Betterman v. American Stores Co.
| Decision Date | 27 March 1951 |
| Citation | 367 Pa. 193,80 A.2d 66 |
| Parties | BETTERMAN v. AMERICAN STORES CO. |
| Court | Pennsylvania Supreme Court |
Rehearing Denied April 17, 1951. [Copyrighted Material Omitted]
Action by Gustave Betterman against the American Stores Company by which plaintiff, a contract motor carrier, sought to recover in assumpsit against defendant for the cost of operation plus a reasonable profit guaranteed him under a contract with the defendant for the use of plaintiff's truck wherein the defendant guaranteed compensation at least equal to the full cost of operation of a typical or average operator of the same class as carrier for similar service plus a reasonable profit. Plaintiff recovered a verdict of $16,050.13 in the Court of Common Pleas of Cambria County, Ivan J. McKenrick at No. 386, December Term 1947, and defendant appealed from a judgment on the verdict which was entered following the lower court's refusal to enter a judgment non obstante veredicto or to grant a new trial. The Supreme Court at No 223 March Term 1950, Bell, J., held that the lower court properly construed the contract and that the plaintiff's evidence was sufficient to establish his case.
Judgment affirmed.
George M. Spence and Spence, Custer, Saylor & Wolfe, all of Johnstown, Joseph Gilfillan, Gilfillan, Gilpin & Brehman, Robert H. Shertz, and Shertz, Barnes & Shertz, all of Philadelphia, for appellant.
Philip N. Shettig and Shettig & Swope, all of Ebensburg, Frank A. Sinon and Rhoads & Sinon, all of Harrisburg, for appellee.
Before DREW, C. J. and STEARNE, JONES, BELL, LADNER and CHIDSEY, JJ.
Plaintiff, a contract carrier by motor vehicle, brought an action of assumpsit against defendant for the cost of operation plus a reasonable profit guaranteed him under a written contract dated August 30, 1937, and recovered a verdict of $16,050.13. Defendant appealed from (the judgment on the verdict which was entered following) the lower court's refusal to enter a judgment n.o.v. or to grant a new trial. What is the proper construction of the contract; was the contract legal; was plaintiff's evidence sufficient to establish his case?-These are the most important questions involved in this appeal. From 1200 pages of testimony we shall briefly summarize the important facts.
Plaintiff was employed by defendant as a truck driver commencing in 1933. In 1936 defendant persuaded plaintiff and other truck drivers of defendant to purchase their own trucks and become contract carriers, orally promising plaintiff (and others) that if they did so they would be given steady work and would make a profit and that their earnings would be considerably increased over those they received as ordinary truck drivers. On August 30, 1937, plaintiff and defendant entered into the aforesaid written contract which was prepared by counsel for defendant and was subsequently filed by counsel for defendant with the Public Utility Commission of Pennsylvania. A similar contract was prepared by defendant and executed by it and 31 other truck drivers of defendant at approximately the same time. The contract was for a period of one year, renewable automatically for a further term of one year and so on from year to year unless 15 days' written notice was given by either party of his or its intention to terminate the same. The agreement provided that the plaintiff (carrier) would furnish a truck suitable to defendant; the he would be subject to call at any time; that he would personally drive the truck (in the absence of sickness, etc.); that his truck would be available for loading and transporting defendant's merchandise at such times and places as defendant should designate; that the transportation was to be within the State of Pennsylvania and the contract was to be subject to the laws, rules and regulations of the proper regulatory bodies. There then followed this very important provision with respect to compensation:
It will be instantly noted that the compensation was not fixed but, because of the indefinite and uncertain services to be rendered by the carrier, the compensation was to vary with a number of varying factors and a cost-plus profit was guaranteed. The importance of this cost-plus clause in the construction of the contract and the question of compensation will hereinafter more fully appear.
Based upon the aforesaid contract, plaintiff, through defendant's counsel, filed an application with the Pennsylvania Public Utility Commission for a contract carrier's permit, which the Commission granted on November 16, 1937 . On September 30, 1940, defendant, on behalf of plaintiff, filed with the Pennsylvania Public Utility Commission a schedule of minimum rates effective November 16, 1937. this schedule contained the rates based on weight and mileage on a zone basis for two types of commodities . One of the obvious purposes was to provide plaintiff with some regular compensation for his work as it was performed.
The court below, in a detailed, comprehensive and very able opinion, held-and we agree-that under said contract of 1937 plaintiff was entitled to ‘ the full cost of operation * * * plus a reasonable profit.’
The conduct of both plaintiff and defendant clearly indicates that the parties believed and intended the contract of 1937 to be binding. Not only did the plaintiff so testify, but (a) in 1943 defendant brought an action against plaintiff upon the aforesaid contract of 1937 in which it averred that said contract was still in full force and effect; and (b) on February 1, 1944, defendant and plaintiff entered into a supplemental written agreement amending (in immaterial matters) ‘ the present contract entered into between the parties hereto dated the 30th day of August 1937 ’ and reaffirming and ratifying said contract of August 30, 1937. How then is it possible for defendant to now maintain that the parties intended to abrogate the contract of 1937 and supersede it by the rates filed with the Pennsylvania Public Utility Commission?
Defendant nevertheless contends that the minimum, maximum and only compensation legally payable to plaintiff is that which is in accord with the schedule of rates or charges filed with the Pennsylvania Public Utility Commission; and that (an agreement to pay or) the payment of a larger sum would be illegal. No authority is cited, and we have found none, to support defendant's contention. On the contrary, the Pennsylvania Public Utility Code throughout, and especially in Section 802(a), 66 P.S. § 1302(a); Section 809(a), 66 P.S. § 1309(a); and Section 810, 66 P.S. § 1310, all refer to minimum rates. For example, Section 802(a) provides: ‘ The commission shall have the power * * * To regulate contract carriers by motor vehicle * * * and to that end the commission may prescribe minimum rates which are just and reasonable * * *.’ Section 809(a) provides: Section 810 empowers to Commission upon complaint or its own motion to ‘ prescribe such minimum rates '. No authority is conferred upon the Commission to fix maximum, or maximum and minimum rates of a contract carrier. It follows, therefore, that an agreement of a contract carrier which provides for minimum and maximum rates (cost plus reasonable profit) is not a violation of the Pennsylvania Public Utility Code, especially since in no event could the rates charged by the contract carrier fall below the schedule of minimum rates filed with the Commission.
The purpose of prescribing minimum rates for contract carriers by the Pennsylvania Public Utility Commission was to protect common carriers from cutthroat competition and price-cutting on the part of the contract carriers, as well as to protect the contract carriers from cutthroat competition and price-cutting among themselves. It was felt, and properly so, that such price-cutting or the charging of an unreasonably low minimum rate would likely result in the deterioration of equipment and the increase of hazards to the public.
This case was further complicated by the fact that plaintiff claimed for the cost of operation plus reasonable profit for merchandise transported by him outside of Pennsylvania under the guarantee clause of the aforesaid contract of 1937 . Defendant prepared and filed with the Interstate Commerce Commission an application for a license for plaintiff, together with an accompanying contract made between defendant and plaintiff dated December 4, 1939 . Defendant in this contract guaranteed plaintiff 500,000 pounds of merchandise...
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