Hathorn's Transp. Co., In re, 1877

• Decision Date: 05 January 1960
• Docket Number: No. 1877,1877
• Citation: 121 Vt. 349,158 A.2d 464
• Parties: In re HATHORN'S TRANSPORTATION CO., Inc. On the Application of MARCELL'S MOTOR EXPRESS, INC., et al., to the Public Service Commission.
• Court: Vermont Supreme Court

Page 464

158 A.2d 464

121 Vt. 349

In re HATHORN'S TRANSPORTATION CO., Inc.

On the Application of MARCELL'S MOTOR EXPRESS, INC., et al.,

to the Public Service Commission.

No. 1877.

Supreme Court of Vermont.

Jan. 5, 1960.

Reargument Denied March 2, 1960.

Black, Wilson, Coffrin & Hoff, Burlington, for plaintiff.

John H. Downs, St. Johnsbury, (Roger C. Cramton, St. Johnsbury, Francis E. Barrett, Jr. and Kenneth B. Williams, Boston, Mass., of counsel), for defendant.

Before HULBURD, C. J., and HOLDEN, SHANGRAW, BARNEY and SMITH, JJ.

SMITH, Justice.

This is an appeal to set aside an order of the Public Service Commission, dated January 2, 1959, which granted authority to Marcell's Motor Express, Inc. to operate as a common carrier within the State of Vermont over the same routes, and with the same restrictions and conditions, formerly issued to Hathorn's Transportation Co., Inc. under Certificate of Public Good No. 2442.

The case is here upon the exceptions of the protestants, Gay's Express, Inc., St. Johnsbury Trucking Co., Inc., and H. P. Welch Company to the Order of the Commission, on the grounds that the Order is not justified or supported by the Findings of Fact made and filed by the Commission. Protestants have excepted to numerous Findings of Fact made by the Commission, and have excepted as well to the Commission's failure to find in accord with various requests to find made by the protestants.

The various carriers involved will be referred to by their proper names, such as Hathorn, for Hathorn's Transportation Co., Inc., St. Johnsbury for St. Johnsbury Trucking Co., Inc., etc., for the sake of brevity in this opinion.

All the various parties to this proceeding are trucking concerns, engaged as common carriers in the State of Vermont. Hathorn received its Certificate of Public Good No. 2442 in May 1950. Both Gay and St. Johnsbury received Certificates on the same date, covering routes nearly identical to those given Hathorn. In September 1950 Welch received its Certificate to operate over some of the same routes previously noted, and in August, 1955, the applicant Marcell received a Certificate for less extensive intrastate rights than those held by the other carriers. All of these carriers were engaged in open competition for carrier traffic over the various routes in which they had mutual rights until 1957.

But during 1956 and 1957 Hathorn began to lose money on its operations. Involuntary bankruptcy proceedings were started against it, and, on January 4, 1958, the Commission was notified by letter from one of Hathorn's officers that it had ceased its operations under Certificate No. 2442, and Hathorn ceased to operate on the routes granted to it after that date.

The United States District, Court for the District of Vermont authorized the Receiver in Bankruptcy of Hathorn to sell the assets of Hathorn, including the intrastate and interstate rights of that carrier. Marcell made the only bid received by the Receiver for the assets of Hathorn, this bid being conditional on the transfer of all of Hatorn's Vermont Public Service Commission rights, to Marcell. This bid was approved by the United States District Court on June 2, 1958, subject to the approval of the Public Service Commission for the transfer of the intrastate rights by the Public Service Commission.

A joint application was made on the part of Marcell and of Hathorn's Receiver and Trustee on July 16, 1959 to the Public Service Commission, requesting the Commission to transfer to Marcell the operating rights which Hathorn held under Certificate No. 2442, or, in the alternative, to issue to Marcell new operating rights identical to those authorized by Hathorn's Certificate No. 2442. This application was opposed by the various protestants here.

The Public Service Commission filed its Report and Findings of Fact on Nov. 13, 1958. The Order was filed on Jan. 8, 1959. It is from this Order and the Findings of Fact upon which it is predicated that the protestants have taken their appeal to this Court.

The Order appealed from reads in part as follows:

'It is hereby Ordered that a Certificate of Public Good be and hereby is issued to Marcell's Motor Express, Inc. to operate as a common carrier within the State of Vermont, on and over the routes formerly operated by Hathorn's Transportation Co. Inc. under Public Service Commission Certificate No. 2442.'

