People v. Western Air Lines

• Citation: 268 P.2d 723,42 Cal.2d 621
• Court: United States State Supreme Court (California)
• Decision Date: 02 April 1954
• Parties: PEOPLE v. WESTERN AIR LINES, Inc. L. A. 22881.

Page 723

268 P.2d 723

42 Cal.2d 621

PEOPLE v. WESTERN AIR LINES, Inc.

L. A. 22881.

Supreme Court of California, In Bank.

April 2, 1954.

Rehearing Denied April 28, 1954.

Everett C. McKeage and J. Thomason Phelps, San Francisco, for appellant.

Guthrie, Darling & Shattuck, Hugh W. Darling, D. P. Renda, Donald K. Hall and Matthew S. Rae, Jr., Los Angeles, for respondent.

SHENK, Justice.

This is an appeal from a judgment of dismissal after a demurrer to the complaint had been sustained without leave to amend.

The action was brought to enforce the penalty provisions of section 2107 of the Public Utilities Code. It was brought in the name of the People at the instance of the Public Utilities Commission as authorized by section 2104 of that code. Companion cases are People v. United Air Lines, Inc., Cal.Sup., 268 P.2d 745, and People v. California Central Air Lines, Cal.Sup., 268 P.2d 744.

After setting forth the status of the Public Utilities Commission as a public agency operating under the constitution and statutes of this state, the complaint proceeds to allege that pursuant to law the commission has at all times had jurisdiction over the rates, fares, charges and tariffs of all transportation companies, common carriers and public utilities operating within this state insofar as their intrastate operations are concerned; that the commission directed its attorney to institute this action; that the defendant is a Delaware corporation having its principal place of business in the county of Los Angeles; that at all times involved the defendant was engaged in the intrastate transportation of passengers by air and furnishes such transportation for compensation to the public generally; that the defendant is a transportation company, a common carrier and a public utility by virtue of and within the contemplation and meaning of article XII of the state constitution, and of chapter 11 of part 1 of division 1 of the Public Utilities Code, as amended.

The complaint further alleges that on September 1, 1949, the defendant filed with the commission its Local Air Coach Passenger Tariff No. 1, establishing its rates for one-way adult air coach service between Los Angeles and San Francisco, California, at $13.60 and $27.20, one-way and round-trip, respectively; that under date of March 14, 1950, pursuant to investigation and hearing, the commission, by its order No. 43932 (49 Cal.P.U.C. 494) found fares for this service of $9.95 and $19.90, one way and round-trip, to be reasonable; that on April 14, 1950, the defendant filed its 3rd Revised Tariff No. 1 establishing these rates commencing June 1, 1950; that these were the lawful rates for this service until May 9, 1951; that effective May 9, 1951, the commission by its decision No. 45624 (50 Cal.P.U.C. 563) (dated April 24, 1951) authorized the defendant to increase the fares applicable to this service to $11.70 and $23.40, one-way and round-trip, respectively; and that the defendant had increased its rates for this service on March 1, 1951, without prior or any authorization, to $11.70 and $23.40, one way and round-trip, respectively, and had demanded and received this rate for each of the 69 days thereafter, to and including May 8, 1951.

It is further alleged that by reason of these acts the defendant had incurred a penalty to the People in the sum of $2,000 for each of the 69 days' violation of law, or a total penalty of $138,000. Judgment was prayed against the defendant in this sum, plus interest, costs of suit, and such other relief as to the court should appear just and proper in the premises.

The decision of the commission of April 24, 1951, No. 45624, was incorporated by reference in the complaint. It is there disclosed that this defendant, the United Air Lines, Inc., and California Central Airlines operated coach flights between the San Francisco Bay and the Los Angeles areas; that they had each made timely application to the commission to have rate increases to $11.70 and $23.40, one-way and round-trip, respectively, for this service approved as of March 1, 1951, but because sufficient data had not been furnished by them to the commission none of the applications had been granted as of that date. On March 6th the commission, on its own motion, ordered an investigation, and hearings were held as to the reasonableness, lawfulness and propriety of the fares of these companies for this San Francisco Los Angeles air coach service. The carriers there challenged the jurisdiction of the commission to regulate in any respect the business of air transportation companies. Without waiving their objection to the jurisdiction of the commission they offered evidence to support the reasonableness of the increased fare and to show, in extenuation of their action, that the fare increase had been made in response to a request by the chairman of the federal Civil Aeronautics Board, which they believed to be compulsory upon them.

