Chicago & NW Ry. v. Buckingham

Citation69 S.D. 1,5 N.W.2d 729
Decision Date12 October 1942
Docket Number8439
PartiesCHICAGO & NW RY. CO., Charles P. Megan, trustee, Respondent, v. BUCKINGHAM TRANSPORTATION COMPANY OF COLORADO, a corporation, O. L. Buckingham, d/b/a Buckingham Transportation Company of St. Paul and Rapid City, the Dakota Transportation Company, a corporation, and the Regulated Motor Carriers of South Dakota, a voluntary association, Appellants
CourtSupreme Court of South Dakota

Appeal from Circuit Court, Hughes County, SD

Hon. John F. Hughes, Judge.

#8439--Affirmed.

Perry R. Moore, Minneapolis, Minn.,

M. Q. Sharpe, Kennebec, SD

Attorneys for Appellants.

Irwin A. Churchill, William S. Churchill, Huron, SD

P. F. Gault, Chicago, Ill.,

Attorneys for Respondent.

Opinion filed October 12, 1942 [69 SD 3, 4,

5]

SMITH, J.

The Public Utilities Commission granted the application of Charles P. Megan as Trustee of the property of the Chicago and North Western Railway Company for a certificate of public convenience and necessity as a Class A motor carrier to, from and between Pierre and all towns and cities located on its railroad west of Pierre in South Dakota. SDC 44.04. Upon appeal to the circuit court (see SDC 52.0502), the order of the Commission was affirmed. Under SDC 52.0505 certain of the protestants have brought the proceedings here for review.

From the outset the appealing protestants have urged that the Public Utilities Commission is without power or jurisdiction to grant such a certificate of convenience and necessity to a railroad company, for the reason that the business of operating as a motor carrier over the public highways is ultra vires the corporate powers of such an applicant. The commission was of the view that such operations, if conducted as a reasonably necessary supplement to railroad services, were intra vires. The circuit court concluded that the legal capacity of the applicant was not in issue. We share the opinion of the circuit court.

In pressing this contention, protestants assume that such motor carrier operations, even though carried on as incidental to or auxiliary of normal railroad service, are not within the powers of a railroad corporation, and reasoning from the statutory direction of SDC 44.0410 that the commission “give due consideration to the likelihood of the proposed service being permanent”, submit that the commission acted unreasonably in granting a certificate to such an applicant because its operations might at any time be halted at the instance of the state or of a’ stockholder because ultra vires in character.

The United States Supreme Court was twice confronted with a similar contention dealing with the powers and duties of the Interstate Commerce Commission and held that Congress did not intend to burden that commission with the duty of passing on the powers of the corporate applicant before granting assent to the construction of an extension, Claiborne-Annapolis Ferry Co. v. United States et al., 285 US 382, 52 SCt 440, 76 LEd 808, or before granting permission to one carrier to acquire control of another, New York Central Securities Corporation v. United States, 287 US 12, 53 SCt 45, 77 LEd 138. Congress directed the Interstate Commerce Commission to find that “the applicant is fit, willing and able properly to perform the services proposed”, before granting an application for a certificate of convenience and necessity to operate as a motor carrier in interstate commerce. 49 USCA § 307(a). Notwithstanding such direction, predicated upon ClaiborneAnnapolis Ferry Co. v. United States, supra, the Interstate Comerce Commission has concluded that it is not competent to inquire into the powers of a corporate applicant. Seaboard Air Line Railway Co. Motor Operation, Vol. 17 M.C.C. (I.C.C. Rep.) 413. Under distinguishable statutes the Pennsylvania court sustained the jurisdiction of its commission to pass on the issue. Haugh & Keenan Storage & Transfer Co. v. Pennsylvania Public Utility Commission, 133 Pa. Super. 175, 2 A2d 548. And see 5 U. of Pittsburgh L. Rev. 192.

