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November 27, 1959


Before Castle, Circuit Judge, and Mercer and Poos, District Judges.

The opinion of the court was delivered by: Mercer, District Judge.

By its complaint against the United States of America, plaintiff seeks to review several orders of the Interstate Commerce Commission and prays that such orders be vacated and set aside. By order entered July 27, 1959, the Interstate Commerce Commission was joined as an intervening defendant.

Defendants, by their joint answer, averred, that the complaint fails to state a cause of action, basing that position principally upon the decision in Callanan Road Improvement Co. v. United States, 345 U.S. 507, 73 S.Ct. 803, 97 L.Ed. 1206. Further answering, in the alternative, defendants admit essentially all facts stated in the complaint but deny that the Commission acted unlawfully or arbitrarily in entering the orders of which complaint is made.

Plaintiff is a common carrier of freight over certain certificated routes in the States of Illinois, Indiana, Iowa and Nebraska. On or about November 2, 1949, plaintiff and one C.H. Smith, doing business as Chicago-Nebraska Motor Express, filed a joint application with the Commission seeking authority for the purchase by plaintiff of certain operating rights previously granted to Smith for haulage of general commodities over regular routes from Chicago, Illinois, to Hastings, Nebraska, and "to and from" certain specified intermediate and off-route points. While the purchase-authorization proceeding was pending before the Commission, plaintiff, on or about March 30, 1950, began operating under the Smith rights as lessor thereof pursuant to a temporary authorization granted by the Commission. On August 14, 1950, the Commission denied the purchase authorization application. After a further hearing was had upon the application, the Commission reversed itself and issued its report and order dated June 23, 1952 authorizing plaintiff to make the purchase. In its report, the Commission interpreted the "Smith rights" grant as authorizing only westbound movements of freight for compensation. In this context, the Commission found that Smith, and plaintiff as lessee under temporary authorization, and all other lessees who had operated under the certificate had exceeded the authority granted to Smith by performing movements for compensation eastbound from intermediate and off-route points. It directed that such unauthorized service be discontinued.

Precisely when plaintiff purchased the Smith operating rights under authority of the June 23, 1952 order does not appear from the pleadings. Plaintiff did purchase those rights and it is a fair assumption that the purchase was effected between June 23, 1952 and August 11, 1952. On the latter date plaintiff petitioned for reconsideration of the June 23d decision, requesting that the rights, with respect to intermediate and off-route points, be interpreted to permit both west-bound and east-bound transportation for compensation. On January 5, 1953, the Commission denied the latter petition, without opinion. Thereafter, on September 23, 1953, the Commission issued to plaintiff a consolidated certificate of public convenience and necessity which included both the purchased Smith rights and operating rights previously granted to plaintiff. The language of the consolidated certificate which delineates the operating rights acquired through the purchase from Smith, was revised to indicate with greater specificity than the original certificate to Smith had done that only west-bound transportation for compensation was permitted as to all points which plaintiff was thereby permitted to serve.

Thereafter, the cause lay dormant until April 11, 1958, when plaintiff filed with the Commission its Petition for Clarification and/or Interpretation and Declaratory Order requesting the Commission to interpret the consolidated certificate to permit both west-bound and east-bound traffic with respect to plaintiff's operation between the "Smith rights" intermediate and off-route points. An order was entered on July 29, 1958 denying plaintiff's petition on the ground that the certificate had been previously interpreted by the whole Commission and that no need or justification was shown for further interpretation or clarification thereof. Plaintiff then filed a petition on August 23, 1958 for reconsideration of its April 11th petition. That last-gasp effort before the Commission was denied by order entered December 10, 1958 as a repetitious petition for rehearing violative of Commission rules.

Plaintiff then filed its complaint in this Court on May 26, 1959, for review of the several orders and reports of the Commission construing its "Smith rights" grant as permitting only west-bound transportation for compensation. Plaintiff alleges that such interpretation of the Smith certificate, and the "Smith rights" portion of the plaintiff's consolidated certificate, is unlawful, arbitrary, capricious and not justified by the evidence before the Commission prior to its June 23, 1952 report and order.

At the outset, we are faced with defendants' first defense, namely, that the complaint fails to state a cause of action upon which relief can be granted. After due consideration we are of the opinion that the decision in Callanan Road Improvement Co. v. United States, 345 U.S. 507, 73 S.Ct. 803, 97 L.Ed. 1206, is not in point, factually. The decision in Callanan rests upon the particular fact situation there presented. One Hutton had been granted a "grandfather clause" certificate of convenience and necessity as a common carrier by water between ports of call in designated areas. Thereafter, on its own motion, the Commission issued to Hutton an amended certificate restricting his operating rights to freightage service only and excluding contract towage service. Hutton accepted the amended certificate without protest and continued operating thereunder until his death. After Hutton's death, Callanan purchased his operating rights by Commission authorization granted in 1947. Several years thereafter Callanan filed a petition requesting an interpretation of its "Hutton rights" certificate permitting it to engage in towage service. The cause reached the Supreme Court in proceedings instituted by Callanan to review an order of the Commission interpreting the "Hutton rights" certificate as permitting freightage service only. Upon this factual background, the Supreme Court held that the proceeding instituted by Callanan could not be maintained for the reason that it constituted a collateral attack upon the Commission order under which Hutton's certificate had been amended prior to the time of Callanan's purchase of the Hutton operating rights. The Court held further that Callanan having invoked the power of the Commission for approval of the transfer of the Hutton certificate, as amended, was estopped to deny the authority of the Commission to issue that certificate.

In the instant cause there is no collateral attack and no similar factual basis for an estoppel. Plaintiff sought approval for the purchase of the certificate as originally granted to Smith. Amendment of the language of the certificate intervened in the case after the interpretive report issued by the Commission on June 23, 1952. Subsequent proceedings, including this cause, have been directed to review of that report and orders issued thereon. This is therefore a direct attack upon the Commission orders and not subject to the infirmities found to exist in the Callanan case.

In conjunction with their attack upon the complaint, defendants assert that plaintiff seeks to vacate a part only of the Commission's interpretive report and order. Thus, defendants state that plaintiff seeks to retain the fruits of the order in the form of the authorization for purchase of the Smith certificate, while, in the same breath, attacking that part of the report and order which interprets that certificate to permit compensated transportation west-bound only. In conjunction with this argument, defendants also assert laches as inimical to the interests of other carriers.

Neither assertion has either logical appeal or supporting precedent requiring its adoption. Federal Power Commission v. Idaho Power Co., 344 U.S. 17, 73 S.Ct. 85, 97 L.Ed. 15, upon which defendants rely decided only that the courts, upon reversal of an administrative order, may not usurp the administrative function and rewrite the order — that the cause must be remanded to the administrative body for further proceedings consistent with the Court's decision. Since the result of vacation of the orders in issue would be a remandment to the Commission, the interest of the Commission in maintaining its control over interstate commercial motor carriage and the interests of competing carriers would be protected should the orders be vacated.

Defendants' first defense is overruled.

The merits of the cause consist solely of the question of interpretation of the single phrase "to and from", as that phrase is used in the Smith certificate. Smith was granted a certificate of convenience and necessity for the transporting of freight by motor vehicle, as follows:

    "General commodities, except those of unusual value
  and, except dangerous and explosives, livestock,
  commodities in bulk, commodities requiring special
  equipment other than refrigeration, and those
  injurious ...

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