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ARMORED CARRIER CORP. v. UNITED STATES

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK


September 28, 1966

ARMORED CARRIER CORPORATION, Plaintiff,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants, and B.D.C. Corporation, Intervenor

The opinion of the court was delivered by: MISHLER

MISHLER, District Judge.

This action instituted pursuant to 28 U.S.C. §§ 2321-2325 seeks to vacate and set aside an order of the Interstate Commerce Commission dated June 30, 1965 (served July 14, 1965), in which it

 

1. Dismissed the complaint of the plaintiff (No. MC-C-3480),

 

2. Granted the application of B.D.C. Corporation (B.D.C.) the Intervenor, for a certificate of public convenience and necessity permitting the operation by B.D.C. as a common carrier of commercial paper, documents, and written instruments used in the conduct and operation of banks and banking institutions between Chicago, Illinois and points in five Wisconsin counties [No. MC-114533 (sub. No. 32)].

 The complaint proceeding was initiated by the plaintiff on November 27, 1961, and charged B.D.C. with knowingly and willfully conducting unauthorized operations in interstate commerce between Chicago and the five Wisconsin counties. On December 1, 1961, B.D.C. applied for a certificate of public convenience and necessity between Chicago and the aforementioned five counties, and for temporary authority pending the determination. Emergency temporary authority was granted December 6, 1961, and temporary authority on January 2, 1962.

 B.D.C. had received authority to transport cash letters between Chicago and 15 counties in Wisconsin in an I.C.C. certificate issued April 4, 1957. The five counties in question lay between Chicago and the 15 counties that B.D.C. was authorized to service.

 The report of June 30, 1965 discusses the manner of B.D.C.'s operation, the need of the so-called "country banks" of the service offered and the sufficiency and efficiency of B.D.C.'s facilities, equipment and manner of operation. The report discusses 4 1/2 years of unauthorized service to the five counties beginning in 1957. It found the unauthorized operations were inadvertently begun. *fn1" The report (p. 131) found "the evidence [of past unauthorized operations] does not require a finding of unfitness." It further found,

 

"* * * that applicant is fit, willing and able properly to perform such service and to conform to the requirements of the Interstate Commerce Act, and the rules and regulations of the Commission thereunder * * *."

 I. B.D.C.'s unauthorized operations for four years prior to filing of the complaint.

 The Interstate Commerce Commission (I.C.C.), Division I, found that the operations in question "were inadvertently begun." A question exists, due to the language used in the report, as to whether the continued unauthorized operations during the four-year period, 1957-1961, were "willfully performed" or continued to be inadvertent and in good faith. If the latter is the fact, such operations, albeit unauthorized, would be no bar to a grant of authority. See Interstate Common Carrier Council of Maryland v. United States, 1949, D.Md., 84 F. Supp. 414, aff'd mem., 338 U.S. 843, 70 S. Ct. 91, 94 L. Ed. 516 (per curiam). For the purposes of this issue, we consider that the Commission found the operations to be inadvertently begun but knowingly and willfully continued.

 No case has been called to the Court's attention that declares that the knowing and willful performance of unauthorized operations is, as a matter of law, a bar to a grant of authority. Absent pertinent authority, and since the Commission is the expert in the field of transportation, East Texas Motor Freight Lines, Inc. v. Frozen Food Express, 1956, 351 U.S. 49, 76 S. Ct. 574, 100 L. Ed. 917, its views should be entitled to special consideration. I.C.C. v. Nelson Coop. Marketing Ass'n, 1962, W.D.Okla., 209 F. Supp. 697, 701. The Commission's view appears clear - past knowing willful conduct in violation of the Act and the rules and regulations thereto, is an element to be considered in the determination of present and future fitness. Thus, in McLaughlin Common Carrier Application, 73 M.C.C. 318, the I.C.C. stated: "* * * applicant's past record leaves a great deal to be desired * * * [but] the record established * * * applicant's resolve in the future to live within the letter and the spirit of the law." Antietam Transit Co., Inc. Common Carrier Application, 84 M.C.C. 459 is not to the contrary. There the Commission found not only that Antietam performed prior willful unauthorized operations, but further that "its unauthorized operations were continued, even after the hearing in the instant application was held. * * *"

 The corporation is a form of business enterprise in which change of management and improvement in systems and controls may result in a radical change in the corporate capability to perform its operations. It would appear impractical and unrealistic to conclude that the I.C.C. lacks discretionary authority to determine whether a corporation is presently "fit" to perform its proffered services. The argument that past willful violations should, per se, bar a grant of authority in the present and for the future is one that looks backward and appears transfixed. Examination of the past should only be useful in assessing the prospective conduct of the applicant. Such assessment is one peculiarly within the expertise of the I.C.C. and should not be interfered with unless found to be arbitrary and capricious.

