Hough-Wylie Co. v. Lucas

Annotate this Case

72 S.E.2d 11 (1952)

236 N.C. 90


No. 522.

Supreme Court of North Carolina.

August 22, 1952.

*13 Taliaferro, Clarkson & Grier, Charlotte, for plaintiff, appellee.

Miller & Moser, Asheboro, for defendants, appellants.

JOHNSON, Justice.

The demurrer filed by the lessors presents for decision the question whether a lease of intrastate motor vehicle common-carrier operating rights, approved by the Utilities Commission, releases the lessors, holders of the certificate of convenience and necessity, from liability for the non-performance of franchise duties or torts incident to operations.

Decision turns in large part on construction and application of the provisions of Chapter 1008, Session Laws of 1947, codified as G.S. §§ 62-121.5 through 62-121.42, known as the North Carolina Truck Act, hereinafter referred to as the Truck Act.

Subject to prescribed limitations, this Act empowers the Utilities Commission to grant to qualified applicants certificates of convenience and necessity to engage in the business of transporting property in intrastate commerce on the public *14 highways of this State, G.S. §§ 62-121.10, 62-121.11, and 62-121.13, and, subject to certain specified exceptions, the Act provides that no person shall engage in intrastate transportation of property by motor vehicle "until and unless such person shall have applied to and obtained from the Commission a certificate or permit authorizing such operations * * *." G.S. § 62-121.15.

A certificate so issued by the Utilities Commission to a common carrier confers upon the holder the right and authority to operate on the routes and in the areas designated in the certificate. G.S. § 62-121.16. It also confers upon the holder the protective benefits of the elimination of unauthorized competition and the prevention of infringement upon the operating rights granted by the certificates. See G.S. §§ 62-121.9, 62-121.27, and 62-121.34.

However, the Act also provides that "there shall, at the time of issuance and from time to time thereafter, be attached to the privileges granted by the certificate such reasonable terms, conditions, and limitations as the public convenience and necessity may from time to time require, * * *." G.S. § 62-121.16.

It follows, then, that inherent in the acceptance of a certificate and the exercise of the rights and privileges evidenced thereby, is the correlative obligation to serve the shipping public faithfully in accordance with reasonable rules and regulations prescribed by the Utilities Commission, G.S. §§ 62-121.6, 62-121.9, and 62-121.16, and in conformity with the requirements of other provisions of the Truck Act prescribing duties to be performed by the carrier for the protection of the shipping public, among which is the requirement that all C. O. D. moneys collected by a motor carrier shall be held in trust, for prompt remittance to the shipper as required by G.S. § 62-121.37, which is in part as follows: "Property received by any motor carrier to be transported in intrastate commerce and delivered upon collection on such delivery and remittance to the shipper of the sum of money stated in the shipping instructions to be collected and remitted to the shipper, and the money collected upon delivery of such party, is hereby declared to be held in trust by any carrier having possession thereof or the carrier making the delivery or collection, * * *."

Manifestly, then, so long as the holder of a certificate of convenience and necessity continues to enjoy the benefits of the operating rights evidenced by the certificate, such holder may not by lease or other device escape the obligation of performing faithfully the correlative duties due the public or evade liability for nonperformance.

True, it appears from the complaint in the instant case that the lease of the operating rights was approved by the Utilities Commission as required by the provisions of G.S. § 62-121.26. But this statute does not confer upon the Utilities Commission the power to release the holder of a certificate of convenience and necessity from liability for the nonperformance of public duties incident to the certificate. And the Commission possesses no such power in the absence of a delegation thereof by the Legislature.

Besides, it does not appear that the Utilities Commission in approving the lease attempted to release the lessors from such liability, nor does it appear that the lessors sought release or expected to be released. On the contrary, it affirmatively appears from the complaint that the Commission contemplated that the holders of the certificate should remain liable for the nonperformance of the franchise duties owed the shipping public.

We conclude, therefore, that the public policy of this State, as expressed in the Truck Act, will not permit one to acquire from the Utilities Commission a franchise to operate as such common carrier and then, while enjoying the benefits there-of, absolve himself from liability for the nonperformance of the public duties incident to the franchise by lease of operating rights.

Thus, taking the complaint as true, as is the rule on demurrer the lessorholders of the certificate of convenience and necessity are liable and answerable jointly *15 with the lessee-operator to the plaintiff shipper for losses sustained by reason of wrongful conversion of C. O. D. moneys collected by the lessee-operator company.

