The opinion
MERCER, Chief Judge
(dissenting).
I cannot agree with the decision of the majority of the court and I therefore dissent. I would hold that the order of the Commission granting the certificate of public convenience and necessity to Short Line 1 was entered in violation of the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq., and that the order is therefore null and void.
Contrary to the suggestion of the majority opinion, we are not concerned with the validity of the basic, or evidentiary, findings of fact of the Commission. Plaintiff does not challenge the evidentiary findings and the Commission and the United States are without standing to challenge the validity of their own findings. To some extent, Short Line, as an intervening defendant, has attempted to raise that issue. As a party intervener on the Commission’s side of the case, Short Line is in the same boat with the Commission and must sink or swim upon the strength of the findings as they are found and incorporated in the Commission’s report.
Two issues are decisive of the case at bar, namely, whether the evidentiary findings of fact of the Commission support its ultimate finding of public convenience and necessity which forms the predicative basis for the Commission order, and, whether the Commission, in entering the order in question, exceeded the power and jurisdiction conferred upon it by Section 207 of the Interstate Commerce Act, 49 U.S.C.A. § 307 . In my opinion, the order must fall on each basis.
Beyond cavil, the Commission was not bound by the findings of fact of the examiner, whether evidentiary or ultimate, but it did adopt the evidentiary findings of its hearing examiner in this case. Disagreement with its hearing examiner is limited solely to a. determination that the ultimate finding and conclusion by the examiner that public convenience and necessity had not been proved was erroneous. Granted that on a mere question of naked power the Commission did have *60 authority to adopt an ultimate finding directly opposed to that recommended by its hearing examiner, but that naked authority is tempered by the legal requirement that the ultimate findings adopted by the Commission be supported by its own evidentiary findings of fact. Universal Camera Corp. v. N. L. R. B., 340 U.S. 474 , 71 S.Ct. 456 , 95 L.Ed. 456 ; United States v. Pierce Auto Freight Lines, 327 U.S. 515, 533 , 66 S.Ct. 687 , 90 L.Ed. 821 ; I. C. C. v. Parker, 326 U.S. 60 , 65 S.Ct. 1490 , 89 L.Ed. 2051 ; Southern Kansas Greyhound Lines v. United States, D.C. Mo., 134 F.Supp. 502 , affirmed 351 U.S. 921 , 76 S.Ct. 779 , 100 L.Ed. 1453 ; Seaboard Air Line Railroad Co. v. United States, D.C.Va., 131 F.Supp. 129 , affirmed 349 U.S. 902 , 75 S.Ct. 579 , 99 L.Ed. 1239 ; Schaffer v. United States, D.C.S.D., 139 F.Supp. 444 , reversed on other grounds, Schaffer Transfer Co. v. United States, 355 U.S. 83 , 78 S.Ct. 173 , 2 L.Ed.2d 117 .
This case arises out of a rather simple situation as the following summary of the findings of the Commission reveal. Its apparent complexity follows from the emotional overtones inherent in the perusal of the seeming overbearing attitude of a labor union in its attempt to enforce its will upon the stockholders of Short Line.
Short Line is a corporation organized by a number of eastern Nebraska carriers who own all of its capital stock. 2 Those carriers are hereinafter sometimes referred to as the stockholders carriers and, individually, as Romans, Clark, Lyon, McKay, Winter, Abler, Peters, Superior, Pawnee, Derickson, Steffy, Wilber and Tillman.
All of the stockholder carriers operate principally between points in the State of Nebraska. All are non-union. Each of them handles both local freight and interstate freight. Each maintains interchange points, principally within Nebraska, for the interchange of interstate-freight with line-haul certificated interstate motor carriers. Interstate freight interchange was, from time to time, made-with plaintiff, Burlington, the intervening plaintiff-carriers 3 and other line-haul' carriers. Hereinafter, for convenience, Burlington and the intervening plaintiff-carriers are referred to as plaintiffs, except as the context otherwise requires, Individually, the intervening plaintiff carriers are referred to as Santa Fe, Watson, Red Ball, I.M.F., Independent, Illinois, I.M.L., Navajo and Ringsby, respectively, in the order in which they are listed in footnote 3.
