Moody v. Consolidated Coach Corp.

• Decision Date: 14 March 1933
• Parties: MOODY v. CONSOLIDATED COACH CORPORATION et al.
• Court: Kentucky Court of Appeals

58 S.W.2d 375

248 Ky. 180

MOODY v. CONSOLIDATED COACH CORPORATION et al.

Court of Appeals of Kentucky

March 14, 1933

Appeal from Circuit Court, Henry County.

Action by Clara C. Moody against the Consolidated Coach Corporation and L. W. Culley. From the judgment, plaintiff appeals.

Reversed and remanded.

R. H Tomlinson, of Lexington, for appellant.

R. W Keenon, of Lexington, and Moody & Berry, of New Castle, for appellees.

RICHARDSON Justice.

The determinant question presented by this appeal is the liability of the Consolidated Coach Corporation as the lessor of a permit granted by the commissioner of motor transportation of Kentucky to operate motor vehicles as a common carrier of passengers on a certain state highway, over a regular route or between fixed termini. The Consolidated Coach Corporation is a corporation organized under the laws of Kentucky, authorized to, and actually engaged in, the operation of motorbusses as such carrier in the state of Kentucky, over the highways of the state, between fixed termini, or over regular routes. The sections of the Statutes by virtue of which the permit involved was issued and enjoyed are section 2739j-3 et seq.

Section 2739j-3 empowers the commissioner of motor transportation to grant a certificate of public convenience and necessity to any person, firm, or corporation, desiring to engage in the transportation of persons for hire, by motor vehicles on any public highway in this state, between fixed termini or over a regular route.

Section 2739j-38a requires that, before the certificate is issued the applicant shall furnish surety by filing with the commissioner to whom the application was first made, good and sufficient bond with adequate corporate surety, payable to the commonwealth of Kentucky, which shall bind the obligors therein to pay on a final judgment rendered against such motor carrier, arising out of the death or injury of any passenger or passengers or damage to property while in transit, or injury to other persons or property, or any act or omission connected with the operation of such motor carrier, which shall be in such penal sum as the commissioner may deem necessary to protect the interest of the public without regard to the number of persons or amount of property involved. Instead of such bond, the commissioner may accept a policy of insurance or other contract in writing, deemed by him adequate, by which any surety company or insurance company authorized to execute such contract shall assume the liability prescribed by this section, or the commissioner may exempt the holder of such certificate on due assurance of the payment of any and all damages it may be liable for, as the result of the negligent operation of the proposed service to the extent of the insurance and bond herein required. etc.

The Consolidated Coach Corporation obtained from the commissioner of motor transportation a certificate of permit No. 5139 to operate a bus line over the route between Pleasureville, via intermediate points, to the city of Louisville, on highway No. 37. At the same time it complied with the requirements of section 2739j-38a. On the 11th day of April, 1931, it leased to L. W. Culley a part of its permit which provides for the operation of motor vehicles over highway No. 37. The lease sets out in detail the duties and obligations of Culley, and specifically reserves the privileges and rights of the Consolidated Coach Corporation. It provides that Culley shall accept for transportation over the route any and all tickets sold or issued by the lessor and its duly authorized affiliated companies, the tickets to be redeemed by the lessor on the 20th day of each month, less 10 per cent. The lease was approved by the commissioner of motor transportation. Culley operated the line in the name of the "Kentucky Home Stages." He obtained from the Mercer Surety Company a policy of insurance on the equipment used and operated over the route. On the 12th day of June, 1931, the insurance was canceled by the Mercer Surety Company, and notice thereof was given to the commissioner of motor transportation, who in turn notified Culley of the cancellation, and also the Consolidated Coach Corporation. The cancellation of his insurance was effective June 24, 1931. Culley was operating a bus by virtue of the certificate of permit granted to, and owned by, the Consolidated Coach Corporation, at the time Mrs. Moody claims she sustained damage to her automobile and injury of her person, as the direct and proximate result of the negligent operation of the bus in charge of Culley on highway No. 37.

The theory of the Consolidated Coach Corporation is that its liability herein is controlled, and must be measured and determined by the law applicable to a private business corporation, i. e., one organized and conducted solely for the benefit of its stockholders. Mrs. Moody argues that there is a broad distinction between a private business corporation and a quasi public corporation, engaged in the business of a common carrier of passengers; that the latter is given large powers to enable it to accommodate the public, and is not permitted, in the absence of express legislation, to renounce its duty to the public or to disable itself from performing such duties, and that the lease in the present case does not relieve the Consolidated Coach Corporation, as a public service corporation, of its liability to the public for damages to the property or injury of the person of a member of the traveling public, resulting from the negligence of the lessee.

The Consolidated Coach Corporation, by the conditions, provisions, and terms of the lease, retains in itself all the authority and power incident to absolute ownership of the certificate and route, covered by it, with such stringent limitations and restrictions as to vest thereby in the lessee merely the capacity of an agent. However, in our determination of its liability herein, we shall not rest our conclusion on our construction of the lease, but will accept the Consolidated Coach Corporation's construction thereof.

The purpose of the incorporation of the Consolidated Coach Corporation, as it appears in the petition as amended, was to engage exclusively in the business of a common carrier of passengers on the public highways of this commonwealth. It is alleged that it engages solely in that business. It should be conceded that, before it engages in business on the state's highways, it is its indispensable duty to observe strictly the requirements of the Statutes, supra. Its compliance therewith is a condition precedent to its right to use for business purposes the highways of the state. Whether the permit granted to it by the commissioner of motor transportation be considered in the technical sense of a privilege, license, or franchise, its obeying the statutes is an essential element of the permit and necessary to its rights to the enjoyment and use of the public highways as a common carrier of passengers for hire. It could not exercise such rights under its charter without the permit. Only the permit confers the rights to the enjoyment and use of the highways designated in it, for business purposes, which, for its purposes, are the same as if it owned them absolutely. Its charter and the permit confer on it public rights on the highways, constructed at public expense for the benefit of the general public. It could not be granted or authorized to exercise such...