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June 6, 1957

RAILWAY EXPRESS AGENCY, Incorporated, Plaintiff,
UNITED STATES of America and Interstate Commerce Commission, Defendants

The opinion of the court was delivered by: SWAN

This case is before a three judge court convened pursuant to applicable statutory provisions. *fn1" 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.

The action seeks annulment or suspension of two orders of the Commission, dated respectively September 24, 1956 and January 23, 1957, entered in a proceeding entitled United Parcel Service, Inc., Common Carrier Application, Docket No. MC-115495. In this proceeding, commenced in August 1955, United Parcel applied for a certificate of public convenience and necessity, pursuant to 49 U.S.C.A. § 307(a), to operate as a common carrier by motor vehicle of general commodities, with certain exceptions, over described irregular routes between Chicago, Illinois, and certain points in Iowa, Illinois, Indiana, Wisconsin and Michigan. *fn2" Protests to the granting of such authority were filed by Railway Express Agency and several motor common carriers. The application was thereafter referred to an examiner who, after extensive hearings, recommended that a certificate be granted. Exceptions to the examiner's report were filed by protestants but Division I of the Commission unanimously adopted the examiner's recommendation and ordered that upon fulfillment of certain conditions including the filing by United Parcel of a proper tariff, the certificate be issued. 68 M.C.C. 199, 206. This is the order of September 24, 1956. The second order complained of denied Railway Express Agency's petition to the full Commission for a reconsideration of the order of Division I. Thereafter United Parcel filed a tariff to become effective April 1, 1957 to which Railway Express Agency filed a protest. The Commission declined to allow the protest, advising, however, that its declination 'does not constitute approval of the protested schedules.' The tariff became effective April 1, 1957 without Commission action. On the same date a certificate of public convenience and necessity was issued to United Parcel.

 The present action was commenced by the issuance of summons March 28, 1957. The complaint alleges that the orders are illegal because a 'necessary ingredient' of United Parcel's proposed operation is a charge of $ 2 per week for a pick-up call each business day regardless of the shipper's need or demand for such service. *fn3" This is asserted to constitute an unlawful discrimination against shippers who require transportation less than five days per week, contrary to 49 U.S.C.A. § 316(b) and (d). Neither the examiner nor Division I passed upon this contention. The examiner's report states that the objection to 'the charging of a fixed amount weekly for scheduled pick-up service * * * (is) premature,' and 'if applicant is granted a certificate it will be expected to publish and maintain reasonable rates and charges for all services performed.' Division I said: 'If applicant is granted authority, it will be required to comply with all applicable rules and regulations of the Commission and will not be permitted to engage in practices which are incompatible with its status as a common carrier. * * * We are not convinced that it cannot operate in conformity with our requirements affecting motor common carriers and still render an efficient service responsible to the public need.'

 While conceding that ordinarily rates are not a relevant factor in certificate proceedings, the plaintiff argues that the Commission's action in refusing to consider the validity of the $ 2 per week charge 'was arbitrary and capricious and therefore the orders of the Commission should be set aside.' We see nothing arbitrary in the Commission's action. It accords with the Supreme Court's statement in American Trucking Associations v. United States, 326 U.S. 77, at page 86, 65 S. Ct. 1499, at page 1503, 89 L. Ed. 2065:

 '* * * It is objected that the railroad as a motor carrier has been permitted through other proceedings to file illegal tariffs, violative of Section 217 of part II of the Interstate Commerce Act, and has been improperly exempted by the Commission from certain accounting requirements of Section 220 of the same part ot which the other motor carriers are subject. These are obviously not grounds upon which appellants can base an argument against the grant of a certificate of convenience and necessity.'

 Nor has the Commission's action deprived Railway Express Agency of opportunity to challenge the legality of United Parcel's rate schedules, pursuant to section 316(e) of the Act. *fn4" Until this administrative remedy has been exhausted, complaint to the courts is premature. See National Water Carriers Ass'n v. United States, D.C.S.D.N.Y., 126 F.Supp. 87, 90.

 The report and order of Division I made the following findings:

 'We find that the present and future public public convenience and necessity require operation by applicant, in interstate or foreign commerce, as a common carrier by motor vehicle, over irregular routes, of the commodities, from and to the points, and subject to the restrictions described in the appendix hereto.

 'We further find that the holding by applicant at the same time of the certificate authorized to be issued herein and of the permit hertofore issued to it will be consistent with the public interest and the national transportation policy.

 'We further find that applicant is fit, willing, and able properly to perform such service and to conform to the requirements of the Interstate Commerce Act and to our rules and regulations thereunder; * * *'

 These findings, if supported by the administrative record, are sufficient to require the order to be upheld. See Newtex S.S. Corp. v. United States, D.C.S.D.N.Y., 107 F.Supp. 388, affirmed 344 U.S. 901, 73 S. Ct. 285, 97 L. Ed. 696.

 Plaintiff contends that the testimony of public witnesses solicited on the basis of low rates is not sufficient to establish the convenience and necessity required by the statute. But the Commission did not base its finding of convenience and necessity on the specific rate structure proposed by the applicant. On the contrary it found that neither plaintiff nor other carriers were meeting, or were fit, able and willing to meet, the shippers' needs for the particular service proposed by the applicant, and it expressly rejected the protestants' argument that the public witnesses favored the application out of a desire for lower rates. *fn5" The opinion in Atlanta-New Orleans Motor Freight case, D.C.N.D.Ga., 155 F.Supp. 68 quoted in the defendants' brief seems closely in point. We think it apparent from the reports of the examiner and Division I that the certificate was granted to United Parcel on the basis of evidence showing a more efficient service, at a lower cost and of a type not presently offered to shippers.

 Accordingly the complaint is ...

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