All of the plaintiffs are union carriers, and each has a collective bargaining agreement with the Teamsters Union. At all times material to this case, each of the union contracts contained a so-called hot-cargo clause which provided that the carrier would not discharge or discipline any employee who refused to cross a picket line or who refused to handle hot-cargo, i. e., freight produced or tendered by any person who was engaged in any labor dispute with the Teamsters or other labor union.
*61 Beginning in 1955, the intervening plaintiff, Local 554 4 began a drive to organize common carrier employees in the eastern part of the State of Nebraska. The attempt was made to organize a part of the stockholder carriers from the top down, i. e., by persuading the carrier to enter into a union shop agreement with Local 554 under which its employees would be required to become union members. When the union drive failed, normal freight interchange with a part of the stockholder carriers was interrupted. The affected stockholder carriers experienced refusal by certain of the interstate motor carriers, who were a party to the hot-cargo agreements, to pick up freight shipped over the stockholders’ lines from points in Nebraska and destined for interstate points outside that State. Some shipments into Nebraska which were routed by the consignee for terminal delivery by the stockholder carriers were diverted from that routing for terminal delivery by other motor carriers or by rail. In many instances delays were experienced by shippers in delivery of goods shipped interstate by them and routed by motor carrier, and in the receipt of merchandise ordered by them for interstate shipment and delivery by motor carrier. Thus, it appears, from the evidence, and the Commission found that Romans, Abler, McKay, Peters, Lyon and Clark experienced a breakdown of interchange of freight and accompanying difficulties to varying degrees. On the other hand, neither Wilber, Tillman, Derickson, Steffy, Winter, Superior nor Pawnee ever experienced any breakdown or interruption of freight interchange.
As a result of the activities of Local 554 and the ensuing interchange interruption experienced by a part of their number, the stockholder carriers incorporated Short Line as an interstate motor carrier. The application for a eertificate of public convenience and necessity was then processed with the Commission, seeking authority for Short Line to operate as an interstate carrier of general commodities, with exceptions, over regular routes between Omaha and Lincoln, Nebraska, on the one hand, and major mid-west cities and Denver, Colorado, on the other.
The examiner found that the routes designated in the Short Line application were served by other certificated interstate carriers, including the plaintiffs. He also found that the equipment of plaintiffs and other carriers whose routes duplicated those requested by Short Line in its application, was not being operated to capacity and that such carriers could handle additional interstate traffic whenever the same was available. In addition to the large number of certificated motor carriers who serve the points along the routes designated in the Short Line application, the affected area is served by either the Chicago, Rock Island & Pacific Railroad, the Chicago & North Western Railway, the Chicago, Burlington & Quincy Railroad, the Missouri Pacific Railroad or the Union Pacific Railroad. Each of the named railroads appeared in opposition to the application, and each was, as the master found, able and willing to handle less than car load shipments, destined for a part of the Nebraska communities included within the area served by the stockholder carriers. In this connection, also, the examiner found that-Burlington and Santa Fe were continuing to interchange freight normally with the stockholder carriers at Omaha and Lincoln on all interstate shipments originating at or destined for delivery to Nebraska points. Interchange was being effected by the affected stockholder carriers with National 5 , Ringsby, Rock Island 6 , Bos 7 , D.M.T. 8 , and Merchants 9 .
*62 The examiner summarized his evidentiary findings on the latter phase of the case in the following language:
“As indicated, applicant relies heavily on the claim that the existing line-haul motor carriers have refused to interchange with stockholders named therein. There is no evidence, however, showing that Derick-son, Frear (who operates Pawnee Transfer and Superior Transfer), ■Steffy, Tillman, Wilber and Winter have had any particular trouble in interchanging shipments with connecting lines, and Peters was still interchanging shipments with a considerable number of line-haul motor carriers. In any event, most of Peters’ interchange at Omaha is effected with National Carloading. As to Abler and McKay, they were still interchanging traffic with Burlington, Ringsby and Santa Fe Trail, and Romans was still able to conduct interchange with Burlington, Ringsby, Rock Island and Santa Fe Trail. Lyon was still interchanging traffic with Burlington at Lincoln, and at Omaha with Bos, Burlington, Rings-by, D.M.T. and Merchants. As to Clark, the evidence shows Sante Fe Trail has continued to interchange traffic and in most instances this .stockholder had been able to find a motor carrier willing to accept interstate shipments.