 Accordingly, we find that past willful misconduct is not, as a matter of law, sufficient to bar a grant of authority. Rather, the I.C.C. is to consider such willful misconduct as an element in assessing the applicant's present and prospective "fitness" within the Act.

 II. The Commission's failure to make a specific finding on the issue of "willfulness ".

 Section 14(1) of Title 49, U.S.C. provides:

 

Whenever an investigation shall be made by said Commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclusions of the Commission, together with its decision, order, or requirement in the premises; and in case damages are awarded, such report shall include the findings of fact on which the award is made.

 Under this section and section 8(b) of the Administrative Procedure Act [5 U.S.C. § 1007(b)] the Commission must make a written report setting out its findings, conclusions and decisions, together with its reasons therefor. It is, however, not required to make the detailed findings of fact required by Rule 52(a) of the Federal Rules of Civil Procedure. See Chicago & E.I.R.R. v. United States, 1952, S.D.Ind., 107 F. Supp. 118, aff'd mem., 1953, 344 U.S. 917, 73 S. Ct. 346, 97 L. Ed. 707 (per curiam). Thus, if the report contains subsidiary findings of fact sufficient to lend adequate and rational support to the order, the Court must uphold the Commission's conclusions. Alabama Great So. R.R. v. United States, 1951, 340 U.S. 216, 71 S. Ct. 264, 95 L. Ed. 225; see United States v. Pierce Auto Freight Lines, Inc., 1946, 327 U.S. 515, 66 S. Ct. 687, 90 L. Ed. 821; State of Florida v. United States, 1931, 282 U.S. 194, 51 S. Ct. 119, 75 L. Ed. 291.

 The Commission made the following subsidiary findings of fact relevant to the ultimate determination of "fitness":

 

(1) That the unauthorized operations were inadvertently commenced;

 

(2) That the unauthorized operations performed in the five counties in question were in B.D.C.'s direct line of haul between Chicago and the fifteen counties in which it was authorized to operate since 1956;

 

(3) That B.D.C. initially thought that it had been granted authority to serve the five counties in question along with the other fifteen counties;

 

(4) That one of the five counties in question, i.e., Kenosha, was named in B.D.C.'s 1956 application and, for an unexplained reason, excluded from the grant of authority therein;

 

(5) That B.D.C. is financially fit to conduct operations in the five counties in question;

 

(6) That B.D.C. carries adequate insurance, including reconstruction insurance;

 

(7) That B.D.C. furnishes vaults to its customers;

 

(8) That B.D.C. operates on a regular daily schedule, six days per week; and

 

(9) That the supporting shippers find B.D.C.'s services satisfactory and desire their continuance.

 The Commission did not make specific subsidiary findings in respect of the issue of willfulness. Plaintiff argues that since it had raised that issue before the Commission and that since the alleged willfulness of B.D.C.'s misconduct forms the basis for its complaint, the Commission must make specific subsidiary findings on that issue; plaintiff concludes that absent such finding the Commission's report cannot lend adequate support to its Order. To complement this argument, plaintiff also contends that absent such a finding a reviewing court would be unable to comprehend the basis for the Commission's ultimate determination.

 In Southern Kan. Greyhound Lines, Inc. v. United States, 1955, W.D.Mo., 134 F. Supp. 502, aff'd mem., 1956, 351 U.S. 921, 76 S. Ct. 779, 100 L. Ed. 1453 (per curiam) plaintiff argued:

 

* * * though the Commission's report took notice of their contentions that they are operating on such a close margin that they cannot stand any diversion of traffic without deterioration in the standards of their service, and that the proposed new service by Trails would result in a competitive situation destructive to them and their service, it did not make a specific subordinate finding upon that issue, * * * but made only the ultimate finding that the proposed service 'is or will be required by the present or future public convenience and necessity', and that, therefore, the findings are not sufficient to support the orders.

