Northville Coach Line, Inc. v. City of Detroit

• Decision Date: 06 June 1967
• Docket Number: No. 21,21
• Citation: 150 N.W.2d 772,379 Mich. 317
• Parties: NORTHVILLE COACH LINE, INC., a Michigan corporation, Plaintiff and Appellee and Cross-Appellant, and Michigan Motor Bus Association, a Michigan corporation, Intervening Plaintiff, Appellee and Cross-Appellant, v. CITY OF DETROIT, a Municipal Corporation, Department of Street Railways, Defendant and Appellant and Cross-Appellee.
• Court: Michigan Supreme Court

Page 772

150 N.W.2d 772

379 Mich. 317

NORTHVILLE COACH LINE, INC., a Michigan corporation Plaintiff and Appellee and Cross-Appellant and Michigan Motor Bus Association, a Michigan corporation Intervening Plaintiff, Appellee and Cross-Appellant, v. CITY OF DETROIT, a Municipal Corporation, Department of Street Railways, Defendant and Appellant and Cross-Appellee.

No. 21.

Supreme Court of Michigan.

June 6, 1967.

Samuel W. Leib, Detroit, for plaintiff-appellee Northville Coach Lines, Inc.; Leib & Leib, Detroit, of counsel.

Edmund M. Brady, John M. Veale, Macheson, Dixon & Bieneman, Detroit, for intervening plaintiff-appellee Michigan Motor Bus Ass'n.

Robert Reese, Corp. Counsel, City of Detroit, Manuel Zechman, Gen. Counsel, Dept. of Street Rys. of City of Detroit, Detroit, for defendant-appellant.

Before the Entire Bench.

KELLY, Justice.

Plaintiff filed its complaint on August 13, 1964, in the Wayne circuit court, seeking an injunction restraining the city of Detroit and its Department of Street Railways from transporting passengers for hire from the Detroit city limits to the city of Livonia.

The trial court granted Michigan Motor Bus Association's motion for leave to intervene.

Defendant moved for the entry of an accelerated judgment as a matter of law. In passing on this motion, the trial court denied plaintiffs' request for injunctive relief on two grounds: First, that the Home Rule Act ¹ authorized the city of Detroit to so operate, and second, that such operations were exempt from the provisions of the Motor Carrier Act. ²

In a split decision the Court of Appeals (2 Mich.App. 591, 141 N.W.2d 316) disagreed with the trial court's interpretation of the Home Rule Act and held that the act limited the DSR operations to suburbs which are contiguous and bordering on the city of Detroit. Defendant appeals from that ruling.

The Court of Appeals agreed with defendant that the DSR need not comply with the Motor Carrier Act and plaintiffs cross-appeal.

QUESTION NO. I

'Are the motor carrier operations of Detroit's municipally owned transportation system beyond the city limits confined to municipalities and areas having common boundaries with the city of Detroit?'

This question involving interpretation of the Home Rule Act calls for judicial determination of legislative intent as expressed in section 4f, subdivisions (2) and (3) of that act, which provide:

'Each city may in its charter provide * * * for * * * operating transportation facilities within * * * its adjacent and adjoining suburbs within a distance of 10 miles from any portion of its city limits.'

'Each city may in its charter provide * * * for the operation of transportation lines without the municipality and within 10 miles from its corporate limits.' ³

The opinions found in 2 Mich.App. 591--598, 141 N.W.2d 316 explain how two members of the Court of Appeals interpreted the act differently than the trial judge and one member of the Court of Appeals.

After carefully considering these judicial interpretations and the able briefs and oral arguments of opposing parties, we conclude that the Home Rule Act permits and authorizes the DSR to extend its transportation system 10 miles beyond the Detroit city limits.

QUESTION NO. II

'Are the operations by the DSR as a common motor carrier of passengers for hire outside the corporate limits of the city of Detroit subject to the provisions of the Michigan Motor Carrier Act?'

This Court's determination of legislative intent as expressed in the following two sections of the act will provide the answer to this question.

C.L.1948, § 476.1 (Stat.Ann. § 22.534) provides:

'No common motor carrier of passengers * * * shall operate any motor vehicle for the transportation of * * * persons * * * for hire on any public highway in this state except in accordance with the provisions of this act. It shall be unlawful for any common motor carrier of passengers * * * to operate upon any public highway without first having obtained from the commision a certificate of public convenience and necessity.'

C.L.S.1961, § 479.2 (Stat.Ann.1965 Cum.Supp. § 22.567) (the pertinent exemption section) is as follows:

'This act shall not apply to: * * *

'(c) Vehicles owned or operated by any incorporated city, village or school district, or by any county or township in the state or by any corporation, agency or instrumentality of the same, For governmental purposes.' (Emphasis ours.)