“Although the shipper evidence relating to interior Nebraska points indicates that there have been some ■delays in transit, principally because shipments had been diverted to carriers other than those designated by the consignees, the shipments had been moving through to destination.”
Again the examiner found as follows:
“On the question of whether a grant of the authority sought would ■endanger or impair the operations of existing carriers contrary to the public interest, it cannot be said that protestants and other unionized carriers are not now enjoying the traffic over their respective portions of the routes involved and the shipments are moving through to destination.”
Upon the basis of his evidentiary findings as above summarized, the examiner found and concluded that Short Line had failed to establish that the interstate operation which it proposed was required by the present or future public convenience and necessity. The examiner concluded that Short Line’s application should be denied.
The Commission adopted the findings of the examiner, including the findings that Burlington, Santa Fe and other motor carriers were continuing normal interchange with the stockholder carriers, that the line-haul motor carriers operated over the routes proposed by Short Line and that their equipment was not used to capacity, that the line-haul carriers were enjoying the freight proposed to be handled by Short Line and that freight shipments destined to and from eastern Nebraska points were moving through to their consignment destinations.
Rather than disturbing the findings of the examiner indicative that the equipment and facilities of the certificated line-haul carriers were adequate to serve the routes sought by the Short Line application, the Commission reasoned that public convenience and necessity required allowance of the application because the breakdown of normal interchange relations with a part of the stockholder carriers constituted an abrogation by a part of the line-haul carriers of their duty to the shipping public which their certificates required. Thus, the Commission recognized that the disruption of normal interchange of freight with some of the stockholder carriers resulted from a labor dispute between such stockholder carriers and Local 554. Although the Commission did not purport to decide the merits of that labor dispute, it reasoned that the certificated union carriers could not bargain away their duty to serve the public by an agreement with a labor union and thus relieve themselves of their obligations to the public as common carriers. *63 The Commission concluded that certain of the line-haul carriers had, in reliance upon the “hot-cargo” clause of their contracts with the Teamsters Union, violated their duty as common carriers to serve the public, and that that violation had created a deficiency in motor service available to Nebraska shippers. Because of that deficiency, the Commission found that the present and future public convenience and necessity required that the Short Line application be allowed. An order was entered accordingly.
I would hold that the order be set aside for the reason that the finding of public convenience and necessity is contrary to the evidentiary findings of the Commission upon which that ultimate finding is based. Upon every application for authority to operate as a common carrier by motor vehicle between interstate points, the Commission must determine the adequacy of the facilities of existing carriers as a preface to its decision. In Filson v. I.C.C., D.C.Colo., 182 F.Supp. 675, 676 , the court said that “an inadequacy of existing facilities is a basic ingredient” for the determination of the existence of public necessity on a carrier certificate application. In Hudson Transit Lines v. United States, D.C.S.D.N.Y., 82 F.Supp. 153 , affirmed 338 U.S. 802 , 70 S.Ct. 59 , 94 L.Ed. 485 , the court held that a finding of the inadequacy of existing facilities is essential to support a finding of the Commission of public convenience and necessity for the grant of a competing carrier application. To the same effect are Schaffer v. United States, D.C.S.D., 139 F.Supp. 444 , reversed on other grounds Schaffer Transfer Co. v. United States, 355 U.S. 83 , 78 S.Ct. 173 , 2 L.Ed. 2d 117 ; Associated Transports, Inc., v. United States, D.C.Mo., 169 F.Supp. 769 ; Inland Motor Freight v. United States, D.C.Wash., 60 F.Supp. 520 ; McLean Trucking Co. v. United States, D.C.N.C., 63 F.Supp. 829 . In reversing the Schaffer case, the Supreme Court said that the relative adequacy of existing service is a significant consideration when interests of competition between carriers are being reconciled with the policy of maintaining an over-all sound system of transportation.
