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SMYTH v. UNITED STATES

August 30, 1968

G. W. SMYTH, General Movers Corporation, Martin Van Lines, Inc., Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants. Aero-Mayflower Transit Company, Inc., Allied Van Lines, Inc., Bekins Van Lines Co., Global Van Lines, Inc., Lyon Van Lines, Inc., North American Van Lines, Inc., and United Van Lines, Inc., Intervening Defendants



Per Curiam

OPINION OF THE COURT

This action under 28 U.S.C. §§ 1336, 1398, 2284, and 2321-2325 seeks to set aside orders of the Interstate Commerce Commission served on May 27, 1966, and January 9, 1967, in I.C.C. Docket No. MC-F-8723, General Movers Corp. -- Control -- Martin Van Lines, Inc., 101 M.C.C. 748. This action was taken before a three-judge District Court pursuant to 28 U.S.C. §§ 2284 and 2325.

By application filed April 17, 1964, as amended, General Movers sought authority to acquire control of Martin Van Lines, Inc. (hereafter Martin) and Messrs. G. W. Smyth, Clarence N. Sayen and Nicholas Schmitt concurrently sought authority to acquire control of Martin through their control of General Movers as joint voting trustees.

 On October 29 through November 3, 1964, a hearing was held in Seattle, Washington, and briefs to the Examiner were filed February 3, 1965. By Report and Order served May 28, 1965, the Examiner recommended that the application be denied, finding inter alia, (a) that the proposed acquisition of Martin constituted a 'single transaction' along with the prior acquisition by General Movers of A. World Van Lines (hereafter A. World); and (b) that at the time of the A. World acquisition, G. W. Smyth, a majority stockholder of General Movers, was 'affiliated' with Smyth World Wide Movers, Inc., (hereafter Smyth World Wide).

 By Report and Order served May 27, 1966, Division 3 of the Commission modified certain findings of the Examiner and eliminated some other findings, but adopted the Examiner's recommendation that the application be denied. On June 27, 1966, pursuant to § 1.101(a)(3) of the Commission's General Rules of Practice, 49 C.F.R. § 1.101(a)(3), plaintiffs filed a petition for reconsideration of the Report and Order of Division 3. By Order dated December 20, 1966, Division 3, acting as an Appellate Division, denied Plaintiffs' petition for reconsideration and request for oral argument.

 Under § 17(9) of the Interstate Commerce Act, 49 U.S.C. § 17(9), and the rules and regulations promulgated thereunder, 49 C.F.R. § 1.101(a)(2) and (3), the denial of the petition for reconsideration by Division 3, acting as an Appellate Division, disposed of the Commission proceedings with administrative finality and exhausted the administrative remedies of the plaintiffs before the Commission. That the plaintiffs can bring no more action before the Commission which would, or may, result in the approval of the instant application for the Martin acquisition is clear. The holding by the Commission that the denial was without prejudice to a later application for approval of acquisition of A. World and Martin in no way affects the finality of the action taken on the petition before it exclusively concerning the acquisition of Martin. Therefore, the plaintiffs have standing under the Administrative Procedure Act and the Interstate Commerce Act to bring this action.

 Without attempting to repeat the factual findings of the Examiner or the Commission as set out in their various reports, the undisputed facts are:

 Prior to General Mover's application, G. W. Smyth had owned and controlled a non-carrier holding company, Smyth World Wide, which controlled, until the end of 1963, at least two carriers of household goods that were regulated by the Commission and operated between limited points in the United States, mostly in the western states, and Alaska. At the time of the application by General Movers, Smyth World Wide controlled one carrier, the other having surrendered its certificate. Smyth World Wide was an agent of North American Van Lines and was approved by the military as a carrier of containerized cargo in limited areas. Mr. Smyth, apparently desirous of having a nationwide carrier of household goods of his own, became interested in acquiring what he termed the 'A. World -- Martin complex.' For exploration of the feasibility of that acquisition, he hired Clarence Sayen, an ex-airline pilot with no prior motor carrier experience. Foreseeing some difficulty, either with North American or the Commission, in making such an acquisition while he still controlled Smyth World Wide, Mr. Smyth sold his interest in that concern to San Raphael and Associates. Smyth apparently retained only a token interest in Smyth World Wide, but was retained by San Raphael as a consultant with a $ 25,000.00 per year salary.

 Before its transfer to San Raphael, Smyth World Wide had obtained options from the owners of A. World and Martin for the purchase of controlling interest in both companies through the purchase of stock. Those options were not exercised by Smyth World Wide but were transferred to Mr. Sayen at the same price as they had been purchased. Mr. Sayen then formed General Movers. Immediately after the transfer of Smyth World Wide to San Raphael, Mr. Smyth appeared as the majority shareholder in General Movers. All of the shareholders entered into a voting trust agreement naming Messrs. Smyth, Sayen and Schmitt joint voting trustees. One day after Smyth had become the majority shareholder, General Movers entered into arrangements whereby it gained control of A. World. The terms of those agreements and their exact nature are unknown due to the plaintiffs' refusal to produce them unless 'directed' to do so. The options first held by Smyth World Wide were never exercised. The control of A. World was gained through the purchase by General Movers of the stock of World Van Service, Inc. (hereafter World Van), a noncarrier which had been in control of A. World. Approximately three weeks after the acquisition of A. World, General Movers agreed to acquire Martin by entering into a series of contracts with the persons controlling Martin. By application filed with the Commission, General Movers, as a noncarrier already in control of a carrier, sought approval of the proposed acquisition under 49 U.S.C. § 5(2).

 Prior to the involvement of G. W. Smyth of General Movers with the A. World -- Martin complex, the record shows that A. World and Martin, together with Rocky Ford Moving Vans, had arrangements permitting a nearly nationwide moving service. The arrangements between those three companies prior to the acquisition by General Movers of A. World resulted from a series of events which left. A. World controlled, at least de facto, by Donald C. Taylor, half-owner of Martin. World Van, which had controlled A. World de jure, was held two-thirds by Irving Anches, a close associate of Donald C. Taylor in many other enterprises, and one-third by Howard Ford, general manager of Rocky Ford Moving Vans. World Van entered into agreements with both A. World and Martin whereby World Van took over the clerical details of both operations, including such things as issuing bills of lading and billing for services. In return for those services, World Van received five percent of the gross revenues of each company. One Beckett, an employee of Martin, went over to A. World, but still remained under Taylor's direction, and organized its activities, including interline arrangements with Martin and Rocky Ford.

 It was after the above arrangements between Martin and A. World were in existence that G. W. Smyth and/or General Movers became interested in acquiring control of the two companies.

 The transaction through which General Movers acquired control of A. World was not presented to the Commission for approval, General Movers taking, and still asserting, the position that that transaction was separate and apart from the acquisition of Martin and therefore it was not necessary under 49 U.S.C. § 5 to receive Commission approval.

 Section 5(2) of the Interstate Commerce Act, 49 U.S.C. § 5(2), requires certain acquisitions concerning carriers under Commission regulation to be presented to the Commission before they may be legally affected. Those are: (1) when one carrier acquires another; (2) when a non-carrier in control of one carrier acquires a second carrier; and (3) when a non-carrier acquires two or more carriers. The crux of the controversy in the present case is whether the plaintiffs are attempting to purchase one ...


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