A. W. STICKLE & CO. v. INTERSTATE COMMERCE COMMISSION
No. 2410
Circuit Court of Appeals, Tenth Circuit
May 1, 1942
Rehearing Denied June 5, 1942
128 F.2d 155
Acting in reliance upon the contract, Grovier-Starr gave up its agency for Blatz beer, employed additional salesmen and other personnel, bought additional trucks and other equipment, and incurred and defrayed other large expenses. It created about 542 retail outlets in the trade territory; its distribution of Budweiser beer to such retail dealers during the last four months in 1933 amounted to $6,484.70; in 1934, $98,093.36; in 1935, $111,932.55; in 1936, $316,777.55; and during the first four months in 1937, $118,085.30; and its net profit for the year ending May, 1937, was $41,000. Its accounts to Anheuser-Busch were paid promptly, no complaint was registered as to the volume of sales or the manner in which the business was being conducted, on the contrary approval was voiced. Hettinger left the employ of Grovier-Starr on April 1, 1937, for the purpose of entering the wholesale beer business on his own behalf. Despite the manner in which Grovier-Starr had faithfully performed the contract on its part, Burdick, who had succeeded Suycott as district manager in that area, advised Grovier-Starr that the contract would be terminated on May first. The secretary of Grovier-Starr testified that Burdick told him and E. J. Grovier, Sr., that he was going to break the contract with them and give it to Hettinger, that he was going to cancel it and give it to Hettinger, and that the reason for doing so was fear of Hettinger as a competitor. And Burdick testified that in his opinion Hettinger was the only one connected with Grovier-Starr actively engaged in the beer business, and that in view of his resignation it was decided to eliminate Grovier-Starr as a distributor. I think the contract was valid, the breach was wrongful and wanton, the damages awarded were reasonable in amount, and the judgment should be affirmed.
Duke Duvall, of Oklahoma City, Okl. (J. B. Dudley and Dudley, Hyde, Duvall & Dudley, all of Oklahoma City, Okl., on the brief), for appellant.
Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.
PHILLIPS, Circuit Judge.
The Interstate Commerce Commission brought this action against A. W. Sticklе & Company to enjoin it from transporting or holding itself out to transport property for the general public in interstate commerce by motor vehicle for compensation and from transporting or holding itself out to transport property in interstate commerce by motor vehicle for compensation on public highways under individual contracts or agreements and not for the general public and from engaging in interstate commerce as a common carrier or a contract carrier by motor vehicle, unless and until it had complied with the requirements оf Part II of the Interstate Commerce Act,
The facts are these: Stickle & Company is a corporation, organized under the laws of Oklahoma, with its principal office and place of business in Oklahoma City. Prior to its incorporation on February 9, 1939, its principal stockholders, Robert O. Jackson and Arthur W. Stickle, were engaged in the sale of lumber as brokers on a commission basis. Their commissions approximated five per cent of their gross sales.
Stickle & Company is the owner and operator of ten motor vehicles, each vehicle comprising a tractor-trailer unit. Since January 1, 1940, it has used such mоtor vehicles to transport lumber on the public highways from various lumber mills located in Texas, Arkansas, and Louisiana to destinations in Oklahoma, Texas, Kansas, Missouri, and Illinois. Since January 1, 1940, it has thus transported monthly from 38 to 77 loads, aggregating from 450,000 to 850,000 board feet of lumber. A substantial portion of such transportation has passed through the Eastern District of Oklahoma. The drivers of such vehicles are employed by Stickle & Company and the vehicles are registered in the name of Stickle & Company in the state of Oklahoma.
Stickle & Company leases from a third party, lumber storage facilities in Oklahoma City. Approximately five per cent of the lumber handled is stored at such facilities. The maximum quantity of lumber stored in the yard rarely, if ever, exceeds 35,000 to 40,000 feet at a given time. Not infrequently the storage facilities are not used for periods of two weeks or longer.
Stickle & Company circulated quotations of its prices on various grades, sizes, and classes of lumber to numerous prospective purchasers. Until about the time of the trial below, such prices were quoted both on the basis of acceptance of the lumber by the purchaser at the mill, and on a delivered basis. It set up a schedule of payments to be added to the f. o. b. mill prices for delivery to the customer. The average load approximates 10,300 board feet. Payments to be added to the f. o. b. mill prices were originally listed on a schedule of “trucking rates,” the rates varying as to points of delivery. Upon advice of counsel, and after an investigation was initiated by the Interstate Commerce Commission, Stickle & Company changed the designation of this schedule to “Schedule of Advance Payments” or “Advances to Driver.”
