People v. Ryerson

Decision Date24 March 1966
Citation241 Cal.App.2d 115,50 Cal.Rptr. 246
CourtCalifornia Court of Appeals Court of Appeals
PartiesThe PEOPLE of the State of California, Petitioner and Appellant, v. David F. RYERSON and James S. Phillips, etc., et al., Respondents and Appellees. Civ. 7735.

Richard E. Tuttle, San Andreas, Harold J. McCarthy and John C. Gilman, San Francisco, for petitioner and appellant.

Reid, Babbage & Coil, Riverside, and Richard J. Weller, San Bernardino, for respondents and appellees.

TAMURA, Justice.

Pursuant to an investigation, decision and order of the Public Utilities Commission a carrier brought an action against a shipper to recover under charges. Based upon a stipulation of facts entered into by the parties, judgment was entered for the shipper. The question presented on this appeal is whether the Public Utilities Commission in the name of the People may maintain an independent equitable action to vacate the judgment on grounds of extrinsic fraud or mistake and lack of jurisdiction in the court to render the judgment.

The carrier, respondents Ryerson and Phillips, doing business as partners under the name of Phillips Trucking Company, (hereinafter referred to as Phillips), operates as a radial highway common carrier (§ 3516 Pub.Util.Code) and highway contract carrier (§ 3517 Pub.Util.Code) pursuant to permits issued by the Commission, 1 and as such is subject to the applicable minimum rate tariffs and regulations promulgated by the Commission including a regulation known as Item 85--A of Minimum Rate Tariff No. 2. Item 85--A provides in substance that before a shipment in multiple lots may qualify for a single shipment rate, the entire shipment must be available and tendered at one time, a single shipping document must be issued prior to or at the time of the first pickup, and the entire shipment must be picked up within two days, exclusive of holidays.

In 1958, the Commission commenced an investigation into the operation and practices of Phillips. Following a public hearing it rendered its decision on September 18, 1958, finding, Inter alia, that Phillips undercharged respondent American Cement Corporation, (hereinafter referred to as American) by charging multiple lot shipment rates for certain shipments in 1957 without issuing shipping documents in conformity with Item 85--A. The Commission directed Phillips to examine its records for the entire period from January 1, 1957, to the effective date of the order to determine whether any additional undercharges occurred during that period and to take such action as may be necessary to collect them, as well as those specifically found by the Commission. Pursuant to that decision and order, Phillips filed an action against American to declare the rights of the parties under the Commission's decision and order and prayed that the court adjudge American to be indebted to Phillips for a certain sum undisclosed by the pleadings in this case. American answered denying the undercharges and cross complained for a decree 'that said manifest freight bills of plaintiff be reformed to express the true agreement of the parties.' Phillips and American thereafter filed an agreed statement of facts in which it was stipulated that 'plaintiffs by mistake issued manifest freight bills which did not show the true agreement between the parties insofar as the same were not in accordance with the requirement of said Item 85--A that plaintiffs issue a single shipping document for each shipment of multiple lots.'

Pursuant to the stipulation the court entered its judgment on October 14, 1960, decreeing that there was no duty owing from American to Phillips under the decision and order of the Commission and that the freight bills issued by Phillips be 'reformed to show that they were issued under single shipping documents complying with the applicable rules and regulations' of the Commission.

On August 16, 1961, the Public Utilities Commission, in the name of the People, filed the present action to vacate the judgment.

In addition to the foregoing facts, the complaint as amended alleged that there was no mistake in the issuance of freight bills by Phillips, that the stipulation and judgment were collusive, that no notice was given to the Commission of the stipulation as proposed or as entered, and that the court lacked jurisdiction to render the judgment by virtue of § 1759 of the Pub.Util.Code. Section 1759 provides in substance that no court, except the Supreme Court, shall have jurisdiction to review, reverse, correct or annual any order or decision of the Commission or to interfere with the Commission in the performance of its official duties.

Following an order sustaining a general demurrer to the complaint as amended, with leave to amend, the People declined to further amend and submitted to the court a judgment of dismissal, which was duly signed and entered. 2 This is an appeal from that judgment.

The People seek to have the judgment in the undercharge action vacated on two independent grounds: (1) that the judgment was obtained by extrinsic fraud or mistake and (2) that the court lacked jurisdiction to grant the relief decreed.

