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YALE TRANSP. CORP. v. UNITED STATES

June 10, 1960

YALE TRANSPORTATION CORP., Empire Carriers Corp., Stone's Express, Inc., and Railway Express Agency, Inc., Plaintiffs,
v.
UNITED STATES of America, Interstate Commerce Commission, and United Parcel Service, Inc., Defendants



The opinion of the court was delivered by: FRIENDLY

Yale Transport Corporation and two other holders of certificates of public convenience and necessity for common carrier service by motor vehicle here seek to enjoin the enforcement of an order of the Interstate Commerce Commission granting an application of United Parcel Service of New York, Inc., hereafter UPS, under § 207 of the Motor Carrier Act, 49 U.S.C.A. § 307, for a certificate to operate as a common carrier. The jurisdiction of the Court is invoked under 28 U.S.C. §§ 1336 and 1398; a court of three judges has been constituted as provided in 28 U.S.C. §§ 2325 and 2284. Railway Express Agency, Inc. and four other holders of common carrier motor vehicle certificates have intervened in support of plaintiffs; they and the three plaintiffs will be referred to as protestants. UPS has intervened as an additional defendant.

UPS is one of a number of operating companies controlled by United Parcel Service of America, Inc., a Delaware corporation, hereafter UPSA. UPS has long held permits authorizing it to engage as a contract carrier with retail specialty shops or department stores in transporting various commodities between such shops and their warehouses and customers (a) between New York City and adjacent areas in New York, Connecticut and New Jersey, and (b) between West Hartford, Connecticut, and three points in New York and one in New Jersey. In addition UPS has been operating since 1953 as a common carrier rendering what is termed wholesale service intrastate commerce within New Jersey and in the New York City commercial zone as defined by the New York Public Service Commission and in interstate commerce within that portion of the New York City commercial zone as defined by the Interstate Commerce Commission which was covered by the partial exemption from regulation conferred by § 203(b) (8), 49 U.S.C.A. § 303(b)(8). An affiliate, United Parcel Service, Inc., a Massachusetts corporation, has been engaged since 1956 in contract carrier service for stores in the Worcester, Mass. area and in wholesale common carrier intrastate service within Massachusetts.

UPS' application here was for authority to engage in the common carriage of general commodities (1) between points within the metropolitan area of New York City and certain adjoining portions of New Jersey, New York and Connecticut; (2) from points in the above area, described as the New York origin area, to points in 13 counties in northern New Jersey, points in Connecticut, Massachusetts, Rhode Island, and a specified territory in eastern New York and returned shipments of the same commodities previously delivered; and (3) from points within and adjoining the metropolitan area of Boston, Mass., described as the Boston origin area, to points in Connecticut, Rhode Island, Massachusetts, northern New Jersey, a described territory in eastern New York, and Southern portions of Vermont New Hampshire and Maine, and returned shipments of the same commodities previously delivered. The authority was sought subject to certain restrictions which, so far as here material, are as follows:

 (a) No service was to be rendered in the transportation of any package or article weighing more than 50 pounds or exceeding 108 inches in length and girth combined, with each package or article considered a separate shipment;

 (b) No service was to be rendered between department stores, specialty shops and retail stores and their branches or warehouses or between any of them and the premises of customers; and

 (c) No service was to be provided in the transportation of packages weighing more than 100 pounds from one consignor at one location to one consignee at one location on any one day.

 The application was heard by an examiner. UPS introduced extensive evidence as to the nature of the operation proposed. The service was designed to handle large volumes of small packages in a faster, more efficient and more economical manner than United States parcel post service, at roughly comparable rates; its general character was similar to that out of the Chicago area as to which this Court sustained the grant of a certificate in Railway Express Agency v. United States, D.C.S.D.N.Y., 153 F.Supp. 738, affirmed per curiam, 1957, 355 U.S. 270, 78 S. Ct. 330, 2 L. Ed. 2d 257. Special features included daily automatic pickups, in consideration of a weekly service charge proposed to be $ 4 in the New York origin area and $ 2 in the Boston origin area; next-day delivery service throughout most of the destination territory; deliveries at consignee's premises wherever located and without regard to distance from main highways; a second and, if necessary, a third attempt at delivery if this could not be earlier completed; every reasonable effort to secure the correct address, and notification of this to the consignor, when a package had been misaddressed; return without additional charge of packages which were refused by the consignee or for any other reason could not be delivered; specially designed records to permit prompt answering of inquiries; automatic protection against loss or damage up to $ 100 per package; receipt of checks as well as cash for C.O.D. shipments; deliveries by uniformed drivers and with vehicles maintained at a high standard of appearance; facilities to permit the handling of fragile merchandise with a minimum of packaging; and collection and return of any package previously delivered, at a charge equal to that for original delivery. All charges were to be billed to and paid by the shippers and hence all shipments would move prepaid.