In United States v. Detroit & Cleveland Navigation Co., 326 U.S. 236 , 66 S.Ct. 75 , 90 L.Ed. 38 , the court stressed the Commission’s findings of inadequacy of existing facilities in reversing a decision setting aside a Commission order granting new operating rights. The application for proposed carriage by water of automobiles from Detroit, Michigan, to other Great Lakes ports was opposed by the Navigation Company which had been previously certified to serve the same ports. The Commission had found that the service by the Navigation Company had been inadequate in peak season because of a shortage of available ships, that most of the Navigation Company’s ships were, at the time of the application, in the service of the United States as a result of World War II and that post-war production of cars would far exceed the pre-war volume which the Navigation Company had carried, which would in turn, require added facilities. Those findings were stressed by the Court as support for the Commission’s order certificating additional service in competition with the protestant.
In Norfolk Southern Bus Corp. v. United States, D.C.Va., 96 F.Supp. 756 , affirmed 340 U.S. 802 , 71 S.Ct. 68 , 95 L.Ed. 590 , the court did say that it was not necessary for the Commission to specifically find that existing service was inadequate before granting a certificate for additional bus service, but that statement must be viewed against the background of the evidence in that case indicating that the service and facilities of existing carriers were inadequate.
We are not here confronted with a mere failure to find, expressly, that the existing carrier facilities and service capabilities are inadequate. What we are confronted with are findings of fact adopted by the Commission which lead to only one conclusion, namely, that existing carrier facilities and service capabilities are adequate. In my opinion, the ultimate finding of public convenience and necessity for granting the Short Line *64 operating rights is diametrically opposed to those basic findings of fact.
It is no answer to say that existing carriers do not have an absolute monopoly with respect to the routes defined in their respective certificates. Neither, in my opinion, is the fatal defect in the predicative basis of the Commission’s order overcome by anything expressed in the National Transportation Policy. The Transportation Policy merely expresses congressional intent that the Commission shall have authority to maintain an integrated system of interstate transportation by balancing the competitive rights of rail, water and motor carrier facilities to fulfill the transportation needs of the public. Both the Policy and Interstate Commerce Act contemplate the granting of limited monopolies. While a carrier may not cite its certificate as a monopoly grant foreclosing the grant of competing rights, it may cite its certificate, in conjunction with evidence of its ability to render adequate service to the shipping public, as persuasive evidence against an application for competing carrier service.
Monopoly grants are tolerated to avoid ruinous competition and unnecessary duplication of service. I would hold that the monopoly rights previously granted to plaintiffs and other interstate carriers are vested rights to the extent that those rights ought not to be ousted or diluted, except upon a finding of inadequacy of existing facilities and of a demonstrated need for competing service as an integral part of a national system of transportation.
I would declare the order under review null and void for the reason that the finding of public convenience and necessity is not supported by the Commission’s basic findings of fact.
The more serious aspect of this case, and an issue equally fatal,, in my opinion, to the Commission’s order, is the question of the jurisdiction of the Commission to enter the order under review. Upon review of the whole case I am convinced that the Commission employed the certification procedures of Section 207 of the Act, for a purpose and in a manner for which the statute was never intended. The hard core of this whole case is one fact, namely, the existence of a labor dispute between Local 544 and certain of the stockholder carriers. Any doubt as to the large effect of that fact is dispelled by reading the Commission’s report. Most significant, I think, is the fact that the Commission found it necessary to devote paragraph after paragraph and several pages of its report to a discussion of the labor aspects of the case and to an explanation that it was not deciding that labor issue. In like manner, in approaching the conclusion that the order of the Commission is valid, the majority of the court devotes some 15 typewritten pages of opinion to the labor aspects of the case, to the duty of a common carrier to the public despite labor involvement and to a discussion of the lack of any decision on a labor dispute in the Commission’s disposition of this case.
Moving out from the hard core of the existence of a labor dispute, the Commission concluded that plaintiff carriers, notwithstanding their union contract and possible labor involvement, owe a duty to the public which they should not shirk. Upon that conclusion is then erected a finding that some, but not all, of the certificated interstate motor carriers breached that duty which they owed to the public by creating a disruption of normal interchange of freight and, thereby, a deficiency in motor freight service to shippers in a part of Nebraska. Upon the verdict of the guilt of a part of the interstate motor carriers hangs the finding and conclusion that public convenience and necessity requires the certification of Short Line as an additional interstate carrier to compete with plaintiffs, both the guilty and the innocent, and to compete with the rail facilities which already exist and serve the interstate needs of Nebraska shippers.