A party or one in privity with him who has been prevented from obtaining a fair adversary hearing through extrinsic fraud or mistake may bring an equitable action to vacate the judgment. (Olivera v. Grace, 19 Cal.2d 570, 122 P.2d 564, 140 A.L.R. 1328; Bennett v. Hibernia Bank, 47 Cal.2d 540, 305 P.2d 20.) A stranger may maintain such an action if his interests have been adversely affected by the judgment. (Babitt v. Babbitt, 44 Cal.2d 289, 293, 282 P.2d 1; Campbell-Kawannanakoa v. Campbell, 152 Cal. 201, 92 P. 184; Anderson v. Bank of Lassen County, 140 Cal. 695, 74 P. 287; Harada v. Fitzpatrick, 33 Cal.App.2d 453, 91 P.2d 941.)

Respondents contend that the People do not have a sufficient interest to have entitled them to intervene in the undercharge action. The interest necessary for intervention 'must involve such an immediate and direct claim upon the very subject matter of the litigation that the intervener will either gain or lose by the direct operation of the judgment that may be rendered therein.' (Faus v. Pacific Electric Railway Company, 134 Cal.App.2d 352, 356, 285 P.2d 1017, 1019; Muller v. Robinson, 193 Cal.App.2d 835, 14 Cal.Rptr. 693; People ex rel. State Lands Commission v. City of Long Beach, 183 Cal.App.2d 271, 6 Cal.Rptr. 658.) While the interest is normally pecuniary, that is not an indispensable element. (County of San Bernardino v. Harsh California Corporation, 52 Cal.2d 341, 340 P.2d 617; Baroldi v. Denni, 197 Cal.App.2d 472, 17 Cal.Rptr. 647.) In County of San Bernardino v. Harsh California Corporation, supra, the court held that the United States was entitled to intervene in an action to recover taxes on a lessee's possessory interest in a Wherry Act Military Housing Project. In defense of the action, the lessee relied upon a federal statute which provided that it shall be entitled to a tax credit for any expenditures made by the federal government or the lessee for street and utility maintenance services normally provided by the county. The court held that while the government had no pecuniary interest in the action, its interest in an adjudication respecting the validity of the statute and its proper interpretation was sufficient for intervention.

The interest of the People in maintaining the integrity of the order of the Public Utilities Commission is clearly sufficient. The collection of undercharges, as was here ordered by the Commission, has been held to be one of the most effective means of preserving the minimum rate structure and of eliminating collusion between carriers and shippers. (Gardner v. Rich Manufacturing Company, 68 Cal.App.2d 725, 731--732, 158 P.2d 23; Butler v. Bell Oil and Refining Company, 70 Cal.App.2d 728, 730, 161 P.2d 559.) 3 In Butler v. Bell Oil and Refining Company, supra, in reply to shipper's contention in defense of an undercharge action that the Commission had no jurisdiction over it, the court stated at page 731, 161 P.2d at page 560:

'The collection of undercharges, however, is simply a step toward making the authorized regulation of highway carriers more effective. It is in furtherance of the purposes of the Act, among which are the establishment of just and reasonable rates and the prevention of discrimination. Gardner v. Rich Mfg. Co., supra, 68 Cal.App.2d page 729, 158 P.2d 23. As pointed out in Johnston v. L. B. Hartz Stores, 1938, 202 Minn. 132, 277 N.W. 414, 416, 'the permitting of such a recovery is a much more effective way of enforcing the law than any other could possibly be.' Fines and penalties may be imposed on the carrier for violating the minimum schedule of rates fixed by the commission but, as is also pointed out in the Johnston case, 'the pressure of the shippers upon the carriers for reduced rates in violation of the statute will almost entirely be relieved if the shippers know that notwithstanding any illegal bargain that is made, recovery may still be had on the basis of the minimum rate fixed by the commission. Collusion between the carrier and the shipper to circumvent the law, which would otherwise be easy of accomplishment, will be practically eliminated.''

Respondents contend that the People have not alleged facts showing extrinsic fraud or mistake. The complaint as amended, however, alleges that there was no mistake on the part of the carrier in issuing freight...

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