Referring to the exemption words 'for governmental purposes,' plaintiffs state:

'It is appellants' position that in operating its motor coaches as a common carrier of passengers for hire beyond the limits of the city of Detroit, the DSR is engaged in a proprietary function, not a governmental function. * * * No case decided by this Court holds that operation of a bus line in communities outside its corporate limits constitutes the performance by a municipality of a municipal operation 'for governmental purposes."

and claim that exemption the DSR from the provision of the act 'would introduce chaos into what has been an orderly area of business activity fairly responsive to any public need. The DSR would be permitted to institute and discontinue service at will whenever its fancy suited, charge whatever rates it decided to fix, operate any kind of equipment, and as few schedules as it desired. The only test would be its own self interest.'

Defendant explains its interpretation of the exemption provision by stating:

'Exempting municipally owned and operated transportation systems from the jurisdiction of the Michigan Public Service Commission and from the operation of the 'Motor Carrier Act' and thus permitting expansions of their operations as new neighborhoods and areas develop in the surrounding communities, has been and is a legislative device of encouraging and authorizing municipally owned public utilities furnishing motor coach passenger services to become an integral part of the entire metropolitan area.'

Michigan Motor Bus Association's motion for leave to intervene emphasized the far-reaching effect of this decision by stating:

'Members of the petitioning association operate over and between various routes both within and without municipal boundaries through the State of Michigan. A determination in the instant proceeding will be applicable both insofar as the operations of petitioner's members throughout the State of Michigan operations are concerned, as well as to the operations of motor vehicles in the transportation of passengers for hire by all municipalities throughout the State similarly situated to defendant.'

In Frederick v. City of Detroit, 370 Mich. 425, 121 N.W.2d 918, we stated that defendant in operating its buses is a common motor carrier of passengers and subject to the rules of law applicable to such carriers.

We considered the Motor Carrier Act in Lafayette Transfer & Storage Co. v. Michigan Public Utilities Commission, 287 Mich. 488, p. 491, 283 N.W. 659, p. 661, and there said:

'Act No. 254, Pub.Acts 1933, is the only act now in force governing the issuance of permits to motor vehicle carriers for hire. This statute was a consolidation of previous acts, it covered the entire field, it was an original and independent act. It conferred new powers upon the Michigan public utilities commission, defined those powers, and provided for new regulations for motor vehicle carriers for hire upon the public highways, Whether such carriers were public or private carriers.' (Emphasis ours.)

In Borski v. City of Wakefield, 239 Mich. 656, 215 N.W. 19, we decided whether a city was liable in a tort action, and held that, when a city operates a common carrier of passengers for hire, it is engaged in a proprietary function.

The trial court disagreed with plaintiffs' contention that Borski should be considered as the controlling precedent. The trial judge stated that, although he was aware of the 'oft-quoted distinction between the governmental and proprietary functions and operations of a municipality,' yet he disagreed with plaintiffs because 'the words 'governmental purposes' in the exemption clause of the Motor Carrier Act have a much more general application and meaning.'

We agree with the trial court's conclusion in regard to the limited meaning of Borski. This case only discloses that the facts and circumstances of each case determine whether a city is engaged in a proprietary or governmental function.

In Grand Rapids Motor Coach v. Michigan Public Service Commission, 323 Mich. 624, 3 N.W.2d 299, we construed the words used in the exemption provisions of subdivision (a), which precedes the exemption provisions of subdivision (c) which is at issue in this appeal.

Subdivision (a) provides:

'This act shall not apply to:

'(a) Vehicles operated entirely within any city or village of this state; nor to motor carriers of passengers whose local operations may extend a distance of not to exceed 2 miles beyond the boundary of such city or village in which such local operations are wholly carried on, provided such extension shall not be to or into another city or village.' C.L.S.1961, § 479.2 (Stat.Ann.1965 Cum.Supp. § 22.567.)

The words 'wholly carried on' were in dispute in Grand Rapids Motor Coach, whereas the dispute in the present appeal concerns the words 'for governmental purposes.'

In construing subdivision (a) in the Grand Rapids case, we held:

(a) That the Court is required to discover the legislative intent and that, if the language is of doubtful meaning, a reasonable construction must be given, looking to the purpose to be served thereby;

(b) That the general rule, that exemptions are carefully scrutinized and not extended beyond their plain meaning, should be applied;

(c) That the purpose shall prevail over the strict letter;

(d) That the act as a whole must be considered and especially the intent of a section listing exemptions from the application of the act.

We have stated that the Motor Carrier...