 In ruling against plaintiff Judge (later Justice) Whittaker placed great emphasis on Luckenbach S.S. Co. v. United States, 1954, S.D.N.Y., 122 F. Supp. 824, aff'd mem., 347 U.S. 984, 74 S. Ct. 850, 98 L. Ed. 1120 (per curiam). There, Judge Augustus N. Hand held that the I.C.C. had considered the issues raised and that specific findings thereon were unnecessary. He stated:

 

"It is only necessary that the essential basis of the Commission's order appear in the report so that a court can satisfy itself that the Commission has performed its function";

 and concluded:

 

"* * * Thus, where the issue raised does not seem of manifest importance and the Commission had indicated that it has considered it, we do not think it wise or necessary to protract the litigation further by remanding the order for more explicit and seemingly useless discussion."

 Luckenbach is not in conflict with United States v. Pierce Auto Freight Lines, Inc., supra, since there the Court found that the Commission had failed to consider the subordinate issues raised.

 The report clearly demonstrates the attention and consideration given by the I.C.C. to plaintiff's claim that the unauthorized operations were "knowingly and willfully performed." The Commission expressly refers to the fact that the examiner in the complaint proceeding "found that B.D.C. had willfully performed the considered operations without authority." And the dissenting opinion declares that the "unlawful operations [of B.D.C.] * * * can only be viewed as knowing and willful violations of the act." Furthermore, the Commission in its discussion of "fitness" concluded "that the evidence as to these operations does not require a finding of unfitness." In so doing, it must have placed some emphasis on subordinate findings numbered one through four above, all of which are relevant to the issue of willfulness. Furthermore, implicit in such conclusion is the subsidiary finding either (1) that the operations continued to be conducted inadvertently and in good faith or (2) that the operations in question were "knowingly and willfully" continued but that such willful misconduct was not sufficient, considering all other relevant findings, to bar a grant of authority.

 Since it is clear that the I.C.C. gave adequate consideration to the subsidiary issue of willfulness, the only issue remaining is whether the issue of "willfulness" is of such "manifest importance" in the instant case that a specific subordinate finding thereon must be made.

 We think not.

 In the instant case, it is irrelevant which of the alternative findings the Commission made, since the findings in the report clearly show that the ultimate finding that the "applicant is fit, willing and able properly to perform such service" would remain the same. The specific subordinate findings in the report are sufficient to lend adequate and rational support to the order; the Court must uphold the Commission's conclusions.

 To remand this case would be useless. As the Court stated in Kweskin v. Finkelstein, 1955, 7th Cir., 223 F.2d 677:

 

We are reluctant to remand this or any other case in order to have the proper findings entered. We realize that such a remand will involve a delay and additional expense for each of the parties. Under Title 28 U.S.C.A. § 2106 we have the authority to * * * and we might consider the failure to make adequate findings of fact as non-reversible error if we can ascertain from the record that one party or the other is clearly entitled to judgment in his favor.

 This statement and that of Judge Hand are apparently outgrowths of that line of decisions that holds that an appellate court must affirm a decision of a trial court if it is correct, and even though the latter relied upon a wrong ground or gave a wrong reason for its decision, Yanish v. Barber, 1956, 9th Cir., 232 F.2d 939; the decision must be affirmed on any grounds that find support in the record. Jaffke v. Dunham, 1957, 352 U.S. 280, 77 S. Ct. 307, 1 L. Ed. 2d 314; United States v. Rose, 1965, 3d Cir., 346 F.2d 985.

 III. Commission's findings supported by substantial evidence.

 In considering this issue it is elementary that the reviewing court is limited to a determination as to whether the Commission's findings are supported by substantial evidence upon the record as a whole. See Universal Camera Corp. v. NLRB, 1951, 340 U.S. 474, 71 S. Ct. 456, 95 L. Ed. 456; Mississippi Valley Barge Line Co. v. United States, 1966, E.D.Mo., 252 F. Supp. 162; Administrative Procedure Act § 10(e), 5 U.S.C. § 1009(e). It is clear that there is substantial evidence in the record to support the Commission's findings in this case; and its findings and conclusions are neither arbitrary nor capricious.

 The law is clear that a court, in reviewing an administrative proceeding, is confined to the record made before the agency; it is not a trial de novo. See National Broadcasting Co. v. United States, 1943, 319 U.S. 190, 63 S. Ct. 997, 87 L. Ed. 1344; Southern Kan. Greyhound Lines, Inc. v. United States, supra. The Criminal Information and the judgment of conviction (dated July 8, 1966) offered by plaintiff subsequent to the hearing, although not properly before us has been considered but does not call for reopening the case or for a contrary result.

 The complaint is dismissed. The Clerk is directed to enter judgment accordingly.


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