While this precise question does not appear to have been presented heretofore to this Court for determination, decision here reached is supported in principle by wellconsidered decisions of other courts of last resort. Moody v. Consolidated Coach Corp., 248 Ky. 180, 58 S.W.2d 375; Swallow Coach Lines v. Cosgrove, 214 Ind. 532, 15 N.E.2d 92; Emerson v. Park, Tex.Civ. App., 84 S.W.2d 1100; Frank Martz Coach Co. v. Hudson Bus Transp. Co., 44 A.2d 488, 23 N.J.Misc. 342. See also: Blashfield, Cyclopedia of Automobile Law and Practice, Perm.Ed., Vol. 1, Part 2, Sec. 491, p. 299, and Vol. 4, Part 1, Sec. 2155, pp. 86 and 87; Aetna Casualty & Surety Co. v. Prather, 59 Ga.App. 797, 2 S.E.2d 115; Dixie Stage Lines v. Anderson, 222 Ala. 673, 134 So. 23; Attorney General ex rel. Corporation Com'r v. Haverhill Gas-Light Co., 215 Mass. 394, 101 N.E. 1061; 60 C.J. S., Motor Vehicles, § 84(b), pp. 268 and 269, and § 84(c), p. 273; 23 Am.Jur., Franchises, Sections 6 and 33.

Decision here reached is also in accord with the policy and principles of our law as applied to common carriers by rail. Our decisions holdand they are in accord with the overwhelming weight of authority elsewherethat a common carrier by rail may not, without explicit governmental sanction, divest itself of liability for violations of contracts or of its general duty to the public, or for torts incident to operation of the road, by leasing it to another. Aycock v. Raleigh & A. A. L. R. Co., 89 N.C. 321; Logan v. North Carolina R. Co., 116 N.C. 940, at page 947, 21 S.E. 959; Pierce v. North Carolina R. Co., 124 N.C. 83, at page 93, 32 S.E. 399, 44 L.R.A. 316. cf. Phelps v. Windsor Steamboat Co., 131 N.C. 12, 42 S.E. 335.

In Aycock v. R. R., supra, with Smith, C. J., speaking for the Court, it is said: "The defendant company, leasing the use of its road or permitting the use of it by another company, remains liable for the consequences of the mismanagement of the train in charge of the servants of the latter, and the injury thence resulting, to the same extent as if such mismanagement was the act or neglect of its own servants operating its own train."

In Logan v. R. R., supra [116 N.C. 940, 21 S.E. 961], it is stated: "`The lessor company,' * * * `remains liable for the performance of public duties to private parties for the nondelivery of goods received by it for delivery, and for all acts done by the lessee in the operation of the road, notwithstanding the lease is authorized by the lessor's charter.' * * * No matter how many leases and subleases may be made, the law attaches to the actual exercise of the privilege of carrying passengers and freight the compensatory obligation to the public to use ordinary care for the safety both of persons and property so transported. * * * On the other hand, the carrier, who simply substitutes, with the consent of the state, another in his place, cannot establish his own right of exemption from responsibility for the wrongs of the substitute, unless he can show not only explicit authority to lease the property, but to rid himself of such responsibility."

We have not overlooked the decision in Anthony v. American Express Co., 188 N.C. 407, 124 S.E. 753, 36 A.L.R. 460, cited and relied upon by the appellants. In that case it is held that no common law duty devolves upon a common carrier to act as the collecting agent of the shipper in respect to money collected on a C. O. D. shipment, and that therefore the obligation of the carrier to collect and remit rests entirely on contract, express or implied, between the shipper and the carrier. Thus on the basis of the rule applied in the Anthony case, the appellants insist that in the absence of contractual privity between the shipper and the lessors, the latter may not be held answerable for the alleged default of the lessee operating company in failing to remit C. O. D. moneys due the plaintiff shipper.

However, the rule applied in Anthony v. Express Co., supra, is inapplicable here, for the reason that the express provisions of the Truck Act enjoins upon motor carriers the duty and obligation to hold in trust and *16 faithfully remit to the shipper the proceeds of C. O. D. shipments. G.S. § 62-121.37. And this duty, by virtue of another section of the Truck Act, being "attached to the privileges granted by the certificate", G.S. § 62-121.16, may not be separated therefrom by the expedient of a lease of operating rights.

The judgment below is affirmed.