’s order of vacation can be found to be “unsupported by substantial evidence.”
There is of course no legislative prescription, as there could have been, that a single violation of an order of the Commission makes a freight forwarder ineligible for a permit either as a matter of law or in the discretion of the Commission. Quoting from a recent decision,9 defendant urges a twofold legislative standard in this language: “The two statutory findings which the Commission must make before it may grant a permit to a freight forwarder are that the forwarder is ‘ready, able, and willing properly to perform the service proposed’ and that the application ‘is or will be consistent with the public interest and the national transportation policy’. * * * ” “Both,” defendant argues, “of these positive findings are necessary to support an order granting a permit.” Both of these findings with respect to ABC were explicitly made by the Commission to support its initial order granting the permit. . In connection with its second order vacating the first óné, a positive finding was made that ABC was “ready, able and willing to perform the proposed service” (without ' using the word “properly” before “perform”), and a negative one was *931made as to the second statutory requirement (consistency with the public interest and the national transportation policy). The difference between the first and second set of findings was occasioned solely by an intervening subordinate finding that plaintiff’s alter ego, Florida Shippers, engaged in unauthorized freight forwarder operations.
Conceding that there is substantial evidence for this subordinate finding, the central question is whether such finding is substantial evidence supporting the ultimate negative finding that to grant ABC additional rights would not be consistent with the public interest and national transportation policy. The prophecy that a past violation in a single instance makes the grant of additional rights to the violator thus inconsistent is supported by no proof in the record whatsoever. The validity of the causal connection between the former dereliction and subsequent performance consistent with public interest and transportation policy, stands or falls on the bare assertion of the proposition that one follows the other. Is the inherent probability of such major premise in the instant syllogism sufficient to amount to substantial evidence without any proof that such is the case? In the light of all relevant circumstances, I think not.
So far from indicating such drastic consequences as revocation, suspension or termination of a freight forwarder’s permit for such violation, Congress has made prerequisite a preliminary warning. No instance of such violation as grounds for denial of this permit has been called to the court’s attention in the practice of the Commission itself, but several have been cited where the Commission has found such violation insuf-. ficient.10 No standard of an impeccable record for a freight forwarder applicant has been set by Congress, and presumably none by the Commission prior to the instant case. Indeed Congress has made the grant of such permit mandatory, and not permissive.11
No standard of the character of the applicant has been included for freight forwarders, although Congress has seen fit to establish such a requirement for other licenses. In Federal Communications Commission v. WOKO, Inc.,12 relied upon by my brethren, the statute explicitly required that “ ‘All such applications shall set forth such facts as the Commission by regulation may prescribe as to the * * * character * * *, and other qualifications of the applicant to operate the station’ ”.13 Also unlike the statute before this court was the provision that “Any station license * * * may be revoked (1) for false statements * * 14 And the evidence bearing upon character and false statements in that case established sustained and repeated misrepresentation of true ownership of capital stock in ap--. plications over a period of many years...
I do not insist nevertheless that'the character of a prospective freight forwarder is irrelevant. Such character, in the sense of the sum total of the applicant’s potentialities’ to serve or dis-serve the public interest and national' transportation policy, might well be appraised by the Commission. I find no such appraisal in this record, other than' the conclusory findings that the applicant is “ready, willing and able,” yet to grant the permit would be inconsistent with public interest and national transportation policy solely because of a past' violation. *
*932No doubt an habitual course of misconduct on the part of a freight forwarder would substantiate the improbability that to grant him a permit would sub-serve the prescribed public interest and policy. But neither this court on review, nor the Commission on its hearing, may take official notice of alleged prior violations by ABC unless they are made part of the record. “Nothing can be treated as evidence which is not introduced as such.”15 Por an agency to take administrative notice of particular violations, especially as here when the alleged ones16 indicate that the proceedings were directed against an Arthur J. Brown and not ABC, would irretrievably deny ABC its right of rebuttal.17 Indeed, even the report of the Commission vacating the order makes no mention of such prior transgressions.18
A legislative determination that a single violation makes a grant of permit inconsistent with public interest and national transportation policy may not be capricious and arbitrary. But the additional statutory test for review of this administrative determination is whether it is unsupported by substantial evidence.
The connection between the prior violation and the improbability of consistency with public interest and national transportation policy is purely hypothetical in the instant case. “Quite obviously, the statement of such a possibility, founded as it was upon a hypothesis having no support in the record, is a far cry from proof of any fact, and may not, even when considered alone, be deemed to satisfy the requirements of the substantial evidence rule.” 19
Accordingly, I would set aside the order of the I. C. C.

. Administrative Procedure Act, 60 Stat. 237, 5 U.S.C.A. § 1009(e) (B) (1).

. Id. § 1009(e) (B) (5).

. Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456. See Dickinson, Administrative Procedure Act: Scope and Grounds of Broadened Review, 33 A.B.A.J. 434, 516 (1947).

. ABC Freight Forwarding Corporation Extension, 285 I.C.C. 276.

. Id., 285 I.C.C. 91.

. Interstate Commerce Act. Feb. 4, 1887, c. 104, Part IV, § 401, added May 16, 1942, c. 318, § 10, 56 Stat. 284, 49 U.S.C.A. § 1010(f).

. 49 U.S.C.A. § 17(8).

. Administrative Procedure Act, § 10(e) (B), (3), 5 U.S.C.A. § 1009(e) (B) (3).

. Acme Fast Freight, Inc., v. United States, D.C.Del., 116 F.Supp. 97, 99.

. See R. T. O. Term Corp., 265 I.C.C. 527 (1949); Howard Terminal Corp., 260 I.C.C. 773 (1946); Carloaders Corp., 260 I.C.C. 123 (1944).

. 49 U.S.C.A. § 1010.

. 329 U.S. 223, 67 S.Ct. 213, 91 L.Ed. 204.

. 329 U.S. at page 226, 67 S.Ct. at page. 215; 48 Stat. 1085, 47 U.S.C.A.,§ 308 (b).

. 48 Stat. 1086, 47 U.S.C.A. § 312(a)

. United States v. Abilene & Southern Ry. Co., 265 U.S. 274, 288, 44 S.Ct. 565, 569, 68 L.Ed. 1016.

. Arthur J. Brown, I.C.O. Docket No. PE-38, decided May 5, 1944; Id., 265 I.O.O. 41.

. Ohio Bell Telephone Co. v. Public Utilities Commission, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093.

. 285 I.C.C. 276.

. McCormack v. National City Bank of New York, 303 N.Y. 5, 9, 99 N.E.2d 887, 888. See also Bridges v. Wixon, 326 U.S. 135, 65 S.Ct. 1443, 89 L.Ed. 2103; National Labor Relations Board v. Sparks-Withington Co., 6 Cir., 119 F.2d 78, certiorari dismissed 314 U.S. 703, 62 S.Ct. 477, 86 L.Ed. 562.