Brown Exp., Inc. v. Railroad Commission

• Decision Date: 12 April 1967
• Docket Number: No. A--11381,A--11381
• Citation: 415 S.W.2d 394
• Parties: BROWN EXPRESS, INC., et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.
• Court: Texas Supreme Court

Page 394

415 S.W.2d 394

BROWN EXPRESS, INC., et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.

No. A--11381.

Supreme Court of Texas.

April 12, 1967.

Rehearing Denied June 21, 1967.

McKay & Avery, C. N. Avery, Jr., Austin, Mills, Shirley & McMicken, Galveston, James, Robinson, Felts & Starnes, Phillip Robinson, Austin, for petitioners.

Crawford C. Martin, Atty. Gen., Sam Kelley, Asst. Atty. Gen., Austin, Kelley, Looney, McLean & Littleton, Jackson Littleton and Rogers Kelley, Edinburg, Dean Moorhead, Austin, for respondents.

POPE, Justice.

The Railroad Commission entered an order approving a transfer of six certificates owned by Southern Plaza Express Inc. Brown Express and a number of other interested motor carriers filed a complaint with the Railroad Commission in which they asserted that the certificates should be revoked. The Commission refused to hear the complaining carriers' complaint and their evidence that the transfer was not for the public convenience and necessity. The questions presented are whether the Commission acted arbitrarily (1) in approving the transfer and (2) in overruling the complaint without hearing the proffered evidence. The trial court on appeal set aside the Commission orders. The court of civil appeals reversed the judgment of the trial court and sustained the Commission orders. 399 S.W.2d 863. We reverse the judgment of the court of civil appeals and affirm that of the district court.

Southern Plaza is the owner of intrastate common carrier certificates numbered 3739, 2054, 4014, 3589, 3605, and 2119. Southern-Plaza was formerly known as Ryder Truck Lines of Missouri but, during the course of these proceedings, changed its corporate name. On June 29, 1964, Ryder Truck Lines of Missouri (Southern Plaza) contracted to sell and transfer the six certificates to Ryder Truck Lines of Texas for $1,000. The next day the corporations filed an application with the Railroad Commission for its approval of the sale and transfer. Brown Express and other competing carriers filed a protest to Ryder's application for the approval of the sale and transfer. They also filed a complaint with the Commission in which they asserted that the six certificates should be revoked for Ryder's failure to comply with the terms of the certificates. The Commission assigned docket number A--1531 to the transfer application and dockets numbered 3839, 2054, 4014, 3589, 3605, and 2119 to the complaints. Hearing in the sale and transfer proceeding began on September 16, 1964. The protesting carriers tendered but were not permitted to introduce evidence that no public convenience and necessity for the transfer existed. Their theory was that the transfer of the certificates to Ryder Truck Lines of Texas, Inc. who would fully operate the certificates constituted the authorization of new services. The complaining carriers also offered proof of non-operation of the certificates for such a period of time that they were subject to revocation. To this offer, the hearing examiner ruled:

'THE EXAMINER: 'It has nothing to do with the sale of the certificates. I am not going to listen to the issue of dormancy. In the first place, the Railroad Commission has no such proceeding. If we did have such a proceeding, it would be a show cause proceeding and would be instituted by the Commission. As long as these certificates are shown to be in good standing, we are not going into the subject of dormancy, nor convenience and necessity. * * * This is purely a hearing on sale and transfer, and I am not going to get into the issue of dormancy.'

"There is no proceeding, as counsel well knows, before the Railroad Commission for abandonment. There is no proceeding before me at this time with reference to failure to operate, which is a statutory definition, and, consequently, I can't see where this testimony would be pertinent to the issue, and it will not be received.'

"They are not dormant, as far as the Railroad Commission is concerned. I am not going to hear any further testimony in accordance with what counsel has outlined. I don't think it is relevant to this hearing."

The complaining carriers insisted that they be granted a hearing on their complaint. On October 5, 1964, they filed a motion requesting that the complaint be set for hearing. They also filed a motion that the Commission defer action on the transfer application until the issue of the good standing of the certificates was heard and decided. They again tendered evidence in the transfer hearing that would bear upon their complaint. The Commission overruled all of these motions, and the complaining carriers were never accorded an opportunity to be heard on the complaint issue in either the transfer or complaint proceedings.