The first question presented to us, in essence, is the nature of the proceedings held before the Public Service Commission, and the actual effect of the Order issued. The protestants claim that Finding No. 32 of the Commission, which, in part, states: 'the Commission did consider the franchise cancelled by reason of the notice from Hathorn's that it was no longer operating,' removes from our consideration any question of whether the proceedings before the Commission were transfer proceedings, and that the only question before this Court is whether the Findings of Fact of the Commission were sufficient for them to issue a new Certificate of Public Good to Marcell. Protestants further claim that the failure of the applicants to file a cross-appeal from the Order of the Commission removes the issue of transfer or new certificate from this case.

The question presented to this Court in an appeal of this nature is whether the Order made below is supported by the Findings. Hewey v. Richards, 116 Vt. 547, 548, 80 A.2d 541. That is, not whether the grounds upon which the Commission professed to proceed is tenable, but whether the Order itself is correct. 42 Am.Jur. Public Administrative Law, p. 683, and cases cited. It is well settled that a Certificate of this nature is a franchise, and is a property right. State v. Gibbs and Lynch, 82 Vt. 526, 528, 74 A. 229, 24 L.R.A.,N.S., 555. It was stated by this Court in Jewett & Son v. Smardon, 101 Vt. 488, 490, 144 A. 683 that one operating under a certificate similar to the one issued to Hathorn occupied a position of economic advantage and opportunity that carries with it a substantial transferrable value.

It is true, of course, that a sale or assignment of this certificate by the possessor to another does not, in itself, give the buyer the privilege to exercise the rights granted in the certificate. The approval of the Public Service Commission is necessary before this can be done, because the Commission is given the power to revoke or amend such certificate by Statute, just as it is given the power to issue an original certificate. 30 V.S.A. § 237. But it is obvious that an applicant to the Commission for the assignment of the rights to operate under a certificate originally granted to another is in a position of decided advantage if he has an agreement of sale of such rights from the original holder at the time of his application to the Commission for such transfer.

The Commission did find, as the protestants claim, that Hathorn had cancelled its franchise by reason of the letter received from Hathorn that the company had ceased to operate. But Hathorn, if such was its intent, had no power to cancel its franchise or certificate. The power to revoke was vested only in the Commission. 30 V.S.A. § 237. And the Findings of the Commission state clearly that no official cancellation or revocation had been made of Hathorn's Certificate No. 2442.

The general rule is that a franchise does not expire by reason of the omission or commission of acts on the part of the grantee, although it be in violation of the terms of the franchise. It continues in full force until the penalty of forfeiture is claimed by the state granting the franchise. The penalty of forfeiture, according to the weight of authority, can be exacted only through a legal proceeding by which the cause of forfeiture is judicially ascertained, and the grantee of the franchise is given an opportunity to be heard. Wilmington & R. R. Co. v. Downward, 8 Houst., Del., 227, 14 A. 720, 723, 32 A. 133; 23 Am.Jur., Franchise, p. 738.

The provisions of 30 V.S.A. § 237 and 30 V.S.A. § 238 clearly indicate that a Certificate of Public Good cannot be issued without advertising and public hearing. This provision is obviously so that all who wish to be heard may appear before the Commission to give their evidence upon a matter of public importance involving a duty to the public. The revoking of such a certificate, or the amending of it, might equally well affect a duty to the public so that there would be an equal necessity for a public hearing. We hold that the legislative intent, under the Statute, is that a public hearing is necessary to revoke a certificate in the same manner as is necessary to issue a new certificate, or to amend one which is in effect.

Under this holding it necessarily follows that Certificate No. 2442, issued to Hathorn, was in full force and effect at the time of the hearing appealed from, and that the Commission's Finding of Fact that they 'considered' the certificate cancelled, was not a Finding of Fact, but an erroneous conclusion of law. Findings that are mere legal conclusions are without force and this Court will disregard an unwarranted inference. Smith v. Vermont Marble Co., 99 Vt. 384, 396, 133 A. 355. So also the Finding of the Commission that the original Certificate of Public Good, No. 2442, issued to Hathorn, 'is not now in effect' is a similar conclusion of law based upon error, and this Court will disregard it.

The fact that Certificate No. 2442 was unrevoked and still in force at the time of the hearing before the Commission, made these proceedings only a transfer matter which was exactly what the applicant had requested in its application.

The matters before a Public Service Commission to be adjudicated are somewhat different in a transfer matter than in an application for an original certificate of public...