Greater Wilmington Transp. Authority v. Kline

• Citation: 285 A.2d 819
• Parties: GREATER WILMINGTON TRANSPORTATION AUTHORITY, a subdivision of the State of Delaware, Plaintiff, v. Bernard J. KLINE, d/b/a Diamond State Bus Lines, Inc. and/or Diamond State Bus Lines, et al., Defendants.
• Decision Date: 15 December 1971
• Court: Superior Court of Delaware

Page 819

285 A.2d 819

GREATER WILMINGTON TRANSPORTATION AUTHORITY, a subdivision of the State of Delaware, Plaintiff, v. Bernard J. KLINE, d/b/a Diamond State Bus Lines, Inc. and/or Diamond State Bus Lines, et al., Defendants.

Superior Court of Delaware, New Castle County.

Dec. 15, 1971.

William D. Bailey, Jr., Wilmington, for plaintiff.

Alfred J. Lindh, Wilmington, for Bernard J. Kline.

OPINION

O'HARA, Judge.

Plaintiff, a Transportation Authority created pursuant to Title 2, Delaware Code, Chapter 16, has initiated these proceedings under power of eminent domain to secure any right, title or interest that defendants might have in certain bus routes.

The record developed before trial in this action had clearly established that the only party claiming any present owner interest in the bus routes involved is Bernard J. Kline, d/b/a Diamond State Bus Lines (Kline). All the remaining defendants have either not appeared to contest this action or have indicated that their only interest is in the nature of tax liens or other fees due and payable to them by the owner. As a consequence, counsel for Kline and plaintiff have been able to stipulate as to certain facts and questions so as to present to the Court before trial the substantial issue of whether or not the bus routes involved are such a property right as would entitle the owner to just compensation as a consequence of eminent domain proceedings.

The record indicates that in January, 1964, Bernard J. Kline, Harry O. Kline, Sr. and Harry O. Kline, Jr. acquired all right, title and interest in the condemned bus routes from certain third parties. The interests of Harry O. Kline, Sr. and Harry O. Kline, Jr. were subsequently transferred to Kline. As part of the above transactions, there is introduced into the record a memorandum agreement between Donald Lurty, predecessor in ownership, and Kline purporting to convey all right, title and interest of the former 'to the Diamond State Bus Lines and its franchise operation' for a recited consideration of $300.00. In reference to this contract, there is testimony by Harry O. Kline, Sr. that the terms 'all right, title and interest' was understood by the parties to contemplate the conveyance of a franchise for which substantial debts were assumed in addition to the recited consideration. The memorandum was approved by the Public Service Commission on December 7, 1966.

At the time of acquisition by the defendants the Diamond State Bus Lines was experiencing financial difficulty. Operation of bus service on all routes acquired by defendants began in February, 1964, and continued with minor exceptions, until February 1, 1969, when plaintiff took possession of the routes. During this period of approximately five years, losses totaled in excess of $30,000.00. Service routes were discontinued on two occasions where the lack of passengers warranted and on one occasion was extended pursuant to application under 26 Del.C. § 162. There is no evidence that defendants were ever refused any request to discontinue service on any particular route by the Public Service Commission.

The essential issue presented to this Court for adjudication is whether the interest of Kline in the aforementioned bus routes has the nature of constitutionally protected property right within the intendment of Article I, Section 8 of the Delaware Constitution, Del.C.Ann.

Kline asserts that he has a vested right to continue the operation of the Diamond State Bus Lines under the terms of 26 Del.C. § 162 ^* the deprivation of which right entitles him to fair compensation. A public utility as defined in 26 Del.C. § 101 includes every individual such as Kline who operates within this State a 'motor bus' for public transportation. Kline contends that since § 162 requires the approval of the Public Service Commission only for new public utility businesses, and certain extensions, the conduct of existing utility businesses becomes by implication vested for those who can establish prior existing rights by contract or user. Kline conceives of his right to the bus routes as in the nature of a franchise, and accordingly directs the Court's attention to certain evidence which would indicate that it was understood as such by the Public Service Commission.

It is plaintiff's position that 26 Del.C. § 162 contains no statutory grant of authority rising to the dignity of a franchise, and that therefore in the absence of any vested rights conferred by Charter or otherwise, defendants are entitled to no compensation.

As generally stated a franchise is a special privilege conferred by government on individuals, which does not belong to a citizen by common right. It is essential that a franchise should be created by a grant from the sovereign authority. 37 C.J.S. Franchises § 10; 17 Words and Phrases, 'Franchise', p. 714; State ex inf. Shartel ex rel. City of Sikeston v. Missouri Utilities Co., 331 Mo. 337, 53 S.W.2d 394, Anno. 89 A.L.R. 607 (1932). at common law a franchise may owe its existence to prescription or long standing use, though this too presupposes a grant. Blue Bird Air Service v. City of Chicago, 376 Ill. 272, 33 N.E.2d 456 (1941). The granting of franchises to operate a public utility is an exercise of the legislative function of the sovereign, which may be delegated by statute to a duly designated agency or commission. 37 C.J.S. Franchises § 14. In the absence of a constitutional or statutory provision providing therefor, a public utility commission has no power to grant a franchise to a public utility. 73 C.J.S. Public Utilities § 42; Commissioners of Cambridge v. Eastern Shore P.S. Co., 192 Md. 333, 64 A.2d 151 (1949). The powers of the Public Service Commission of Delaware are entirely statutory. Smith v. Delaware Coach Co., 31 Del.Ch. 256, 70 A.2d 257 (1949).

Thus, it is of particular significance to inquire as to whether 26 Del.C. § 162 constitutes a legislative delegation to the Public Service Commission of its sovereign authority to grant franchises, or provides merely an incident to regulation. For in fact, if the former is the case the proprietary interest created must be compensated for upon its taking for public use. United States v. Puget Sound Power & Light Co., 147 F.2d 953 (9th Cir. 1944).

This Court does not construe 26 Del.C. § 162 as statutory authorization for the granting of a franchise as to require compensation upon a taking for public use. In general if the main object of a statute is regulation, a grant of authority or power which is merely incident to the implementation of that purpose does not contain authorization to create a franchise. The Public Service Commission of Delaware is essentially a regulatory body which performs certain legislative functions where specifically authorized by statute. 26 Del.C. § 127. Authority to...