Holyoke St. Ry. Co. v. Department of Public Utilities

• Decision Date: 04 May 1964
• Parties: HOLYOKE STREET RAILWAY COMPANY v. DEPARTMENT OF PUBLIC UTILITIES et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 413

198 N.E.2d 413

347 Mass. 440

HOLYOKE STREET RAILWAY COMPANY v. DEPARTMENT OF PUBLIC UTILITIES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 9, 1964.

Decided May 4, 1964.

Eliot P. Brooks, Holyoke (John S. Begley, Holyoke, with him), for Holyoke Street Ry. Co.

Frank Daniels, Boston, for intervener, Peter Pan Bus Lines, Inc. Samuel Adams, Asst. Atty. Gen., for Department of Public Utilities.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and REARDON, Jj.

CUTTER, Justice.

This is an appeal by Holyoke Street Railway Company (Holyoke Company) from an order of the Department of Public Utilities (D.P.U. 12,620) dated October 25, 1960, granting a petition (dated June 12, 1958) of Peter Pan Bus Lines, Inc. (Peter Pan) for amendment of a certificate (No. 3089, see D.P.U. 11,137) of public convenience and necessity permitting Peter Pan's predecessor, one Picknelly (doing business as Peter Pan Bus Lines), to operate between Springfield and Northampton over routes in these two communities and in West Springfield, Chicopee, Holyoke, and Easthampton. At the request of the parties, a single justice reported the case without decision for determination by the full court.

Picknelly in 1933 began interstate bus operation, under authority granted by the Interstate Commerce Commission, serving points between Northampton and Boston, via Springfield and Stafford Springs, Connecticut. Picknelly also had an intrastate route between Springfield and Boston. Prior to 1955 he could not carry passengers between Springfield and Northampton nor could he carry passengers between Northampton and Boston without going through Stafford Springs. In 1954 (D.P.U. 11,137) Picknelly sought leave to operate (1) through service between Northampton and Springfield and (2) without going through Connecticut, service between Northampton and points east of Springfield, including Boston. Prior to 1955, through service had been provided between Northampton and Springfield by a joint operation of Holyoke Company and either another street railway or another bus company. This involved a transfer at the Northampton-Easthampton boundary.

In 1952, the department had denied four bus companies permission to give service between Northampton and Holyoke. This was done in order to protect Holyoke Company, as a local carrier, against 'competition which might impair * * * [its] operating revenue.' The department then also dismissed a petition by Picknelly to give such service because he did not have the necessary local licenses. See G.L. c. 159A, § 1, as amended through St.1956, c. 99. See also G.L. (Ter.Ed.) c. 159A, § 3.

In late 1954 Holyoke Company and Picknelly came to an agreement under which the former withdrew its opposition to granting Picknelly a local license in Holyoke. Such a local license was issued and Picknelly then filed his application (D.P.U. 11,137), mentioned above, for leave to carry passengers between Springfield and Northampton via Holyoke.

While the 1954 application (D.P.U. 11,137) was pending, Holyoke Company and Picknelly entered into a written contract, dated December 2, 1954, (1) that Holyoke Company would not object to the granting of the application if the certificate should 'be subject to the agreements' in the contract, and (2) that if Picknelly should be granted a certificate he (and his successors) would pay to Holyoke Company stated amounts (either fifteen cents or twenty cents depending upon the place of pick up or discharge) per passenger carried by his line to or from certain territories served by Holyoke Company. The contract also provided that if the department 'should issue a certificate * * * to * * * Picknelly, and * * * if such certificate * * * should be amended by the [d]epartment * * * [thereafter], then * * * [the contract] shall remain in full force.'

The department, by its order of January 21, 1955, in D.P.U. 11,137, issued to Picknelly a certificate, subject to certain restrictions not now relevant and to a condition relating to the contract of December 2, 1954. ¹ The record reveals no appeal by Holyoke Company from this decision (D.P.U. 11,137). Picknelly made the payments called for by the contract for about one year.

On June 12, 1958, Peter Pan filed its present petition (D.P.U. 12,620) to be relieved of the proviso (fn. 1) in the certificate. The director of the department's division of railway and bus utilities presided as hearing officer at a public hearing (held September 10, 1958) on this petition and on October 5, 1960, recommended that it be dismissed. On October 25, 1960, the department disregarded this recommendation (cf. Norwood Ice Co. v. Milk Control Commn., 338 Mass. 435, 441, 155 N.E.2d 758), struck the proviso from the certificate, and ordered that the contract of December 2, 1954, 'be * * * canceled.'