That the legislature, if it had seen fit, could have required the Public Utilities Commission to deal with the issue as a step in determining whether a certificate should issue, we may assume without deciding. See Prentis v. Atlantic Coast Line Company, 211 US 210, 29 SCt 67, 53 LEd 150; 24 Cornell L. Q. 13; Application of Dakota Transportation Co., 67 SD 221, 291 NW 589. It has, however, indicated no such an intention. The Public Utilities’ , Commission is made up of practical men “informed by experience” whose primary function it is to pass expert judgment on issues of fact. “Public convenience and necessity” presents the commission with such an issue. Application of Dakota Transportation Co., 67 SD 221, 291 NW 589, 591; 28 Mich. L. Rev. 276. Corporate capacity is not presented as a factor of convenience and necessity. See 28 Mich. L. Rev. 144. In directing this administrative agency to consider whether the proposed service will be permanent, we gather that the legislature but intended to emphasize certain, specific, practical or economic factors the commission is required to consider in finding the ultimate fact of convenience and necessity.

The contention of the protestants that to sustain the power of the Public Utilities Commission to grant a certificate of public convenience and necessity to carry on an ultra vires business is to permit that commission to enlarge the corporate powers of an applicant, is untenable. By its order directing that a certificate of convenience and necessity issue, the commission neither grants nor adjudicates corporate power.

By an assignment somewhat more broad in scope than the exceptions appearing in the record of the proceedings below, protestants point out particulars wherein the application of the railroad for a certificate fails to comply with the requirements of SDC 44.0408, assert that the statute is mandatory in character and that, therefore, the proceedings are a nullity for the reason that the jurisdiction of the commission was not invoked.

The statute, SDC 44.0408, provides:

“... A motor carrier making application for such certificate or permit shall do so in writing, separately for each route, which petition shall specify the following.

(1) The name and address of the applicant and the names and addresses of its officers, if any;

(2) The public highway or highways over which, and the fixed termini between which, or the regular route or routes over which it intends to operate;

(3) The kind of transportation, whether passenger or freight or both, together with a full and complete description of the character of the vehicle or vehicles to be used, including the seating capacity of any vehicle to be used for passenger traffic and the tonnage capacity of any vehicle to be used in freight traffic;

(4) The proposed time schedule;

(5) A schedule of the tariff or rates desired to be charged for the transportation of freight or passengers, or both;

(6) A complete and detailed description of the property proposed to be devoted to the public service;

(7) A detailed statement showing the assets and liabilities of such applicant;

(8) Such other or additional information as the Commission may by order require.”

The protestants insist that the application embraces three separate routes and fails to sufficiently specify the vehicles and property to be devoted to the public use and the proposed time and rate schedules.

The provisions of a mandatory statute must be followed in order that the proceeding to which it relates will be valid. A directory statute dealing with a proceeding, may not be ignored to the prejudice of a party thereto who makes timely objection. In the light of these principles and assuming the petition to be defective in certain of the specified respects, we conceive the issue to be two-fold.

Is the statute mandatory or directory in character? If directory, were the protestants prejudiced because of the defects in the petition which were called to the attention of the commission?

The frequent use of such words as “shall”, “must”, and “may” by the legislature without regard to their literal meaning compels the courts to resort to construction for the purpose of discovering its actual intention. The principles which serve as guides in determining that intention are easier to state than to apply.

“... Whether a statute is mandatory or directory depends on whether the thing directed to be done is of the essence of the thing required, or is a mere matter of form. Accordingly, when a particular provision of a statute relates to some immaterial matter, as to which compliance with the statute is a matter of convenience rather than substance, or where the directions of a statute are given merely with a view to the proper, orderly, and prompt conduct of business, it is generally regarded as directory, unless followed by words of absolute prohibition; and the same is true where no substantial rights depend on the statute, no injury can result from ignoring it, and the purpose of the legislature can be accomplished in a manner other than that prescribed, with substantially the same results. But a provision relating to the essence of the thing to be done, that is, to matters of substance, is mandatory, and when a fair interpretation of a statute, which directs acts or proceedings to be done in a certain way, shows that the legislature intended a compliance with such provision to be essential to the validity of the act or proceeding, or when some antecedent and prerequisite conditions must exist prior to the exercise of power, or must be performed before certain other powers can be exercised, then the statute must be regarded as mandatory.” 59 CJ § 631, p, 1074. And see Stephens et al. v. Jones et al., 24 SD 97, 123 NW 705.

“Public policy often requires that minor omissions and failures by officials shall not make void all their proceedings; otherwise, government in some special feature might...

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