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04/26/62 Flota Mercante v. Federal Maritime

April 26, 1962

FLOTA MERCANTE GRANCOLOMBIANA, S.A., PETITIONER

v.

FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, PHILIP R. CONSOLO, BANANA DISTRIBUTORS, INC., INTERVENORS. PHILIP R. CONSOLO, PETITIONER,

v.

FEDERAL

MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, FLOTA MERCANTE GRANCOLOMBIANA, S.A., INTERVENOR. FLOTA MERCANTE GRANCOLOMBIANA, S.A., PETITIONER

v.

FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, PHILIP R. CONSOLO, INTERVENOR.



Before WILBUR K. MILLER, Chief Judge, and BAZELON and WASHINGTON, Circuit Judges.

UNITED STATES COURT OF APPEALS DISTRICT OF COLUMBIA CIRCUIT. 1962.CDC.47

Nos. 15330, 16366, 16369.

April 26, 1962.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WASHINGTON

WASHINGTON, Circuit Judge.

These cases raise issues concerning the grant of reparations by the Federal Maritime Board *fn1 to Philip R. Consolo, a banana shipper, against Flota Mercante Grancolombiana, S.A. ("Flota"), a steamship company, for Flota's allegedly discriminatory treatment of Consolo, who sought space on Flota's vessels for the shipment of bananas from Ecuador to the United States.

In our case No. 15,330, Flota challenges an order of the Board, dated June 22, 1959, in which the Board found Flota to be a common carrier of bananas between the United States and Ecuador, and to have discriminated against Consolo in the allocation of space, in violation of Sections 14 and 16 of the Shipping Act of 1916, as amended, 46 U.S.C.A. ยงยง 812, 815. *fn2 In No. 16,369, Flota challenges a later order of the Board, issued March 30, 1961, directing Flota to pay Consolo some $143,370.98 as reparations for the conduct condemned in the order of June 22, 1959. In No. 16,366, Consolo challenges the award of March 30, 1961, as inadequate. *fn3 I.

We will take up first the issues presented in No. 15,330. The background of the controversy may be briefly stated. The Grace Line, another steamship company, offered a year-round regularly-scheduled weekly service to North Atlantic ports with vessels containing refrigerated ("reefer") cargo space suitable for carrying bananas. Flota offered a generally similar service. In a proceeding against the Grace Line, the Maritime Board ruled that under the Shipping Act that line was a common carrier, and must offer refrigerated space to all qualified banana shippers. Banana Distributors, Inc. v. Grace Line, Inc., 5 F.M.B. 615 (1959), aff'd sub nom. Grace Line, Inc. v. Federal Maritime Board, 280 F.2d 790 (2d Cir. 1960), cert. denied, 364 U.S. 933, 81 S. Ct. 380, 5 L. Ed. 2d 365 (1961); see also Consolo v. Grace Line, Inc., 4 F.M.B. 293 (1953). Since that ruling, Grace has carried bananas for a number of shippers. Flota, however, has carried bananas since 1950 under special contracts giving the contracting shippers the exclusive use of Flota's refrigerated facilities. In August 1957, following the Board's first decision in the Grace cases, Consolo made a written demand on Flota for a fair share of Flota's refrigerated space. This was refused. On October 30, 1957, Flota filed a petition with the Board for a declaratory order determining whether or not Flota was required to cancel its existing contracts for banana shipment. On November 15, 1957, Consolo filed his complaint. Banana Distributors, a banana shipper similarly situated, filed its complaint thereafter. The three proceedings - the petition for a declaratory order and the two complaints - were consolidated for hearing.

At an early stage, the Examiner ruled that he would defer the taking of evidence on the measure of reparation due the complainants until after the merits of the complaints were decided. The merits were determined in Consolo's favor by order of the Board dated June 22, 1959, and it is this order which Flota seeks to have reviewed in No. 15,330. At a proceeding commenced after the decision on the merits, evidence of damages was taken, and the Board entered a Report and Order on March 28, 1961, directing Flota to pay Consolo $143,370.98 in reparations.

The threshold question in No. 15,330 is whether the Board could properly find, as it did, that Flota violated Section 14 Fourth and Section 16 First of the Shipping Act of 1916. *fn4 Flota argues that the issue whether it had violated these sections of the Act was not properly before the Board when the latter rendered its Report and Order of June 1959. The Board's Examiner had ruled, as we have seen, that the proceeding would be heard in two phases. In essence, Flota contends that the first phase was concerned only with the question whether or not Flota was a common carrier of bananas, and that all remaining issues, including the crucial question whether Flota was in violation of the Shipping Act, were reserved for the subsequent proceeding. *fn5 As a corollary, Flota claims that in the first proceeding it was deprived of a proper hearing on the question of violation of the Act because it put on complete testimony only with respect to the common carrier issue.

The literal language used in making, and granting, the motion for a severance of the hearing can probably be read in such a way as to lend some support to Flota's contention. Thus, counsel for Banana Distributors, in moving to sever, said "we would like an immediate decision . . . on the question of whether or not the Grancolombiana Line is a common carrier" and "if the Grancolombiana Line is found not to be a common carrier, that would end the case." The Board explains this language by saying that the term "common carrier issue" was a kind of oral shorthand for the concept of violation of Flota's duties as a common carrier under the Shipping Act.

Be that as it may, a careful reading of the record leads us to the conclusion that the only matter removed from the first proceeding was the question of the quantum of damages, not the issue of violation of the Shipping Act. Such in our view must or should have been the understanding of all parties, including Flota. In granting the motion to sever, the Examiner stated: "We ought to proceed with the merits." It is difficult to imagine the "merits" as excluding the issue of whether Flota had violated the Act. And in requesting separation, counsel for Banana Distributors spoke only of "our damage case" and "the damage part of this proceeding" as belonging in the second stage of the hearings. Moreover, counsel described the motion to sever as "a severance of the proceeding just like was done in the Grace Line case." It seems to us that the parties must have understood this as a reference to the closely similar and very recent Grace case, in which the common carrier and violation issues were treated together. *fn6 Similarly, in two earlier Board cases which involved separated proceedings, only the question of the extent of the damages was left to the second hearings. See Roberto Hernandez, Inc. v. Arnold Bernstein Schiffartsgesellschaft, 1 U.S.M.C. 686 (1937), 2 U.S.M.C. 62 (1939), aff'd, 116 F.2d 849 (2d Cir. 1941); Waterman v. Stockholms Rederiaktiebolag Svea, 3 U.S.M.C. 131 (1949). *fn7

In moving for a severance, counsel for Banana Distributors clearly informed the Examiner and other counsel that his purpose was to "get on the Grancolombiana Line ships as promptly as possible." Given that purpose, it would have been pointless to restrict the case to the sole inquiry whether petitioner was a common carrier. For even if Flota were found to be a common carrier, this in itself would not get Consolo on Flota's boats if Flota's denial of space to Consolo was not an "unjust" or "unreasonable" discrimination.

Our conclusion that Flota should have known that the question of its violation of the Act was in issue is borne out by indications that Flota did in fact know this. In its own brief to the Examiner, Flota recognized that the legality of its conduct was in question. It argued that "denial of space violates the Shipping Act only if it constitutes an unjust discrimination between competitors." It concluded its brief by ...


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