In their exceptions, respondents urge that Haley's operation differs significantly from those involved in the Piedmont and Hopke proceedings, in that the latter were shown to have selected and exercised a material measure of control over their distributors, whereas it does not. In this connection, it is argued that the mere retention of a right to discontinue shipments to a defaulting distributor should not destroy its independent status. Also, Haley denies any responsibility for the safe transportation of the traffic beyond its possession, and contends that the mere expectation by shippers that their freight will move to destination should not be "stretched" to impose responsibility where none is intended. Thus, Haley claims to be a consolidating agent not subject to economic regulation by this Commission because it does not assume responsibility for traffic beyond its terminal, arrange for distribution and assume responsibility for it, insure shipments from origin to destination, issue a bill from origin to destination, handle tracing of shipments, process claims on shipments, or advertise a through service from origin to destination. Finally, it is asserted that the cease and desist order recommended by the examiner does not spell out, with the necessary degree of clarity, the operations from which respondents must cease and desist.

In reply, the Bureau generally supports the findings and conclusions of the examiner. The Bureau points to the fact that Haley actually selected some 19 distributors from time to time; and it asserts that there has been and is a "working arrangement" between each of the distributors and Haley, involving the break bulk and final delivery of shipments, and for the collection and distribution of all handling and transportation charges; that shippers may call Haley and receive a close estimate of the total cost of the through transportation service; and that Haley's advertising and brochures represent that its service facilitates the tracing of shipments.

Although we are in substantial agreement with the examiner's findings and recommendation, we believe that the contentions raised by respondent and the Bureau merit some additional discussion in view of the troublesome nature of this area of regulation. The basic issue is clear. The Bureau argues that respondent's operation is that of a freight forwarder as defined in section 402(a)(5) of the statute, while Haley, on the other hand, claims status as a consolidating agent not subject to regulation pursuant to the provisions of section 402(c)(2) of the act.

It is clear that all of the elements delineated by the statutory definition embraced in section 402(a)(5) of the act must be present if

respondent's operation is to be found that of a freight forwarder. National Motor Freight Traffic Assn. v. United States, 242 F. Supp. 601, 605 (D.D.C. 1965); and Columbia Shippers and Receivers Assn., Inc., v. United States, 301 F. Supp. 310, 323 (D. Del. 1969). However, in applying the section, we have consistently stressed the essential nature of the operation as revealed by respondent's holding out, over the formalities of organization and contractual obligation. If the nature of respondent's undertaking, as conveyed to and understood by the public it serves, is the rendition of a complete transportation service, this Commission has not hesitated to disregard the absence of formal relationships with other participants in the process, or purported disclaimers of responsibility for the traffic. Compare Southern Bonded Warehouse Co.-Investigation, 318 I.C.C. 345, 355 (1962); and Barre Granite Assn., Inc., Freight Forwarder Application, 265 I.C.C. 637 (1949). In Vendors Consolidating Co., Inc., F. F. Application, 265 I.C.C. 719, 285 I.C.C. 66 (1951), Piedmont, supra, Hopke, supra, and No. FF-C-32, Metropolitan Shipping Agents of Illinois, Inc. Investigation of Operations (not printed), decided August 11, 1971, this Commission considered and rejected the claims of four carloading companies that their operations, substantially similar to Haley's fell within the exclusionary provisions of section 402(c)(2) of the act. In each case, it noted that to obtain a complete service to destination, a shipper had only to tender property to the company with a document indicating the consignee. All subsequent arrangements were effected by the companies, and no further intervention by the consignor was necessary. In the circumstances, the absence of a contractual relationship between the companies and their distributors did not preclude a finding that the former had provided for the break bulk and distribution of the traffic. Nor were the respondents considered successful in avoiding responsibility for safe transportation to destination through specific disclaimers in their promotional literature and freight bills. It was found in each case that if a service, in all other respects that of a freight forwarder, is offered to the general public, the person providing it is held as a matter of law to have assumed such responsibility. See also R. T. C. Term. Corp. Freight Forwarder Application, 265 I.C.C. 527, 265 I.C.C. 641 (1949).

