State v. Fleming

Annotate this Case

71 S.E.2d 41 (1952)

235 N.C. 660

STATE ex rel. UTILITIES COMMISSION v. FLEMING et al.

No. 314.

Supreme Court of North Carolina.

June 11, 1952.

*44 Harry McMullan, Atty. Gen., and John Hill Paylor, Asst. Atty. Gen., for Utilities Commission.

Fuller, Reade, Umstead & Fuller, Durham, and J. Ruffin Bailey, Raleigh, for Atlantic Greyhound Corp.

Arch T. Allen, Raleigh, for Carolina Coach Co.

Shearon Harris, Charlotte, and Vaughan S. Winborne, Raleigh, for Queen City Coach Co.

Ward & Tucker, New Bern, for Seashore Transp. Co.

DENNY, Justice.

The Bus Act of 1949, being Chapter 1132 of the 1949 Session Laws of North Carolina, in section 2 thereof, codified as G.S. § 62-121.44, contains a declaration of policy which reads as follows: "Upon investigation, it has been determined that the transportation of passengers by motor carriers for compensation over the public highways of the State is a business affected with a public interest, and is hereby declared to be the policy of the State of North Carolina among other things, to provide fair and impartial regulation of motor carriers of passengers in the use of the public highways in such a manner as to promote, in the interest of the public, the inherent advantages of highway transportation; to promote adequate economical and efficient service to all of the communities of the State by motor carriers engaged in the transportation of passengers over the public highways for compensation; to encourage the establishment and maintenance of reasonable charges for transportation services without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to encourage and promote harmony among motor carriers *45 of passengers, between such carriers and carriers of passengers by rail or water, and between all carriers of passengers and the traveling public; to foster a coordinated State-wide motor carrier service; to conform with the national transportation policy and the Federal Motor Carrier Act insofar as the same may be found practical and adequate for application to intrastate commerce; and to co-operate with other states and with the federal government in promoting and coordinating intrastate and interstate commerce by motor carriers."

Section 3 of the Act, codified as G.S. § 62-121.45, vests in the North Carolina Utilities Commission authority to administer and enforce the provisions of The Bus Act of 1949, and to make and enforce reasonable and necessary rules and regulations to that end.

In light of the declaration of policy contained in The Bus Act of 1949, and the grandfather clause contained therein, we must determine whether the appellant is entitled to charter party rights as a contract carrier.

We think it is essential to a clear understanding of the question involved in this appeal to set out certain definitions and provisions contained in The Bus Act of 1949, and to point out wherein they differ from the Federal Motor Carrier Act, 49 U.S.C.A. § 301 et seq.

A common carrier is defined in The Bus Act of 1949, as "any person which holds itself out to the general public to engage in the transportation by motor vehicle in intrastate commerce of passengers for compensation over regular routes and between fixed termini." G.S. § 62-121.46(5).

A common carrier is defined in pertinent part in the Federal Motor Carrier Act as, "any person which holds itself out to the general public to engage in the transportation by motor vehicle in interstate or foreign commerce of passengers or property or any class or classes thereof for compensation, whether over regular or irregular routes." Title 49 U.S.C.A. § 303(14).

A contract carrier is defined under our Act as, "any person not included in the definition of `common carrier by motor vehicle' which, under individual contracts or agreements, engages in the transportation by motor vehicle of passengers in intrastate commerce for compensation. Such contracts (a) must be in writing, (b) must provide for the transportation of particular persons or group of persons, (c) must be bilateral and impose specific obligations upon both the carrier and the other contracting parties, (d) must cover a series of trips in contrast to a single trip, and (e) a copy of which must be preserved by the carrier until terminated by its terms and at least one year thereafter." G.S. § 62-121. 46(6).

A contract carrier under the Federal Act is defined as, "any person which, under individual contracts or agreements, engages in the transportation (other than transportation referred to in paragraph (14) of this section and the exception therein) by motor vehicle of passengers or property in interstate or foreign commerce for compensation." Title 49 U.S.C.A. § 303(15).