 A large number of shippers from both areas testified as to the advantages of the service proposed by UPS and as to their desire to use it. Protestants and other motor carriers offered evidence as to the availability of service within the area and asserted that UPS' proposed service, although perhaps designed to compete primarily with parcel post, would divert considerable amounts of small package traffic now moved by them and thereby jeopardize the financial soundness of their service.

 The examiner recommended that the application be granted as regards the Boston origin area but be denied as regards the New York origin area. He rested the latter recommendation primarily on the ground that superimposing common carrier authority upon UPS' existing contract authority in the New York area would result in 'dual operations' inconsistent with § 210 of the Motor Carrier Act, 49 U.S.C.A. § 310. He distinguished the grant of authority in the Chicago area sustained in Railway Express Agency v. United States, supra, on the basis that the applicant there had consented to a condition cancelling the portion of its contract permit that authorized service between points to be included in the common carrier certificate.

 Exceptions having been taken by both applicant and the intervening motor carriers, Division 1 of the Commission sustained the Examiner's affirmative recommendation as to the Boston area and reversed his negative recommendation as to the New York area, 79 M.C.C. 629 (1959). It found that UPS would furnish a distinctive and useful service not now being furnished either by parcel post or by any of the intervening motor carriers, reviewed the evidence with respect to diversion, and concluded, p. 654, that the proposed service was 'responsive to a public need which cannot be met adequately by existing transportation facilities and that it can be performed without adversely affecting the operations of existing carriers contrary to the public interest.' The Division also found that the dual operations would not be inconsistent with the public interest provided this was safeguarded by two additional conditions. One of these prohibited deliveries to as well as from the premises of persons who had entered into contracts with the applicant and were served by it pursuant to permits issued by the Commission. The other reserved to the Commission the right to impose in the future such terms, conditions or limitations on the certificate as it might find necessary to insure that applicant's operations conformed to the provisions of § 210. One Commissioner dissented with respect to the New York area on the ground that applicant had failed to meet its burden of proving that 'existing carriers specializing in handling small packages are not willing and able to meet the needs shown for service to and from the New York City area', p. 657.

 The protestants thereupon applied for reconsideration by the Commission, 49 U.S.C.A. § 17(6). In consequence the effectiveness of the order of Division 1 was stayed, 49 U.S.C.A. § 17(8). By order dated February 4, 1960, the petitions for reconsideration were denied. This action followed. Judge Palmieri denied a temporary restraining order and the case is before us on a stipulation that we shall consider the hearing as for both temporary and final relief.

 Protestants attack the Commission's order on four principal grounds. First, they assert that the Commission did not have adequate evidence to support its findings of public convenience and necessity of the proposed service and of fitness and ability of the applicant to render it. Second, they contend that the Commission ought not have granted the application in view of the prohibition against dual operations in § 210. Third, they urge that the grant of the application is contrary to commands of § 5 of the Interstate Commerce Act, 49 U.S.C.A. § 5, relating to acquisitions of control. Finally, they argue that the Commission violated the requirements of § 221(b) of the Act, 49 U.S.C.A. § 321(b), in permitting the certificate to become effective when issued on March 9, 1960, although the order of February 4, 1960 denying reconsideration was not served until February 24 or 25. After careful review we find none of these contentions sufficient to warrant enjoining the Commission's order.

 I -- Convenience and Necessity and Fitness and Ability.

 Defendants contend that the issue of convenience and necessity is largely foreclosed by Railway Express Agency v. United States, supra; protestants assert the circumstances here are significantly different. Of course, no two cases of this sort are exactly alike and the present record does appear to contain a more impressive showing of the service being offered by presently certificated carriers than did that in the Chicago case. Nevertheless, any differences in the evidence as to the value of UPS' service, the availability of other service, and ...


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