On a steady, normal market, approximately 75 to 80 per cent of thе lumber handled by Stickle & Company is purchased after receipt of orders therefor, but on an advancing or declining market, the percentage varies between 40 and 85 per cent, respectively.
Upon receipt of an order for lumber not already purchased from a mill by Stickle & Company, it sends circulars to one or more of the mills in Arkansas, Louisiana, or Texas, quoting prices it will pay for the various grades, sizes, and classes of lumber required to fill the order. After arranging for the purchase of the lumber required and on receipt of advice from the mill that it is ready for delivery, it dispatches one of its trucks to the mill for the purpose of loading the lumber and transporting it to the purchaser.
Between 70 and 90 per cent of the lumber handled is delivered by Stickle & Company trucks. The remainder is shipped by rail, by mill truck, or by motor carriers for hire.
Formerly, the driver of each truck was furnished by Stickle & Company with a document designated as a “freight bill.” It set forth the location of the mill, the date, Stickle & Company‘s order number, its truck number, the name of the driver, the name and location of the consignee, a description of the lumber, and the amount of delivery charges to be paid to the driver by the consignee, such payment to be made in the form of a check payable to Stickle & Company. Upon advice of counsel, and after the institution of an investigation by the Interstate Commerce Commission, the name of the document was changed to “loading tally.”
Upon delivery of the lumber to the purchaser, the latter was required to receipt for same by signing and delivering to the driver a copy of the freight bill or loading tally, and to deliver to the driver a check payable to Stickle & Company for the amount of the transportation charge shown on the frеight bill or loading tally. The amount of charges thus collected has aggregated more than $3,000 monthly. In order to give the customer an opportunity to take a two per cent discount for prompt payment, Stickle & Company send an invoice to the customer showing the price of the lumber, on which the discount is allowable, separate and apart from the pay
At or about the time of the trial below, Stickle & Company adopted a modified plan. It divided its trade territory into zones and quoted delivered prices in each zone varying as to zones, dependent on their distance from the mills, the difference in prices being due to a difference in the charges made for transportation.
On delivery of lumber to a customer under the modified plan, the customer has the option of paying the driver 30 per cent of the delivered price and the balance within a fixed time, less a discount of one per cent, or to pay the full delivered price within 30 days, without discount. Under the original and the modified plan, Stickle & Company includes in the delivered price a charge for transporting the lumber to the customer, based on the distance from the mill to the customer‘s yard.
The amоunt charged for transportation is materially less than the amounts charged by certified public carriers operating between the mills and the territory served by Stickle & Company. Stickle & Company has no certificate of public convenience and necessity authorizing it to engage in interstate commerce either as a common carrier or a contract carrier.
The amount which Stickle & Company receives from its customer, in excess of what it pays the mill for the lumber, approximates the charge which a carrier who has complied with the Motor Carrier Act and has a certificate of public convenience and necessity, would make for transporting the lumber.
All lumber transported by Stickle & Company belongs to it during the period of transportation. It does not solicit or advertise for transportation of lumber generally, and transports lumber only for delivery to its customers in fulfillment of contracts of purchase.
The major portion of Stickle & Company‘s capital investment is in its transportation facilities. The major portion of its payroll goes to its transportation employees. It has ten truck drivers and employs one or two salesmen who work part time.
I
Process was served upon Stickle & Company in Oklahoma City in the Western District of Oklahoma. Stickle & Company filed a special appearance and moved to dismiss for want of jurisdiction, challenging the validity of the service of process. The trial court overruled the motion.
Sec. 222(b) of the Interstate Commerce Act,
“If any motor carrier * * * operates in violation of any provision of this part [chapter] * * * or any rule, regulation, requirement, or order thereunder * * * the Commission * * * may apply to the district court of the United States for any district where such motor carrier * * * operates, for the enforcement of such provision of this part [chapter], or of such rule, regulation, requirеment, * * * and such court shall have jurisdiction to enforce obedience thereto by a writ of injunction * * *“.
Sec. 221(c) of the Interstate Commerce Act,
“Every motor carrier shall also file with the board of each State in which it operates a designation in writing of the name and post-office address of a person in such State upon whom process issued by or under the authority of any court having jurisdiction of the subject matter may be served in any proceeding at law or equity brought against such carrier. Such designation may from time to time be changed by like writing similarly filed. In the event such carrier fails to file such designation, service may be made upon any agent of such motor carrier within such State.”
Stickle & Company had not designated a service agent for the state of Oklahoma.
