Barney v. Board of Railroad Commrs. , 93 Mont. 115 ( 1932 )

I am not able to subscribe to the majority opinion as applied to the statute under consideration. I concede that much of the opinion announces correct principles of law when applied to a statute that is in truth and in fact one for the purpose of regulating the use of public highways in the interests of public safety, or the preservation of the highways, but the Act under consideration before us is not, in my opinion, such an Act, and in consequence the majority opinion is rested upon a false premise as to the purpose of our statute.

In considering the question of the validity of the Act it must be remembered that it is challenged, not by one who is complaining of its regulatory provisions, but by one who is denied the right to use the highways in question regardless of his willingness to abide by all regulations that may be imposed. In other words, we are concerned here only with the right of exclusion upon the ground of public convenience and necessity. Conceding that it is competent for the legislature to exclude private carriers from the use of the highways in order to protect the highways from excessive use or in the interest of public safety, the Act before us has no such purpose.

It is true that the title of the Act contains the preliminary declaration that it is one providing for the "Supervision, Regulation and Control of the Use of the Public Highways." Also section 22 of the Act, in an effort to proclaim that the Act is one which it is not, declares: "This Act is intended primarily as a regulation of the public highways of the State of Montana." It will not do, of course, to say that the insertion of these words in section 22 was an idle and useless formality. They were put there for some reason. If the Act otherwise disclosed its purpose to be that of regulating the use of the public highways, of course this declaration would be useless. But since there was nothing else in the Act from which it would be recognized or identified as one to regulate the use of the highways, this declaration of purpose was obviously incorporated in the Act with the hope that such declaration would save the Act. But the question before us is: "Are the courts bound by this declaration of purpose when it is the only thing in the Act pointing in the direction of the claim that it was designed as a means of regulating the use of the highways in the interest of public safety or for the preservation of the highways?" The answer must be in the negative. (Foster-Fountain Packing Co. v. Haydel,278 U.S. 1, 49 Sup. Ct. Rep. 1, 73 L. Ed. 147.)

Doubtless it is competent for the legislature to make a declaration of purpose entitled to consideration by the courts when the body of the Act contains provisions bearing out the avowed purpose, but I know of no rule of law which permits the legislature to make a binding declaration of purpose for a certain Act, either in the title or body of the Act, or both, different from that which the body of the Act plainly reveals, as does Chapter 184, Laws 1931.

In prescribing what the board shall take into consideration in passing upon the propriety of issuing or withholding a certificate of public convenience and necessity, the statute provides that: "The board shall give reasonable consideration to the transportation service being furnished or that will be furnished by any railroad, or other existing transportation agency, and shall give due consideration to the likelihood of the proposed service being permanent and continuous throughout twelve (12) months of the year and the effect which such proposed transportation service may have upon other forms of transportation service which are essential and indispensable to the communities to be affected by such proposed transportation service or that might be affected thereby." (Sec. 11, Chap. 184, Laws of 1931.)

The real purpose of the Act is again reflected by section 3 which provides that, in fixing the tariff or rates to be charged by Class A and Class B carriers, the board shall take into consideration "the effect of such tariff and rates upon other transportation agencies, if any, and as far as possible avoid detrimental or unreasonable competition with existing railroad service or service furnished by a motor carrier."

And section 17 of the Act reveals something of its actual purpose. That section makes provision for the creation of a special fund to be made up of the fees and charges collected under the Act, and states: "Such fund shall be available for the purpose of defraying the expenses of administration of this Actand the regulation of the businesses herein described."

It will be noted that there is not a suggestion in the Act that the board, in considering whether a certificate of public convenience and necessity should issue, should take into consideration the amount of traffic on the highway, the number of motor-trucks already using it, the damage likely to result to the highway if the proposed service be allowed, or any other matter from which it can be said that the design in authorizing the commission to exclude private carriers from the use of the highways is to regulate the use of the highways. There is nothing in the Act that has to do with the speed of motor-trucks, their size, the weight of loads they may carry, the qualifications of the drivers, or the number of trucks that may be used on any particular road. The Act is not in any sense one to regulate the use of the highways.