It will be noted that under the Federal Act, a common carrier by motor vehicle is not limited to those engaged in transportation of passengers and property between fixed termini. Therefore, it is clear that if the appellant herein had been operating in interstate commerce instead of intrastate commerce, there could be no question about his being a common carrier with respect to his charter operations. Crescent Express Lines v. United States, 320 U.S. 401, 64 S.St. 167, 88 L. Ed. 127; Alton R. Co. v. United States, 315 U.S. 15, 62 S. Ct. 432, 86 L. Ed. 586. However, under the definition of a common carrier by motor vehicle in our Act, no common carrier by motor vehicle would be authorized to render charter service were it not for the permissive privilege to render such service contained in G.S. § 62-121.52(9), which reads as follows: "Common carriers by motor vehicle transporting passengers under a certificate issued by the Commission may operate to any place in this State, pursuant to charter party or parties, trips originating on such common carrier's authorized routes or in the territory served by its routes under such *46 reasonable rules and regulations as the Commission may prescribe."

The North Carolina Utilities Commission adopted certain rules and regulations pursuant to the authority contained in The Bus Act of 1949, effective from and after 1 October, 1950, among them being Rule 27, pertaining to charter service. The pertinent parts of Rule 27 read as follows: "The right of a common carrier to transport passengers by motor vehicle in intrastate commerce includes the right, unless restricted by its certificate or by an order of the Commission, to engage in charter service under the following conditions: (a) The service shall be limited to the transportation of a charter party as defined by Section 4(3) of the Bus Act, and at a fixed charge for the use of its vehicle or vehicles as set out in its published tariff. * * * (c) A common carrier may originate charter service at any point on its regular route, and at any point not served by another common carrier within five miles of its regular route. Points more than five (5) miles from the regular route of any common carrier shall be deemed open territory for the purpose of originating charter service, and any common carrier may originate charter service at any such point. (d) If for good cause, a carrier cannot transport a charter party when requested to do so, it shall so notify the charter party, or its representative, in writing, and shall mail the Commission a copy of such notice, in which case the Commission may arrange for such service by some other common carrier. * * *."

A "charter party," referred to in the above rule, is defined in G.S. § 62-121.46(3) as, "a group of persons who, pursuant to a common purpose and under a single contract, and at a fixed charge for the vehicle in accordance with the carrier's tariff, lawfully on file with the Commission, have acquired the exclusive use of a passenger carrying motor vehicle to travel together as a group from a point of origin to a specified destination or for a particular itinerary, either agreed upon in advance or modified by the chartering group after having left the place of origin."

As a matter of fact, a common carrier by motor vehicle was not expressly authorized by statute to render charter service, in this state, prior to the enactment of The Bus Act of 1949. And prior to such time, contract carriers were not regulated by nor under the control of the North Carolina Utilities Commission. Even so, prior to the enactment of The Bus Act of 1949, contract carriers and common carriers engaged extensively in rendering such service.

Consequently, it is not contended by the appellees that the appellant, prior to the passage of The Bus Act of 1949, was required to obtain either a franchise certificate or a contract carrier permit from the Utilities Commission in order to engage in charter service or as a contract carrier of passengers. In view of this fact, it becomes necessary to consider what rights the appellant is entitled to under the grandfather clause contained in The Bus Act of 1949. Since the appellant did not hold a franchise certificate as a common carrier to operate over designated highways and between fixed termini, as provided in G.S.C. 62, sections 105 and 106, now repealed but in effect at the time of the passage of the 1949 Act, he is not entitled to a certificate of public convenience and necessity under the terms of the grandfather clause granted in G.S. § 62-121.49.

On the other hand, he is entitled, as a matter of law, to a permit under the grandfather clause with respect to contract carriers, G.S. § 62-121.50, that will permit him to continue operating his business as a charter and contract carrier if he was engaged in bona fide operations rendering such service prior to the passage of The Bus Act of 1949 and is continuing to render such service since the passage of the Act.

