The opinion of the court was delivered by: AUGELLI
In this action, plaintiff P. Saldutti & Son, Inc. ('Saldutti'), seeks to set aside an order of the Interstate Commerce Commission ('Commission'), which order determined that Saldutti's contract carrier permit should be revoked and a common carrier certificate issued in lieu thereof, and also delineated the scope of Saldutti's operating authority as a common carrier under said certificate.
The order under attack stems from a conversion proceeding initiated by the Commission under section 212(c) of the Interstate Commerce Act ('Act'), 49 U.S.C.A. § 312(c), to determine whether Saldutti's operations conformed to the amended definition of a contract carrier by motor vehicle contained in section 203(a)(15) of the Act, 49 U.S.C.A. § 303(a)(15).
Section 212(c) of the Act directed the Commission to examine each outstanding permit 'and after notice and hearing revoke a permit and issue in lieu thereof a certificate of public convenience and necessity, if it finds, first, that any person holding a permit whose operations on the date this subsection takes effect (August 22, 1957) do not conform with the definition of a contract carrier in section 203(a)(15) as in force on and after the date this subsection takes effect (August 22, 1957); second, are those of a common carrier; and, third, are otherwise lawful. Such certificate so issued shall authorize the transportation, as a common carrier, of the same commodities between the same points or within the same territory as authorized in the permit.'
For a number of years prior to August 22, 1957, Saldutti was the holder of a permit issued to it by the Commission which authorized Saldutti, as a contract carrier by motor vehicle, to transport certain commodities, over irregular routes, within the territorial limits of its permit.
On January 3, 1959, the Commission, on its own motion, and acting pursuant to Section 212(c) of the Act, instituted a proceeding to determine whether Saldutti's contract carrier permit should be revoked and a common carrier certificate, authorizing the transportation of the same commodities between the same points and within the same territory as previously authorized by the permit, should be issued in lieu thereof. In connection with that proceeding, and in compliance with a Commission requirement, Saldutti completed and filed with the Commission a questionnaire in which Saldutti set forth certain details concerning its operations and therein expressed the opinion that it was a 'contract carrier by motor vehicle' under the amended definition of that term.
Subsequent to the filing of the questionnaire, and on June 7, 1960, a hearing was held on the issue of Saldutti's status. The only witness who appeared and testified in behalf of Saldutti was Melvin Chirls, Saldutti's president and chief executive officer, who had familiarity with the entire operation and business of his company. Upon a consideration of all the evidence adduced at the hearing, the Examiner found, as appears from his recommended report and order which was served on August 22, 1960, that Saldutti's operations on the critical date of August 22, 1957, and thereafter, did not conform with the amended definition of a contract carrier; that such operations were those of a common carrier, and were otherwise lawful; and that upon compliance by Saldutti with certain conditions, its permit should be revoked and a common carrier certificate of public convenience and necessity issued in lieu thereof. The Examiner also recommended that certain changes be made in the language of Saldutti's existing permit which, when carried over into the certificate proposed to be issued, would establish the scope of Saldutti's authority as a common carrier thereunder.
On October 3, 1960, Saldutti filed exceptions to the Examiner's recommended report and order. It contended the Examiner erred in finding that Saldutti's operations did not conform to the amended definition of a contract carrier by motor vehicle, but that even if the Examiner's conclusion was correct on this phase of the case, the Examiner nevertheless erred in recasting the scope and extent of Saldutti's operating authority as a common carrier.
On March 30, 1961, Saldutti filed a petition for reconsideration by the entire Commission of the Division 1 order of February 20, 1961. No objection was made by Saldutti in that petition regarding its conversion from a contract to a common carrier. The objections were confined to the scope of the authority contained in the common carrier certificate. Reconsideration was denied by the entire Commission on July 13, 1961, 'for the reason that the findings of Division 1 in its report and order of February 20, 1961, are in accordance with the evidence and the applicable law.'
The complaint in this case was filed on November 17, 1961. Pending the final outcome of this litigation the Commission, on its own motion, has postponed the effective date of its conversion order of February 20, 1961.
We shall first consider the Commission's determination that Saldutti's operations did not conform to the amended definition of a contract carrier.
The problem which confronted the Commission in dealing with contract carriers by motor vehicle prior to 1957, and the considerations which led to the amendment of section 203(a)(15) of the Act, and the addition of section 212(c) thereto, are set forth in 1957 U.S.Code Cong. and Admin.News, pp. 1599-1605. A perusal of this legislative history clearly evinces a Congressional intent to preserve the basic distinctions between common and contract carriers and to overcome the effect of the decision in United States v. Contract Steel Carriers, Inc., 350 U.S. 409, 76 S. Ct. 461, 100 L. Ed. 482 (1956). In that case, the Supreme Court, after noting that the Commission found that Contract Steel Carriers, Inc. had not sufficiently specialized its operation, concluded that if such specialization was a factor, it was satisfied in that case since the carrier hauled only strictly limited types of steel products under individual and continuing contractual agreements with a comparatively small number of shippers throughout a large area. The Supreme Court also held that the fact that Contract Steel Carriers, Inc. had actively solicited business within the bounds of its license, did not support a finding that the carrier was 'holding itself out to the general public', and stated that a contract carrier is free to aggressively search for new business within the limits of its license.
The Contract Steel Carriers case pointed up the difficulties that had been facing the Commission in trying to regulate the operations of contract carriers. The Commission lacked power to limit the number of contracts under which a contract carrier could operate. While specialization of service was a factor considered by the Commission in passing upon an application for a contract carrier permit, the Commission could not prevent a contract carrier from later adding contracts for unspecialized services within the limits of its permit. As a result of ...