On November 12, the Commission approved the sale and transfer of the certificates. The order provided, among other things, that 'all motions, complaints or ancillary matters previously filed in connection with this application are * * * expressly overruled * * *.' On December 3, 1964, the Commission overruled the complainants' motion to set the complaint for hearing stating its reasons in the following order:

'The Commission has, subsequent to the filing of this complaint, heard the application for the sale and transfer of these certificates in another Docket and is of the opinion that this motion filed on July 7, 1964, should be in all things overruled.'

The complainants then appealed from both orders of the Commission which were heard together by the trial court.

The Commission properly excluded the evidence about public convenience and necessity. That issue was determined upon the original authorization of the certificates. Section 5 of art. 911b, Vernon's Ann.Civ.St., states the nature of the proof an applicant must make to obtain the Commission's authorization of a transfer order. The applicant must show (1) the transfer is in good faith, (2) the successor to the certificate is able and capable of continuing the operation of the equipment 'in such a manner as to render the services demanded by the public necessity and convenience * * *,' and (3) the proposed sale is for the public interest.

This court in Tarry Moving & Storage Co. v. Railroad Commission, 367 S.W.2d 322 (Tex.1963) rejected the contention that public convenience and necessity was an issue in a hearing to divide a certificate as to territory, although an additional carrier would be created, since there would be no change in the character of the service to be rendered. The court relied upon L. A. Norris Truck Line v. Railroad Commission, 245 S.W.2d 746 (Tex.Civ.App.1952, writ ref.) which held that public convenience and necessity need not be considered in an application to divide a certificate as to commodities. Only when the orders will create or establish a new service about which there has never been a finding of public convenience and necessity must the issue be determined. Railroad Commission of Texas v. Jackson, 157 Tex. 32, 299 S.W.2d 266 (1957). Upon the basis of these authorities, the Commission correctly denied the protestants' offer of proof that there was no public convenience and necessity for transfer of existing certificates.

The Commission acted arbitrarily, however, in overruling the complaint filed by the protesting carriers without granting them a hearing. See, Stotts v. Railroad Commission, 236 S.W.2d 210 (Tex.Civ.App. 1951, writ ref.); Wattenburger v. Railroad Commission of Texas, 231 S.W.2d 924 (Tex.Civ.App.1950, writ ref. n.r.e.). Since the protesting carriers operate over the routes and serve the points encompassed in the six certificates which are the subject of the transfer hearing, they are interested parties. Railroad Commission of Texas v. Red Arrow Freight Lines, Inc., 96 S.W.2d 735 (Tex.Civ.App.1936, writ ref.). Being interested parties, they could complain about the transfer of a certificate which had no standing. Sections 12(b) ¹ and 14(a) ², art. 911b recognize their right to make complaints. See, Railroad Commission v. Winkle, 57 S.W.2d 287 (Tex.Civ.App.1933), affirmed in Texas & Pacific Motor Transfer Co. v. Railroad Commission, 124 Tex. 126, 73 S.W.2d 509 (1934). The Commission's Rule 59 further recognizes an interested carrier's right to complain. ³

The Commission made its final decision that the certificates are not subject to revocation without holding a hearing and receiving evidence. Complaints against certificate holders in the past have been determined by hearings after notice. Texas & Pacific Motor Transfer Co. v. Railroad Commission, supra; Wattenburger v. Railroad Commission of Texas, supra. A denial of the right to be heard is not excused by section 12(b) which permissively states that the Commission 'may' revoke certificates if a holder discontinues operations or violates the terms of the certificate or the Commission's rules. Texas & Pacific Motor Transfer Co. v. Railroad Commission, supra. The power of the Commission to exercise its discretion after a hearing cannot be construed as the power to overrule a complaint without a hearing. The complaining carriers endeavored to get a hearing both in the transfer hearing and the complaint proceedings. The Commission first excluded the complainants' evidence in the transfer hearing and then overruled their motion for a complaint hearing on the grounds that the order in the transfer hearing rendered the issue immaterial. Evidence that the certificates are subject to revocation is material to the issue of the good standing of the certificates but has not yet been considered. The Commission's refusal to hear the complaining carriers' proof was arbitrary. Railroad Commission v. Alamo Express, Inc., 158 Tex. 58, 308 S.W.2d 843 (1958).

The Commission says that its departmental practice is to hear transfer applications without regard to a complaint which attacks the standing of the certificate in question. Departmental practice is important when an...