Respondent argues that the operations considered in Hopke, Vendors, and Piedmont can be distinguished from its own, principally on the grounds that the former selected and otherwise controlled the operations of the distributors, whereas it does not. There is strong evidence in this record, however, that Haley, too, has been instru

mental in the appointment of a substantial number of the distributors, and in instructing them as to their duties. At least as to these distributors, respondents should not now be allowed to reap the benefits of the unauthorized and illegal forwarding operation they initially conceived and requested. Moreover, irrespective of who selects the distributor, Haley must, as a matter of prudent business practice, provide some measure of direction to them, particularly with regard to the remission of its fees. For the same reason, Haley has reserved the right to discontinue shipments to a defaulting distributor. As the examiner so aptly noted, Haley "could scarcely remain in business if shipments were merely shipped off to warehousemen and local carters in distant cities solely on the strength of their likely sounding names and without at least some mutual understanding." Further, respondent notified the distributors of the existence, identity, description, and destination of each shipment. Prior to billing, the distributors take no orders or instructions from the shippers or consignees; they take them from Haley. Thus, respondent is in a position to, and does in fact, direct and control the process of break bulk and distribution. Cf. No. FF-C-32, Metropolitan Shipping Agents of Illinois, Inc.-Investigation of Operations, supra. It is clear, we think, that although shippers are free to choose or not to choose the established freight forwarding services of Haley, they generally are not able to employ the services of Haley as a consolidating agent when their shipments are destined to someone other than a prearranged distributor. In these circumstances, the operations here under consideration must be found to be those of a freight forwarder subject to regulation under part IV of the

act.

These conclusions prompt us to the observation that any person which offers a service involving the consolidation of c.o.d. traffic, moving from multiple consignors to multiple consignees, and which undertakes to effect the transportation arrangements, will find it extremely difficult to avoid freight forwarder status. To the shipping public, such an undertaking constitutes the essence of freight forwarding, for it proclaims to the shipper essentially that his traffic will move to destination at volume rates, without further effort on his part. Consequently, in a determination of the status of such an operation under section 402(a)(5), the form of the arrangements among the participants in the process is of secondary concern; it makes no essential difference whether the through transportation process is coordinated under formal agreements or, as here, is conducted by means of implied understandings or working arrangements between the consolidator and its distributing agents.

FINDINGS

We find that respondent, Haley Transfer and Storage, Inc., of High Point, N.C., is and has been engaged in operation, in interstate or foreign commerce, as a freight forwarder, without having obtained authority therefor from this Commission, and that such operations are and have been in violation of section 410(a) of the Interstate Commerce Act; and that respondent, Howard J. Haley, as chairman of the board and controlling stockholder of Haley Transfer and Storage, Inc., is interested in such violation and unlawful operations and has participated therein; and that an order should be entered requiring said respondents to cease and desist, and thereafter to refrain and abstain from the operations found herein to have been unlawful; unless and until appropriate authority therefor is obtained from this Commission.

An appropriate order will be entered.

340 I.C.C.

EX PARTE NO. 281

INCREASED FREIGHT RATES AND CHARGES, 1972

Decided December 21, 1971

1. Petitions requesting institution of an investigation into the adequacy of nationwide railroad freight rates and charges, granted.

2. Request for authority to establish an interim surcharge on bills for freight services, with exceptions, on 5 days' notice, denied. Petitioners authorized to publish the surcharge on 30 days' notice, but with an effective date no earlier than February 5, 1972, subject to protest and suspension.

Andrew C. Armstrong, Harry N. Babcock, Curtis H. Berg, R. W. Bridges, John J. Burchell, J. T. Clark, Charles H. Clay, John A. Daily, Harry L. DeLung, Jr., Louis T. Duerinck, R. S. M. Emrich III, J. D. Feeney, J. E. Frick, Stuart F. Gassner, Rene J. Gunning, Louis A. Harris, A. W. Hesse, Jr., Charlie H. Johns, Edward A. Kaier, Richard W. Kienle, A. M. Knowles, Richard D. Lalanne, Charles N. Marshall, John P. McCall, Don McDevitt, Thormund A. Miller, Robert B. Munsell, Richard J. Murphy, J. J. Nagle, John J. Paylor, Charles C. Rettberg, Jr., R. J. Schreiber, James M. Souby, Jr., R. H. Stahlheber, C. B. Sterzing, Jr., Wm. A. Thie, Thomas E. Tisza, D. M. Tolmie, W. G. Treanor, John S. Walker, and Sidney Weinberg for the Eastern and Western Railroads, petitioners.

John W. Adams, J. R. Davis, James L. Howe III, W. J. O'Brien, Albert B. Russ, Jr., John M. Simms, John F. Smith, James L. Tapley, and Donal L. Turkal for the southern territory railroads, petitioners.

REPORT AND ORDERS OF THE COMMISSION ON PETITIONS

BY THE COMMISSION:

On December 13, 1971, eastern, western, and southern railroads and certain water and motor carriers participating in joint rates with those railroads, filed petitions, accompanied by verified statements, requesting the Commission to institute an investigation into the adequacy of freight rates and charges of all railroads in the United