As applied to the plaintiff the Act is not regulatory, but prohibitory. It has no other purpose than that of regulating competition between carriers. It was rail carriers who made the protest here. Those protests were not upon the ground that the highways were being subjected to excessive burdens, nor that the public safety was endangered by use of the trucks. We are advised by the record that the protests and objections were "that either or both of these objectors were engaged in furnishing transportation service for goods, wares and merchandise by railway and express over all of the territory covered by the applications of the plaintiff and that the transportation business was insufficient in the territory covered by the applications to justify the existence of new and additional carrier facilities and was being adequately and conveniently handled and the public convenience and necessity did not require the proposed service and that the transportation facilities furnished by the railways and the said express company would be impaired by reason of the loss of revenues resulting from the granting of said applications."

So far as we can tell there may be no motor-trucks other than the plaintiff's that use the highways in question for the purpose of transportation of freight for hire. I confess, moreover, that I am not able to follow the logic of the majority wherein they find additional evidence of the purpose of this Act to be that of highway regulation from section 25 thereof, which provides: "This Act shall not repeal any of the existing law or laws relating to motor-propelled vehicles and owners and operators, or requiring compliance with any condition for their operations." This the majority say (and I think correctly) has reference to sections 1742 to 1763, which have to do with speed, chauffeurs' licenses, traffic regulation of automobiles and motor vehicle registration, all of which relate to the use of the highways. To me it seems a novel doctrine that the validity of an Act depends in any measure upon statutes already in force and which are unrepealed by the Act assailed.

Nor can I see how sections 1742 to 1763, which relate to the use of the highways can be resorted to as evidencing a like purpose for the enactment of Chapter 184, Laws of 1931, simply because the latter expressly states that it does not repeal the former.

To my mind section 25 indicates that the legislature was satisfied with the existing laws (secs. 1742 to 1763) relating to the use of the highways, and therefore did not, by Chapter 184, either amend, alter, repeal or in anywise change the previously existing laws on that subject. The fact that no change was made by Chapter 184, by implication or otherwise, in the existing laws having to do with the use of the highways, is fairly conclusive that Chapter 184 has to do with an entirely different subject. As I view it, section 25 refutes rather than sustains the claim that Chapter 184 is a measure designed to regulate the use of the highways.

In all of the cases cited in the majority opinion as sustaining statutes asserted to be similar to ours, the statutes under consideration were so essentially different from ours, that they are not authority in this case in determining the validity of our statute. Thus in the case of Schwartzman Service, Inc., v. Stahl, (D.C.) 60 F.2d 1034, the court had before it the Missouri statute found in the Laws of Missouri 1931, page 304 (Mo. Stats. Ann., secs. 5264-5280). That Act was one to regulate the use of the highways. It empowered the Public Service Commission to promulgate safety rules and regulations and specified that those regulations shall include the following: "(a) Every motor vehicle and all parts thereof shall be maintained in a safe and sanitary condition at all times. (b) Every driver employed by motor carriers or contract haulers shall be at least twenty-one years of age, of good moral character, and shall be fully competent to operate the motor vehicle under his charge. (c) Accidents arising from or in connection with the operation of motor carriers or contract haulers shall be reported to the commission in such detail and in such manner as the commission may require. (d) The commission shall require and every motor carrier or contract hauler shall have attached to each unit or vehicle such distinctive marking as may be adopted by the commission. (e) No vehicle coming within the provisions of this Act shall be operated at a speed in excess of forty (40) miles per hour." It also provided that in determining whether it should issue a permit the commission shall give consideration to the kind and character of vehicles permitted over the highway.

The long quotation from Northern P. Ry. Co. v. Bennett,83 Mont. 483, 272 P. 987, had relation to a different statute (Chap. 154, Laws of 1923), and one which did not apply to private carriers. (Stoner v. Underseth, 85 Mont. 11, 277 P. 437.)

The Oklahoma statute is the next one claimed by the majority opinion to be like our own. It is found in Chapter 113, Laws of 1923, and was under consideration in Ex parte Tindall,102 Okla. 192, 229 P. 125. This Act bore evidence on its face of being one designed to promote the safety of the public and the preservation of the highways. Section 8 of the Oklahoma Act gave the Public Service Commission (there called the Corporation Commission) authority to promulgate safety rules and regulations, and required that such rules and regulations should embrace certain specified matters similar to those contained in the Missouri statute above quoted, as well as others of the same general tenor.

