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SALVINO v. UNITED STATES

February 24, 1954

SALVINO
v.
UNITED STATES et al.



The opinion of the court was delivered by: LINDBERG

This case involves an application for an injunction wherein plaintiff, Pasco Salvino, seeks relief from an order of the Interstate Commerce Commission requiring him to cease and desist from all operations in interstate or foreign commerce of the character found by the Commission to be beyond the scope of the authority granted to him.

 Plaintiff holds a permit, No. MC-74647, as a contract carrier which so far as here pertinent authorizes transportation of factory supplies, canned and cold packed fruits and vegetables, and cannery supplies, between Seattle, Washington and Eugene, Oregon over a specified route serving the intermediate points of Tacoma and Chehalis, Washington and Portland and Salem, Oregon. This authority was granted as a result of a 'grandfather' clause application, in the informal processing of which there was issued on September 3, 1937 a so-called compliance order granting plaintiff a permit authorizing him to transport 'matches, match factory machinery and supplies, canned and cold packed fruits and vegetables, and cannery supplies' between the points above indicated. On April 1, 1938 a revised compliance order was entered changing the commodity description to read 'matches, factory supplies, canned and cold packed fruits and vegetables, and cannery supplies,' and in due course a permit in conformity with this order was issued.

 Under the described authority to transport 'factory supplies' plaintiff for many years has hauled paperboard, pulpboard, wrapping paper, potash, glue, zinc oxide, lampblack, and phosphorous, to the Tacoma plant of the Pacific Match Company, hereinafter called the match company, and in more recent years has hauled paperboard, pulpboard, boxes, potash, zinc oxide, aluminum sulphate and returnable skids, to plants of the Container Corporation of America, hereinafter called the container corporation.

 By complaint filed October 6, 1950, as amended, Henry Johnson, doing business as Johnson Truck Service, and others, all being motor common carriers of property, alleged that plaintiff, Pasco Salvino, of Seattle, was and had been engaged in the transportation of certain commodities in interstate commerce between points in Oregon and Washington beyond the scope of his present contract carrier authority and thereby was in violation of the provisions of the Interstate Commerce Act.

 The complaint was referred to Joint Board No. 45 for hearing and recommendation of an appropriate order thereon. Hearing was held on October 2, 1951 at Portland, Oregon, before the Joint Board, which was assisted by the Examiner, who was present during the entire proceeding. The Joint Board waived its right to participate in the proceeding and the matter was referred to the Examiner for report and recommended order. At the hearing the complainants contended that plaintiff's authority to transport 'factory supplies' included only those items used in the manufacturing process at the plants served. On the other hand plaintiff maintained that such authority entitled him to transport all commodities needed or used in the factories served by him, regardless of whether such commodities were to be consumed in the operation or maintenance of the factories, in the shipping of the product, in the operation of their offices, or in the manufacture of outgoing products. During the course of the hearing a stipulation as to the issues or contentions involved was agreed to by the attorneys for the parties and appears in the record. Pages 24 and 25. *fn1"

 The testimony offered by both complainants and plaintiff generally bore out the contentions of the respective parties. However, the Examiner in his report and recommendation rejected the contentions of both parties and held, in substance, that the permit issued to plaintiff so far as it authorized the transportation of 'factory supplies' did not authorize transportation of commodities related to or to be used in the manufacture of products of the factories served. Plaintiff excepted to the recommended order and report. Briefs were filed in behalf of both parties and a report and order made by Division 5 of the Commission. It is this order which is now before us for review.