I find the suggestion that Burlington, Santa Fe, and the other interstate carriers who continued normal interchange with the stockholder carriers are not af *65 fected or injured by the order to be a completely unrealistic concept. As I have previously pointed out the Commission found that these carriers were operating at less than maximum capacity for their equipment and facilities, and that they, along with the other interstate motor carriers had been enjoying the traffic which Short Line sought by its application. The order deprives the guilty and the innocent alike of traffic which they otherwise would enjoy.
I think the evil of the order lies in a simple but very significant fact which both the Commission and the majority of this court overlook, namely, that the basic findings of the Commission’s report and the evidence adduced before the hearing examiner are geared to the complaint procedures established by Section 212 of the Act, 49 U.S.C.A. § 312 , not to the procedure contemplated by the express provisions of Section 207.
The evidence adduced before the examiner tended to prove that some, but not all, of the plaintiffs and other interstate carriers had refused to conduct normal interchange of freight destined to and from destinations within the eastern part of Nebraska. Upon that evidence the Commission rendered its verdict of guilt, making no distinction between the guilty, the semi-guilty, and the innocent. The evidence as to the effect of the disruption of normal interchange by some of the line-haul carriers tended to prove that some, but not all, of the stockholder carriers had lost business and revenue because of the decrease of interstate freight. The shipper evidence supports the finding that some shippers in the area served by the stockholder carriers had incurred increased freight charges and less efficient motor freight service as a result of disruption of normal interchange. Again, the Commission’s report makes no distinction between the injured and the uninjured.
The effect of the Commission’s order is a carte blanche decision that all interstate motor carriers operating through the interchange points used for eastern Nebraska freight are guilty, either actually or vicariously, of a breach of duty owed to the public under their operating certificates for which they would be punished by granting the Short Line application. The benefits of the granting of that application accrue not only to the stockholder carriers who were found to have been injured by the disruption of normal interchange, but, also, to the stockholder carriers who had not been injured and who, under the expressed finding of the Commission, had no complaint against the interstate carriers.
No case is cited by the Commission or by the majority of this court, and no case has been found, in which the certification procedure of Section 207 has been employed in this fashion. Cases upon which the Commission relies and which are cited by the majority of this court involved either a complaint proceeding or a civil action for injunctive relief or for damages resulting from the failure of a carrier to render service commensurate with the obligations imposed by its status as a common carrier. E. g., Pacific Gamble Robinson Co. v. Minneapolis & St. L. Ry. Co., D.C.Minn., 105 F.Supp. 794 , affirmed as modified 8 Cir., 215 F.2d 126 ; Montgomery Ward & Co. v. Northern Pacific Terminal Co., D.C.Or., 128 F.Supp. 475 .
The Commission does have the authority under Section 212 of the Act, upon any complaint, after notice and a hearing, to compel a carrier to comply with the Act and with the duties and obligations imposed by its certificate of public convenience and necessity. E. g., Montgomery Ward & Company v. Santa Fe Trail Transportation Co., 46 M.C.C. 212; Planters Nut & Chocolate Co. v. American Transfer Company, 31 M.C.C. 719. Section 212 vests the Commission with a wide discretion to penalize violations of the Act and breaches of duty to the shipping public, which includes the suspension or revocation of a certificate previously granted.
The shipper or carrier injured by a violation of the Act by any carrier, or by a breach of the duties and obligations owed by a common carrier to the shipping public may prosecute an action for dam *66 ages, e.g., Pacific Gamble Robinson Co. v. Minneapolis & St. L. Ry. Co., supra, Montgomery Ward & Co. v. Northern Pacific Terminal Co., supra, or a suit to enjoin continuing unlawful conduct. E.g., Quaker City Motor Parts Co. v. Interstate Motor Freight System, D.C.Pa., 148 F.Supp. 226 .
Either a complaint proceeding or a civil action for damages or injunction apparently would be appropriate in this case. As the examiner pointed out in his report, the evidence adduced in this case is geared to the complaint situation, not to the customary certification proceeding under Section 207.