Reliance is placed upon the case of Sproles v. Binford,286 U.S. 374, 52 Sup. Ct. Rep. 581, 76 L. Ed. 1167, upon the assertion that the statute there considered had the same ultimate purpose as Chapter 184. The most cursory examination of that statute, a copy of which is set forth in the footnotes in286 U.S. 380, 52 Sup. Ct. Rep. 581, 582, 76 L. Ed. 1174 et seq., will disclose at once that that statute had to do with the weight and size of the vehicles permitted to use the highways, the weight and size of the loads permitted to be hauled, and in other respects shows that it was in truth and in fact a piece of legislation in the interest of public safety and the preservation of the highways.

The case of Riley v. Lawson, (Fla.) 143 So. 619, is relied upon and quoted from at great length. But the statute is wholly different from ours. The statute there involved required the Railroad Commission, in determining whether a certificate of public convenience and necessity should issue to a private carrier, to take into consideration "the effect of the granting of such certificate may have upon transportation facilities within the territory sought to be served by said applicant, and/or congestion of traffic on the highways, and/or safety of traffic moving on the highways under such operations in relationship to other private and/or public traffic permitted by law to move over the same roads or in the same territory, and also the effect upon transportation as a whole within said territory." It also contained three printed pages dealing with the size of trucks permitted, the weight of loads, the speed of trucks and other safety provisions. There is no similarity between that Act and Chapter 184.

The Maryland statute is claimed in the majority opinion to be very similar to ours. It was under consideration in RutledgeCo-op. Assn. v. Baughman, 153 Md. 297, 138 A. 29,56 A.L.R. 1042. That Act is different fundamentally from ours. In the first place it related only to motor vehicles used in the "public" transportation of property, and had nothing to do with private carriers. It contained a section declaring in effect that transportation by a co-operative association for its stockholders shall be considered "public transportation." The court in theBaughman Case simply held that it was proper for the legislature to characterize such transportation as public transportation within the meaning of the Act. True, the opinion in that case contains dictum as to the authority of the legislature over private carriers, but this dictum is predicated upon an Act designed for the safety of the public and the preservation of the highways of the state, and the case is not any authority that a statute such as Chapter 184 could be upheld as one having this purpose. The Texas statute involved inStephenson v. Binford, (D.C.) 53 F.2d 509, affirmed by the United States supreme court on December 5, 1932, 53 Sup. Ct. Rep. 181, 77 L.Ed. ___, was also one containing provisions clearly designed to protect the highways and the public safety.

The legislature of this state in its wisdom has not yet seen the necessity of adopting legislation of the more populous states, designed to limit the number of trucks on its highways to prevent congestion of traffic. Also, thus far the legislature of this state, so far as the damage to the highways is concerned, evidently is satisfied that this is offset by the fees exacted from owners of motor-trucks and the contributions made by them in defraying the cost of building and maintaining the roads (seeArps v. State Highway Com., 90 Mont. 152, 300 P. 549) by the exaction of a tax of five cents per gallon on gasoline, which, though imposed upon dealers in gasoline, is passed on directly to those who use gasoline in propelling vehicles over the highways.

The Act in question here can have no other purpose than that of curbing, or excluding, motor traffic only when it works to the detriment of another carrier, not the highway. There is no limitation in the Act as to the number of motor-trucks that may be permitted on any highway when and if their service increased the revenues or business of other carriers in the territory.

The Act under consideration here, in so far as it requires a certificate of public convenience and necessity to be measured by the effect that the issuance of the certificate would have upon existing transportation service, comes within the rule stated inBuck v. Kuykendall, 267 U.S. 307, 45 Sup. Ct. Rep. 324, 326,69 L. Ed. 623, 38 A.L.R. 286, where the court, in speaking of such certificate, says: "Its primary purpose is not regulation with a view to safety or conservation of the highways, but the prohibition of competition. It determines, not the manner of use, but the persons by whom the highways may be used. It prohibits such use to some persons, while permitting it to others for the same purpose and in the same manner."