 After summarizing briefly the testimony offered by the complainants as well as the plaintiff the Commission justified and reasoned its conclusion in the following language appearing on sheet 6 of its report and order:

 'The meaning or scope of the term 'factory supplies' as contained in defendant's permit is not controlled by the interpretations which he, or his shippers, have placed thereupon in his hauling contracts or in his schedules of minimum rates. Nor is the fact that this Commission accepted such contract and schedules for filing without challenge to be viewed as an interpretation. Also, the divergent opinions advanced by witnesses for defendant and complainants are of questionable value in resolving the meaning of the described term inasmuch as they fail to distinguish 'supplies' from 'materials.' Actually, a distinction between these terms has long been recognized by this Commission, both formally and informally. (Citing and quoting from Builders Exp., Inc., Interpretation of Certificate, 51 M.C.C. 103, 106-107, and P. B. Mutrie Motor Transp., Inc. v. Blue Line Exp., Inc., 53 M.C.C. 530, 533.) It is clear, therefore, that the terms, 'supplies' and 'materials', have distinct and established meanings. To illustrate, a carrier authorized to transport garment factory supplies, for example, may haul commodities such as boxes, garment hangers, needles, sewing machines, and brooms, which are intended for use in such a factory inasmuch as they are 'supplies' necessary for the operation or maintenance thereof. It may not, however, transport dyes, cloth, thread, and buttons, to a garment factory under the same authority because they are 'materials' which are consumed in, or which form a part of, the finished product. Thus, the terms 'supplies' means those things consumed in, or necessary to, the maintenance and operation of a plant, factory, or business, other than the raw materials or ingredients which go into the finished product or structure, whereas 'materials' mean those things used as ingredients or parts of the finished product or structure. * * * Complainants being uncertain themselves as to the meaning of the term 'supplies' and in any event critical of the modifying term 'factory', which they consider to be too broad for reconciliation with defendant's operations on the 'grandfather' date, urge that we go back of defendant's permit and examine the proof in his 'grandfather' clause proceeding to ascertain the true meaning of the term 'factory supplies'; as used in his permit, and the extent of the operation intended to be authorized thereby. Such procedure is permissible, however, only where the certificate or permit is ambiguous. Where, as here, the meaning of its terms is definite and well established, it is binding on both the holder of the authority and others. Since 'supplies' and 'materials' have long been distinguished and have well established meanings, it cannot be said that there is any ambiguity or any occasion or justification for going back of defendant's permit.' *fn2"

 Plaintiff does not agree with the interpretation as made by the Commission and asks the court to set it aside.

 We may not substitute our judgment or interpretation for that of the Interstate Commerce Commission unless its judgment is clearly erroneous and arbitrary. The Commission has the authority to construe its own permit. Being familiar with the ordinary usage and common understanding of language used in the transportation industry, the Commission's judgment and interpretation in a field wherein it has expert knowledge and experience should be accepted and deferred to unless clearly erroneous and arbitrary. Converse v. United States, D.C., 109 F.Supp. 807; United Truck Lines, Inc., v. Interstate Commerce Commission, 9 Cir., 189 F.2d 816, certiorari denied 342 U.S. 830, 72 S. Ct. 54, 96 L. Ed. 628; Adirondack Transit Lines, Inc., v. United States, D.C., 59 F.Supp. 503, affirmed 324 U.S. 824, 65 S. Ct. 688, 89 L. Ed. 1393; Dart Transit Co. v. Interstate Commerce Commission, D.C., 110 F.Supp. 876, affirmed 345 U.S. 980, 73 S. Ct. 1138, 97 L. Ed. 1394; Wilson v. United States, D.C., 114 F.Supp. 814.

 If our review were restricted to passing upon the definition the Commission has accorded or assigned to the word 'supplies' or the words 'factory supplies' as opposed to the definition of the same words as urged by the plaintiff this case might properly be disposed of under the decisions cited above with the sound conclusion that the interpretation is not clearly erroneous or arbitrary. However, the problem before us, as before the Commission, is not one in lexicology. We are not necessarily concerned with the abstract meaning of the word 'supplies'; rather with its meaning as used in the plaintiff's permit.

 Plaintiff complains, among other things, that by reason of the Commission's cease and desist order he will suffer great and irreparable damage in that a substantial and indispensable portion of his business will be wholly destroyed, his present two-way haul largely eliminated, and his shippers prevented from using his service as they otherwise would do. He invokes the equitable powers of the court for proper relief.

 Title 5 U.S.C.A. § 1009(e) defines the scope of our review. It provides inter alia that we shall hold unlawful and set aside agency action found to be (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; or (4) without observance of procedure required by law. As a three-judge court we are vested with and empowered to exercise all the ...


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