Holyoke Company now contends (1) that the contract of December 2, 1954, remains valid and cannot be controlled by the department without taking Holyoke Company's property without due process of law; (2) that the Legislature has not given the department authority over that contract; and (3) that, in any event, certain aspects of the department's decision (D.P.U. 12,620) were incorrect.

1. The department has been given 'general supervision and regulation of, and jurisdiction and control over, the following services, when * * * rendered for public use within the commonwealth, and all persons * * * [and] corporations * * * rendering * * * such * * * services,' as common carriers, including the 'carriage of passengers for hire upon motor vehicles as provided in' G.L. c. 159A. See G.L. c. 159, § 12 (as amended through St.1945, c. 175). See also City of Newton v. Department of Pub. Util., 339 Mass. 535, 541, 160 N.E.2d 108. General Laws c. 159A, § 7 (as amended through St.1956, c. 329), provides in part, 'No person shall operate a motor vehicle under a license issued * * * [by local authorities for the carriage of passengers for hire as a common carrier] unless he has also obtained from the department a certificate declaring that public convenience and necessity require such operation. The department may * * * issue or refuse to issue such a certificate, or may issue the same for the partial exercise only of the privilege sought. Such certificate shall specify the * * * routes over which the motor vehicles * * * may operate * * * and may attach to the exercise of said rights such terms and conditions as the department shall deem that public convenience and necessity may require. The department, after notice and hearing, may revoke any such certificate for cause, and may, in like manner, revise any provisions thereof and any of the terms and conditions of such certificate or license. * * *' (emphasis supplied). Section 7 thus gives to the 'department * * * continuing power * * * to revise the provisions of a certificate.' See Fortier v. Department of Pub. Util., 342 Mass. 728, 731, 175 N.E.2d 495, 498.

The contract of December 2, 1954, between Picknelly and Holyoke Company dealt with a matter which under § 7 was subject to the determination of the department, viz. the terms upon which a certificate of public convenience and necessity should be issued. The department in its order of January 21, 1955 (D.P.U. 11,137), took notice of the contract, but did not make its order subject to it, for the department expressly reserved (in a manner consistent with, if not required by, § 7) the right to review, modify or cancel the contract 'at any time * * * or in any respect as * * * [the department] may find * * * to be in the public interest.' Picknelly and Holyoke Company could not bind the department to adhere to and enforce their contract, and, in any event, the department properly refused so to be bound. The department had power under § 7 to strike from the certificate the proviso concerning the payments to Holyoke Company, if, upon substantial evidence, it found that to require those payments was no longer in the public interest. See the Fortier case, 342 Mass. 728, 731-732, 175 N.E.2d 495.

Holyoke Company seems to have recognized the department's continuing power to amend the certificate. The department, however, has done more than that. It has ordered that the contract be canceled despite the provision that the contract was to remain in effect even if the certificate should be amended. This provision plainly was an attempt by Holyoke Company to guard against the possibility of a change of mind on the part of the department.

We think that in its inception the contract was not void as against public policy, even though it dealt with intercompany competition which, in at least many aspects, was subject to regulation by the department. The contract contemplated its submission to the department. Cf. Montana-Dakota Util. Co. v. Williams Elec. Cop. Inc. 263 F.2d 431, 433-436, 70 A.L.R.2d 1318 (8th Cir.); Restatement: Contracts, § 564; Corbin, Contracts, § 1452; Williston, Contracts (2d ed.) § 1733; annotation, 70 A.L.R.2d 1326. There was to be no concealment of its provisions and of Holyoke Company's conditional commitment not to oppose the granting of a certificate to Picknelly. Cf. also New York City Transit Authy. v. Jamaica Buses, Inc., 16 A.D.2d 959, 229 N.Y.S.2d 794; New York City Transit Authy. v. Green Bus Lines, Inc., 16 A.D.2d 959, 229 N.Y.S.2d 787. The department not only knew about the contract, but it included most of its terms in D.P.U. 11,137.

The provision that, despite an amendment of the certificate, the contract was to remain in effect stands upon a different basis. It purported to make the contract enforceable notwithstanding any later departmental amendment of the certificate. The contract dealt directly with the terms of the public service operations of two carriers in their relation to each other. It purported to impose a term of their continuing competition. This aspect of these carriers' competition with one another was a matter...