Carriers subject to Part II of the Interstate Commerce Act operate in numerous states and federal judicial districts. Many states have more than one judicial district. Congress provided for only one service agent in each state. The service agent may reside at any designated place in the state. He might reside in a district through which the motor carrier does not operate. The Act provides that such agent may be served with process “issued by or under the authority of any court having jurisdiction of the subject matter,” and that if no service agent is appointed, service may be made “upon any agent of such motor carrier within such State.” It seems clear to us that Congress has expressly provided for the service upon an
II
Sec. 203(a) of the Interstate Commerce Act, as amended,
“(14) The term ‘common carrier by motor vehicle’ means any person which holds itself out to the general public to engаge in the transportation by motor vehicle in interstate or foreign commerce of passengers or property or any class or classes thereof for compensation, whether over regular or irregular routes, except transportation by motor vehicle by an express company to the extent that such transportation has heretofore been subject to Part I [chapter 1 of this title], to which extent such transportation shall continue to be considered to be and shall be regulated as transportation subject to Part I [chapter 1 оf this title].
“(15) The term ‘contract carrier by motor vehicle’ means any person which, under individual contracts or agreements, engages in the transportation (other than transportation referred to in paragraph (14) and the exception therein) by motor vehicle of passengers or property in interstate or foreign commerce for compensation. * * *
“(17) The term ‘private carrier of property by motor vehicle’ means any person not included in the terms ‘common carrier by motor vehicle’ or ‘contract carrier by motor vehicle‘, who оr which transports in interstate or foreign commerce by motor vehicle property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or in furtherance of any commercial enterprise.”
The trial court found, in substance, that Stickle & Company is primarily engaged in the transportation of lumber for compensation under individual contracts with its customers; that the amount which Stickle & Company received from the customer for the lumber and the transportation thereof, in excess of the amount Stickle & Company рays the mill for the lumber, approximates the amount a carrier, who has complied with Part II, supra, and has a certificate of convenience and necessity, would charge for transporting the same lumber; that the transportation by Stickle & Company is not an incident to a commercial enterprise; and that, on the contrary, the buying and selling of lumber is a means and device employed by Stickle & Company to enable it to engage in the transportation of lumber as a contract carrier without complying with the provision of Part II, supra, respecting cоmmon carriers and contract carriers. We think the stipulated facts and the evidentiary facts and the legitimate inferences deducible therefrom fully warrant the findings made by the trial court.
Congress by the Act of September 18, 1940, 54 Stat. 899, amended the Interstate Commerce Act by inserting before Part I thereof a provision entitled “National Transportation Policy,
The three definitions set forth in
For a time Stickle & Company offered to sell lumber at stated f. o. b. prices for acceptance at the mill or to sell lumber delivered to the customer at his yard at a stated f. o. b. mill price, plus a transportation charge set forth in a schedule, the transportation charge varying as to the distance from the mill to point of delivery. About the time of the trial below, Stickle & Company modified its plan. It began to quote delivered prices for lumber in designated zones. Different delivered prices were quoted in several zones. They were based on the distance from the mill to the zone. In other words, the quoted prices are based on the f. o. b. mill price of the lumber and the distance of transportation. The quoted prices in the zones nearest to the mill are lowest. The quoted prices in the other zones range upward from the lowest quoted price in proportion to their distance from the mills and embrace a greater charge for transportation.
For a time Stickle & Company entered into contracts with purchasers to sell them lumber and to transport the lumber from the mill to the customer‘s yard for a stipulated compensation to be paid for the transportation service on delivery of the lumber to the customer‘s yard. About the time of the trial, it sought to camouflage the transportation charge by collecting on delivеry of the lumber 30 per cent of the total charge for the lumber and the transportation thereof instead of a stated charge for transportation. A. W. Stickle, vice-president of Stickle & Company, testified at the trial below that there was very little substantial difference in the two systems. Under the former plan, the customer agrees to pay a stipulated sum for the lumber and a stipulated amount for the transportation thereof. Under the latter plan, the customer agrees to pay a stipulated amount for the lumber and for the transportation thereof from the mill to his yard. In either case, the customer agrees to pay an amount which includes compensation to Stickle & Company for the transportation of the lumber. The change in the plan obviously was to avoid the provisions of Part II, supra, applicable to common and contract carriers.
What the court said in Georgia Truck System, Inc., v. Interstate Commerce Commission, 5 Cir., 123 F.2d 210, 212, is apposite:
“We need not indulge here in any of these refinements. It is sufficient for us to say that the invoked statute is a highly remedial one, that its terms are broadly comprehensive enough to bring within them all of those who, no matter what form thеy use, are in substance engaged in the business of interstate or foreign transportation of property on the public highways for hire.”