The distinction between a Section 212 proceeding and a civil action for relief, on the one hand, and Section 207 proceeding on the other, is too significant to lightly permit the latter to be used by a disgruntled carrier indiscriminately as an equivalent substitute for the former. The Section 207 proceeding is an ex parte proceeding, although opponents of an application may appear and resist it. On the other hand, a Section 212 proceeding is an adversary action commenced by a complaint which must specify charges of some illegal action or breach of duty by a named carrier or carriers. As in litigation before the courts, the issues are squarely drawn. Due notice of the complaint and a full opportunity to appear and defend are the minimum requisites for a valid decision of the issues by the Commission. The initial burden of proof is on the complainant.
By contrast, the proceedings before the Commission in this case evince a serious, and I think unwarranted and unlawful, extension of the certification authority granted by Section 207. Here, an ex parte application was filed. Upon the hearing upon that application, by evidence adduced, both those stockholder carriers who claimed injury and those who, presumably, felt they might be injured in the future, converted the application into a broad charge of misconduct on the part of the line-haul carriers. I find that approach frightening enough when the question of adequacy of notice, alone, is considered. It becomes even more frightening when the evidence of misconduct of some of the line-haul carriers is made to attach vicariously and detrimentally to those carriers who conducted normal interchange.
While it cannot be doubted that the Commission does possess a large discretion to frame its decisions in a manner calculated by it to implement the provisions of the Act, that discretion does not extend to the creation of a new penalty which is not expressly provided by the Act and which the framers of the Act never contemplated. In my opinion, that is what the Commission has done in this case, and its order should not be permitted to stand and become a very dangerous precedent.
Here, the Commission conceded that it was without authority to decide the merits of the dispute between Local 554 and a part of the stockholder carriers and to determine the validity of the “hot-cargo” clause. Yet it took the position that it could, nevertheless, find that a breach of duty had been perpetrated as a result of those labor questions by a part of the line-haul carriers serving eastern Nebraska, and, upon that finding, penalize all carriers in that classification by the grant of competing operating rights to Short Line. That is, I think, the crux of the true impact of the labor aspects on this case — they furnished an opportunity for the Commission to assert an authority beyond that granted by the Act.
The old axiom that “the hit dog howls” should be made to apply to this case. If Clark and others have a complaint against some or all of the line-haul carriers, they alone should do the howling. Section 212 of the Act provides them the opportunity to assert that complaint before the Commission and invoke a jurisdiction under which the issues could be decided in an appropriate proceeding. At least, until the complaint procedure has been tested, we should not permit the whole pack to come in asserting that *67 some have been hit and claiming a right, on behalf of the pack, to a remedy which the Act was never intended to provide.
I would declare the Commission’s order null and void.
. Nebraska Short Line Carriers, Inc.
. These stockholder carriers are John Romans, doing business as Romans Motor Freight, Fred L. Clark and Walter F. Clark, doing business as Clark Bros. Transfer, Royal F. Lyon, doing business as Lyon Transfer, C. C. McKay and Earl R. McKay, doing business as McKay Freight Line, Waldo W. Winter and Hubert B. Winter, doing business as Winter Bros., Abler Transfer, Inc., Herbert Peters, doing business as Fremont Express Co., Henry G. Frear, doing business as (1) Superior Transfer and (2) Pawnee Transfer, John Derickson, doing business as Derickson Transfer, Lewis Steffensmeir and Edward Steffensmeir, doing business as Steffys Transfer, Norman J. Rezny and Norman B. Slepica, doing business as Crete and Wilber Freight Lines, and Harvey Tillman, doing business as Tillman Transfer Co.
. Santa Fe Trail Transportation Company, Watson Bros. Transportation Co., Inc., Red Ball Transfer Co., Interstate-Motor Freight System, Inc., Independent Truckers, Inc., Illinois-California Express, Inc., Interstate Motor Lines, Navajo Freight Lines, Inc., and Ringsby Truck Lines, Inc.
. General Drivers and Helpers Union, Local 554, affiliated witlx the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
. National Carloading Company.
. Rock Island Motor Transit Co.
. Bos Truck Lines.
. Des Moines Transportation Company, Inc.
. Merchants Motor Freight, Inc.