The Supreme Court of the United States in interpreting the meaning and effect of the grandfather clause contained in the Federal Motor Carrier Act, in the case of Crescent Express Lines v. United States, supra, [320 U.S. 401, 64 S. Ct. 171], said: "The statute, * * * contemplated `substantial parity' between future and prior operations," citing Alton R. Co. v. United *47 States, supra. To like effect are the following decisions: United States v. Carolina Freight Carriers Corp., 315 U.S. 475, 62 S. St. 722, 86 L. Ed. 971; Goncz v. Interstate Commerce Commission, D.C., 48 F. Supp. 286; Chicago, St. P., M. & O. Ry. Co. v. United States, D.C., 50 F. Supp. 249, affirmed 322 U.S. 1, 64 S. Ct. 842, 88 L. Ed. 1093; Transamerican Freight Lines v. United States, D.C., 51 F. Supp. 405; Peninsula Corp v. United States, D.C., 60 F. Supp. 174.

In the case of McCracken v. United States, D.C., 47 F. Supp. 444, 447, the court in considering a motor carrier's rights under the grandfather clause contained in the Federal Motor Carrier Act, said: "There is often a clear conflict between the public convenience and necessity and the rights thus confirmed. However, the principle is clear that if the operator had strictly complied with the requirements of the statute, his right to operate should be recognized. * * * While the Commission had no power to take away any rights or privileges thus confirmed by Congress to an established operator, they could place such terms in the certificate as were required by public necessity to make the operations conducted thereunder consistent with operations carried on by others and convenient for the public."

The appellees contend that a contract carrier, as defined in our Act, cannot perform charter service since contracts of a contract carrier must cover a series of trips in contrast to a single trip. G.S. § 62-121.46(6) (d). The first sentence in this section defines a contract carrier as "any person not included in the definition of `common carrier by motor vehicle' which, under individual contracts or agreements, engages in the transportation by motor vehicle of passengers in intrastate commerce for compensation." Clearly this definition includes charter service, unless such service is excluded by the remaining provisions in the section or by other provisions in the Act. The appellees argue and contend that the further provisions in this section delimit the scope of service a contract carrier may perform to such an extent as to exclude the exercise of charter rights under a permit issued pursuant thereto. There might be merit in such contention with respect to an application for a permit as a contract carrier pursuant to the provisions of the Act, separate and apart from any grandfather rights contained therein. But we hold that the provisions contained in this section, which the appellees contend exclude any right to render charter service under a contract carrier permit, are definitive or regulatory and intended to be applied prospectively with respect to applications for permits as contract carriers under the general provisions of the Act, and have no bearing on or relation to the grandfather rights confirmed in the Act. Whether such provisions are valid we need not now decide. To make these definitive and regulatory provisions retroactive so as to place a limitation on the rights of the appellant under the grandfather clause contained in the Act, would be in contravention of his constitutional rights and contrary to due process of law. Article I, section 17, Constitution of North Carolina; Fifth and Fourteenth Amendments of the Constitution of the United States. Moreover, such a construction would completely nullify the grandfather clause and make it feckless.

The purpose of a grandfather clause is to protect and preserve bona fide rights existing at the time of the passage of the legislation which contains such clause. Other provisions in such Act intended to apply to applicants seeking rights thereunder, separate and apart from any grandfather rights confirmed therein, will not be permitted to impinge upon or defeat such rights as are intended to be protected by the grandfather clause.

The appellees likewise contend that the appellant had no right to amend his application as requested, due to the provision in subsection (5) of G.S. § 62-121.52, which reads as follows: "No certificate or permit shall be amended so as to enlarge or in any manner extend the scope of operations of a motor carrier without complying with the provisions of this section." The contention is without merit. In the first place the appellant was not seeking to amend a permit so as to enlarge or in any manner extend *48 the scope of his operations. He was only seeking to amend his application so there could be no question about his position with respect to his charter rights. In the second place, the protestants, with the exception of Seashore Transportation Company, never interposed the slightest objection to the appellant's application except as it related to charter rights. And counsel for the Carolina Coach Company and Queen City Coach Company stated in open court that they had no objection to the appellant's request for a contract carrier permit provided he was not permitted to render charter service thereunder.