The legislature, of course, has the right to regulate competition or to prohibit it, by authorizing the commission to refuse a certificate of public convenience and necessity when dealing with public utilities, and where it has the correlative right to regulate and fix the rates and charges. But it has no right to deny, or unreasonably curtail, the right to engage in a lawful private business. (See New State Ice Co. v. Liebmann,285 U.S. 262, 52 Sup. Ct. Rep. 371, 374, 76 L. Ed. 747, decided March 21, 1932.) In that case it is said: "There is no question now before us of any regulation by the state to protect the consuming public either with respect to conditions of manufacture and distribution or to insure purity of product or to prevent extortion. The control here asserted does not protect against monopoly, but tends to foster it. The aim is not to encourage competition, but to prevent it; not to regulate the business, but to preclude persons from engaging in it. There is no difference in principle between this case and the attempt of the dairymen under state authority to prevent another from keeping cows and selling milk on the ground that there are enough dairymen in the business; or to prevent a shoemaker from making or selling shoes because shoemakers already in that occupation can make and sell all the shoes that are needed. We are not able to see anything peculiar in the business here in question which distinguishes it from ordinary manufacture and production."

If this Act can be sustained, then I know of no reason why the legislature may not, if it sees fit, authorize the Railroad Commission to prohibit transportation by airplane or pipeline wherever such service is found to affect the earnings of the railroads, and thus confer a monopoly upon transportation by railroads.

In my opinion the requirement that a private carrier must obtain a certificate of public convenience and necessity before being permitted to use the public highways of the state not being a regulation of the use of the highways, but a prohibition of competition, and therefore a measure designed to regulate the business of those using the highways, cannot stand.

But if, by a tortured construction of the Act, we treat it as one having for its purpose the regulation of the use of the highways, it is still invalid when used as a pretext for excluding contract carriers from the highways because it is unreasonably discriminatory.

It is fundamental that, "whatever rules and regulations are made in connection with the use of highways should be reasonable, operate with equality, and have some tendency to accomplish the end in view." (Weaver v. Public Service Com., 40 Wyo. 462,278 P. 542, 548.) It must be conceded that under the Act those with whom plaintiff contracts, instead of hiring plaintiff to transport their property, could use their own trucks of the identical model, size and weight as plaintiff's, to haul the same property over the identical roads. The danger to the public safety and the damage to the highways would be identical in either case. The Act, as applied here, excludes the one and not the others from the use of the highways. There is no basis for the distinction when the right is assumed to be exercised under the authority to regulate the use of highways.

The distinction between the two classes of carriers, those operating under contract, and those carrying property which is owned by the carrier, admits of no diversity of treatment to the extent of excluding the one from the highways, and not the other. The public safety is in like manner endangered and the highways as much damaged by carriers hauling their own products as by those operating under contract.

What was said by the supreme court of Wyoming in Weaver v.Public Service Com., supra, is here pertinent. The court in that case said: "If it be true, as intimated by some of the cases, that a person or corporation carrying on his or its own business may not be forbidden the use of the public highways in a reasonable way, but that a private carrier for hire may be, and that arbitrarily in every case, then some strange results would follow. A groceryman in a city could not be prevented from delivering his goods to his various patrons through an employee; but no one would be permitted to make an independent contract with such groceryman to do so as a private carrier. A company operating a sugar factory at Torrington, or some other place, would be permitted to contract to purchase sugar beets at the various farms, and through one of its employees haul the beets over the public highways of this state; but no one would be permitted to make an independent contract with the factory to haul them as a private carrier. Other illustrations might be multiplied. An independent calling as a private carrier could in that manner be arbitrarily forbidden, and the only way in which it could be enjoyed would be by becoming a servant of some employer. If the legislature has that arbitrary power, then we have reverted to the time when it, like a Roman emperor, may, by the stroke of a pen, create serfs and affix them to the soil."

Freedom of contract is the general rule and is guaranteed by the Constitution, and restraints the exception. And a state may not, under the guise of protecting the public by the exercise of its police power, arbitrarily interfere with private business or prohibit lawful occupation. (State v. Gateway Mortuaries,Inc., 87 Mont. 225, 287 P. 156, 68 A.L.R. 1512.)

In my opinion the Act in question transcends the power of the legislature as limited by the fourteenth amendment to the United States Constitution, and the learned trial judge properly overruled the demurrer to the complaint and properly entered judgment for plaintiff.