Arizona Corp. Commission v. Reliable Transp. Co.

• Decision Date: 25 November 1959
• Docket Number: No. 6742,6742
• Citation: 86 Ariz. 363,346 P.2d 1091
• Parties: , 32 P.U.R.3d 372 ARIZONA CORPORATION COMMISSION, and William T. Brooks, George F. Senner, Jr., and E. T. 'Eddie' Williams, Jr., as members of and comprising the same, Appellants, v. RELIABLE TRANSPORTATION COMPANY, a corporation, duly qualified and doing business in Arizona, and Arizona Tank Lines, Inc., an Arizona corporation, Appellees.
• Court: Arizona Supreme Court

Page 1091

346 P.2d 1091

86 Ariz. 363, 32 P.U.R.3d 372

ARIZONA CORPORATION COMMISSION, and William T. Brooks, George F. Senner, Jr., and E. T. 'Eddie' Williams, Jr., as members of and comprising the same, Appellants, v. RELIABLE TRANSPORTATION COMPANY, a corporation, duly qualified and doing business in Arizona, and Arizona Tank Lines, Inc., an Arizona corporation, Appellees.

No. 6742.

Supreme Court of Arizona.

Nov. 25, 1959.

Rehearing Denied Jan. 5, 1960.

Wade Church, Atty. Gen., Fred Kallof, Minne & Sorenson, Richard Minne and Anderson D. Ward, Lewis, Roca, Scoville, Beauchamp & Linton, John P. Frank, Phoenix, for appellants.

Langmade & Sullivan, Evans, Kitchel & Jenckes, Earl H. Carroll, Phoenix, for appellees.

BERNSTEIN, Justice.

This is an appeal by the Arizona Corporation Commission (hereinafter called the 'Commission'), from a judgment of the superior court vacating certain orders of the Commission which granted contract motor carrier permits to Cantlay & Tanzola, Inc. (hereinafter called 'Cantlay') and Pacific Intermountain Express Company (hereinafter called 'P.I.E.') (Cantlay and P.I.E. are hereinafter sometimes referred to collectively as 'appellants'). ¹

Pursuant to A.R.S. § 40-608, appellants applied to the Commission for permits to operate as contract motor carriers for the transportation of petroleum and petroleum products, in bulk, in tank transport equipment over irregular routes between all points and places in Arizona for certain designated oil companies. At the hearings on these applications, Reliable Transportation Company and Arizona Tank Lines, Inc. (hereinafter referred to collectively as 'appellees'), certificated by the Commission to transport petroleum products as intra-state common motor carriers, appeared actively in opposition. Thereafter, the Commission entered orders granting permits to Cantlay covering contracts made by it with Union Oil Company of California, General Petroleum Corporation, Shell Oil Company and the Texas Company. P.I.E. was permitted to act as contract motor carrier under contracts with Tidewater Associated Oil Company, Shell Oil Company and Richfield Oil Company.

Appellees, in accordance with A.R.S. § 40-254, commenced the instant actions to vacate and set aside the orders of the Commission. Trial was held before the superior court, without a jury, and following the filing of findings of fact and conclusions of law, judgment was entered vacating and setting aside the orders of the Commission on the ground that they were unlawful.

The Court held, in effect, that appellants were engaged in transporting petroleum products as common carriers and were, accordingly, not entitled to permits as contract motor carriers.

The Facts. ²

Prior to 1956, appellants, pursuant to a grant of authority from the Interstate Commerce Commission to operate as interstate common carriers, transported substantial volumes of petroleum products, in bulk, into this State from California. Completion in early 1956 of the interstate pipeline between El Paso, Texas and Los Angeles, California, with outlets at both Tucson and Phoenix, substantially reduced the need for interstate motor carriage of petroleum. Shipment of the petroleum into Phoenix and Tucson, and storage there in tank farm facilities did, however, require ultimate distribution by motor carriers on an intra-state basis.

In response to the changed circumstances appellants entered into subject contracts and obtained from the Commission the permits here in issue to operate as intra-state contract motor carriers. Each of the contracts, in essence, requires the carrier to transport a specified minimum gallonage of petroleum products as required by the particular oil company between enumerated points and at stipulated rates. The rates were on various occasions amended for the express purposes of keeping the service 'competitive.' Each contract imposes the risk of loss during transport upon the carrier, provides for loading, unloading, diversions and returns, and lists equipment to be used by the carrier. The contracts are for various periods up to 10 years, subject to the right of the oil company, at least, to cancel the contract on thirty days' notice.