While it would have been proper to have allowed the amendment as requested, we do not think its denial has any material bearing on the merits of the controversy. It was clearly understood by the Commission and the protestants that the appellant was seeking a contract carrier permit that would authorize him to continue his charter and contract business in the same general manner he had been operating such service prior to and since the passage of The Bus Act of 1949. Moreover, the only burden resting on the appellant was to show that he was a bona fide operator engaged in charter service and in the transportation by motor vehicle of passengers in intrastate commerce for compensation, at the time of and prior to the passage of the Act, and that he had continued to render such service since its passage; that he had the necessary equipment; was financially responsible and otherwise qualified to perform the service he seeks to render on a continuing basis. An applicant seeking to preserve rights confirmed to him in a grandfather clause, is required to show neither public convenience and necessity, nor public need. United States v. Carolina Freight Carriers Corp., supra; McDonald v. Thompson, 305 U.S. 263, 59 S. Ct. 176, 83 L. Ed. 164; Chicago, St. P., M. & O. Ry. Co. v. United States, supra; McCracken v. United States, supra.

On this record, according to the Commission's findings, the appellant has met the burden of proof required of him in every essential particular.

The appellees also contend that a contract carrier may not be authorized to render charter service because the charges to be made for such service are determined by a "tariff, lawfully on file with the Commission." They state in their brief, in support of this contention, that "only common carriers by motor vehicle file tariffs with the Utilities Commission; contract carriers by motor vehicle do not. Section 23 of the Act (G.S. § 62-121.65)." They appear to have overlooked the provisions of section 24 of the Act, G.S. § 62-121.66, which, in pertinent part, reads as follows: "(1) It shall be the duty of every contract carrier to establish and observe reasonable minimum rates and charges for any service rendered or to be rendered in the transportation of passengers or in connection therewith, and to establish and observe reasonable regulations and practices to be applied in connection with said reasonable minimum rates and charges. It shall be the duty of every contract carrier to file with the Commission, publish, and keep open for public inspection, in the form and manner prescribed by the Commission, schedules containing the minimum rates or charges of such carrier actually maintained and charged for the transportation of passengers in intrastate commerce, and any rule, regulation, or practice affecting such rates or charges and the value of the service thereunder. No such contract carrier, unless otherwise provided by this article, shall engage in the transportation of passengers in intrastate commerce unless the minimum charges for such transportation by said carrier have been published, filed, and posted in accordance with the provisions of this article." We do not construe the word "tariff," used in connection with the rates of a common carrier, to have any special legal significance that would differentiate it in effect from the word "rates," used in connection with a contract carrier. Moreover, an examination of rates or tariffs filed with the Utilities Commission for charter service by a number of common carriers, some operating in intrastate commerce and others operating both in intrastate and interstate commerce, reveals that such service *49 is now being rendered on a mileage basis per coach, or for an hourly or daily charge for a coach; and that the charges vary depending on the seating capacity of the coach. There is likewise some variance in the rates charged by different carriers.

We hold that on the undisputed evidence adduced in the hearing before the Utilities Commission, and the facts found by the Commission, which facts are amply supported by the evidence, the appellant is entitled, as a matter of law, to a contract carrier permit authorizing him to continue to operate as a charter and contract carrier on a substantial parity between his future and prior operations. The Commission may impose upon the holder of this permit any reasonable rules and regulations with respect to the operations thereunder which are now in effect or which may be adopted hereafter for the regulation of motor vehicle carriers performing similar service. In other words, he must file his rates in compliance with the provisions of G.S. § 62-121.66, and comply with all other reasonable rules and regulations of the Commission.

The order of the Commission entered 24 October, 1950, except in the respects pointed out herein, is affirmed, and the proceeding is remanded to the Superior Court to the end that it may direct the Commission to modify its order in accord with this opinion.

Modified and affirmed.