We think it unimportant that the technical title to the lumber remains in Stickle & Company until the transportation is completed and the lumber delivered to the customer. Prior to the transportation of the lumber and normally before the lumber has been purchased by Stickle & Company, it has entered into a contract to sell the lumber to a customer and to transport it to his yard. The lumber is transported and delivered by Stickle & Company in fulfillment of that contract to sell and Stickle & Company receives both pay for the lumber and compensation for its transportation from the customer.
The transportation is not merely incidental to the business of selling lumber. It is a major enterprise in and of itself. The major portion of Stickle & Company‘s capital investment is in that enterprise, and the major portion of its payroll goes to em
We conclude that, in substance and reality, Stickle & Company is engaged primarily in the transportation of lumber in interstate commerce by motor vehicle for compensation under individual contracts or agreements with its customers, and that it is a contract carrier by motor vehicle within the meaning of
The judgment is affirmed.
HUXMAN, Circuit Judge (dissenting).
I cannot agree with the conclusions reached by the majority. Section 203(a) of the Interstate Commerce Commission Act, as amended,
At the time of argument, the government assumed the position that the adoрtion of the construction of the Act contended for by appellant would to a large extent nullify the beneficial purposes of the Act and would result in serious injury to common and contract carriers. This is no concern of the administrative agency nor of this court. If Congress failed to accomplish what it sought to do, it has power to rectify its failure to accomplish a lawful function.
I subscribe to the declaration of the majority that the Act should be construed in the light of the declared Congressional policy, but that does not justify us in expanding a definition beyond its clear import because we feel that otherwise the Congressional policy will fail. It is clear to me that, as defined in the Act, one who transports goods which he owns or in which he has a proprietary interest is a private carrier and not subject to the regulatory provisions of the Act. If such a construction results in unfair competition with common or contract carriers, the remedy lies with Congress.
Of course, a private carrier must be such in good faith. He may not become the nominal or ostensible owner of goods for the purpose of evading the Act. So if onе takes the title to goods which are in fact the property of another, solely for the purpose of transportation, he is not a private carrier. If appellant camouflaged its transaction and in fact is hauling goods that belong to others, under a contract or agreement for hire, then it is a contract carrier, even though it may have taken the nominal title and ownership of the goods in itself for the purpose of evading the Act.
But what are the facts? Stickle was formerly in the wholesale and retail lumber business. Jackson was engaged in the retail lumbеr business, and also worked as a lumber salesman. They incorporated the appellant company. Its charter authorized it to buy and sell lumber at wholesale or retail or on a commission basis. It further authorized it to buy and sell at wholesale or retail other allied products, such as brick, paint, timber, and other products. Appellant solicits orders for lumber. It purchases its lumber from mills on the open market, buying wherever it gets the best prices, and paying its own money there-for. Most of the lumber is purchased to
I attach no significance to the fact that appellant quoted an f. o. b. price which included the cost of the lumber to it, plus its commission, and a separate transportation charge in the event it delivered the lumber, rather than quoting a single price. The price of any article for sale consists of the cost, a reasonable profit, and transportation charges. Whether these items are stated separately or as a unit is immaterial. They are present and inherent in the price of any commodity offered for sale.
Neither is it of any significance that most or all of the profit results from savings in freight or reduced cost in transportation. If a wholesaler is so located that because of freight rates he finds himself unable to compеte with a competitor more favorably situated, and therefore buys a fleet of trucks and delivers the merchandise he sells, and as a result thereof he can reduce his transportation costs enough so that he can not only make a profit but even undersell his competitor who delivers by common carrier, is he any the less a merchant? Is he not still a merchant even if his entire profit comes from savings in transportation costs? Does the fact that a merchant makes all his profit from reduced transportation costs result in a transmigration by which the soul of the merchant leaves his body and enters that of a transportation company? There is here no subterfuge or camouflage for the purpose of evading the act. Appellant is engaged in carrying out the purposes for which it was chartered. In furtherance of that purpose, and in order to increase its profits, it provides its own means of delivery rather than utilizing those of a common carrier. But as a result thereof, under the decision of the majority, it has in effect forfeited its charter and ceased to be a merchant and has become a transportation company. I do not believe that we are justified in construing and giving such an effect to words and definitions which, considered alone, are clear and unambiguous, under the guise of interpreting and effectuating Congressional intent and policy. If the explicit and clear language of Congress leads to a result other than what it intended, it has the power to correct it. We should not do so by judicial interpretation.
For these reasons, I am forced respectfully to dissent.
PRESTON v. KAW PIPE LINE CO. et al.
No. 2422.
Circuit Court of Appeals, Tenth Circuit.
May 5, 1942.
Rehearing Denied June 22, 1942.