Whether the contracts were solicited in the first instance by the carriers or the oil companies is not clear from the record but as they were all doing business formerly on an interstate common carriage basis and were in constant communication with each other, the precise source of origin of the contracts appears to be of little moment. Other than listing their names in the Phoenix classified telephone directory, appellants seem not to have advertised or solicited business within Arizona. The fact is, however, that most of the oil companies doing business in Arizona maintain their sales and traffic offices in California.

Pursuant to the contracts, appellants distributed petroleum from the oil companies to three main classes of consignees: distributors, who, as commission agents for the oil companies, maintain bulk plants and distribute petroleum products to gasoline stations and consumers; commercial accounts, which purchase the products for their own use; and gasoline stations. In each case, the routing was arranged and controlled by the oil company which paid the freight and apparently retained title to the product during transport. Each class of consignee, including the distributor, is an independent business entity and not merely an integrated division of the oil company.

Despite the contractual provisions which apparently contemplated dedication of particular equipment to each oil company, appellant carriers freely interchanged equipment to meet the needs of the oil companies.

The volume of petroleum actually transported by appellants under the contracts does not, unfortunately, appear clearly from the record either as to number of gallons or the percentage of the total intra-state transport. Although appellants testified that they suffered a considerable reduction in business when they shifted to intrastate carriage, there was no evidence of the precise amount involved or whether the total volume of petroleum transported in Arizona dropped substantially when the pipeline was completed or, indeed, whether public motor carriage was displaced in part by other means of intra-state shipment, including private carriage by the oil companies themselves. It does appear that appellants at the time of trial were serving seven of the eight major oil companies doing business in Arizona ³ and it seems fair to conclude, as did the trial court, that appellants had by the time of trial acquired a substantial portion of the available business.

In comparing appellants' former interstate business with their present intra-state business, it appears that all of the oil companies now under contract were served by appellants under their interstate authority, but it is not clear whether or to what extent appellants have lost any oil company as a customer. It is apparent that the economic function performed by appellants, their modus operandi, and the equipment used are essentially the same now as before, except that appellants now service Arizona on an intra-state basis and each of their customers is under contract. No significant difference appears between appellants' intra-state service and the service performed by other carriers operating as common motor carriers in Arizona. Although appellants may not have actively solicited the remaining petroleum carriage business available in Arizona, it may reasonably be concluded that they are ready, willing and able to undertake such business generally, even tht business presently performed by common motor carriers.

On the basis of the evidence the trial court found, that:

appelants 'by solicitation and advertising in localities where the business offices of prospective shippers of petroleum products were located, offered their intra-state transportation services of petroleum products within the State of Arizona on substantially the same basis to all shippers';

the contracts between appellants and the oil companies are 'substantially uniform' and 'do not provide any specialized service not afforded by interstate or intra-state common carriers engaged in transportation of petroleum products in Arizona';

since March 1956 appellants 'have engaged in the business of carrying petroleum products in bulk in intra-state commerce in Arizona for others as a public employment, and have held themselves out as ready to engage in the transportation of petroleum products in bulk for a substantial portion of the public requiring such service, as a business, and not as a casual occupation';

appellants have 'undertaken to carry goods in intra-state commerce of the kind to which their business is confined' and 'have transported substantial volumes of petroleum products in bulk * * * for hire';

appellants 'have provided the same service to oil companies as intra-state carriers of petroleum products as provided prior thereto by such carriers as interstate common carriers';

appellants have each transported petroleum products in bulk 'for more than one consignor' and 'to more than three consignees';

appellants 'have used the same tank truck equipment for operations under their different contract permits and * * * have not dedicated any equipment to operations under a particular contract' and 'have used the same equipment and facilities for common and contract carrier services'; and

appellants have limited their activities to the contracts in issue but have by their 'general advertising stood ready to offer such services to other similar shippers on substantially the same basis.'

The trial court concluded that the services contemplated and actually provided by appellants are those of a common carrier, that appellants have been operating in Arizona under the Commission's permits as intra-state common carriers of petroleum products in bulk, and that the...