By its decision the commission determined that it had jurisdiction over transportation companies by virtue of sections 20 and 22 of article XII of the state constitution; that this jurisdiction extended to air transportation companies; that the Civil Aeronautics Act has not purported to extend economic regulation to intrastate transportation of persons or property by air other than mail, and that the state was free to regulate intrastate rates and fares of air carriers to the same extent as it regulates intrastate rates of railroads, trucking and bus companies, and telephone and telegraph utilities. It found that the fare increases in question were justified and would be authorized 'for the future' and that reparations should be made to passengers who had paid the excess fare since March 1, 1951. The decision expressly advised the companies that they would thereafter be deemed to be transportation companies, common carriers and public utilities within the meaning of the state constitution and be subject to its prohibitions and requirements. It specifically called their attention to the provisions of section 76(a) of the Public Utilities Act, which provided as follows: ¹

'Any public utility which violates or fails to comply with any provision of constitution of this state or of this act, or which fails, * * * to obey * * * any order * * * of the commission, in a case in which a penalty has not hereinbefore been provided for such public utility, is subject to a penalty of not less than five hundred dollars nor more than two thousand dollars for each and every offense.'

The order was made effective as of May 9, 1951, 15 days after its date. Defendant's petition for review was denied by an order of this court on August 2, 1951, without opinion. A petition for rehearing was denied August 30, 1951. The United States Supreme Court on January 7, 1952, dismissed an appeal from the order denying the writ (Western Air Lines, Inc. v. Public Utilities Comm., 342 U.S. 908, 72 S.Ct. 304, 96 L.Ed. 679) 'for want of a substantial federal question.'

The defendant demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action; that the court had no jurisdiction of the subject matter of the action; that the plaintiff has not the legal capacity to sue; and that the complaint is uncertain, ambiguous and unintelligible in that it cannot be ascertained therefrom under what law the defendant has incurred a penalty to the People.

The special demurrer is without merit and will receive no further notice. The jurisdiction of the superior court to entertain the action and the right of the commission to direct its prosecution are supplied by section 2104 of the Public Utilities Code. The consideration of the general demurrer will dispose of the pertinent questions raised on the appeal.

At the outset it is urged by the plaintiff that the prior decision of the commission followed by the order of this court denying a writ of review and the dismissal of the defendant's appeal by the Supreme Court of the United States has resulted in res judicata as to certain issues involved in the present action. These include the determination (1) that the commission had jurisdiction to fix the intrastate fares of the defendant; (2) that the status of the defendant is that of a public utility subject to regulation as contemplated by the constitution of this state; and (3) that the Civil Aeronautics Act of 1938, as amended, 49 U.S.C.A. § 401 et seq., has not deprived this state of the power, through the commission, to regulate the defendant's intrastate fares.

The determination as to these three questions was made, the plaintiff asserts, in the exercise by the commission of its judicial power, and was and is to that extent as conclusive as would be a final judgment of a court of record.

Under the constitution and statutes of this state the commission is possessed of broad and comprehensive powers. It has wide administrative powers. It has legislative powers, such, for example, as the fixing of rates of public utilities, the exercise of which is prospective in operation and legislative in character. Southern Pacific Co. v. Railroad Comm., 194 Cal. 734, 739, 231 P. 28. That it also possesses judicial powers may not be questioned. People v. Lang Transportation Co., 217 Cal. 166, 170, 17 P.2d 721. When its determinations within its jurisdiction have become final they are conclusive in all collateral actions and proceedings, § 1709, Public Utilities Code. Direct attack is made available by application for writ of review to this court in accordance with the provisions of section 1756 of the Public Utilities Code. We are not herein dealing with a determination of the commission made in the exercise of its judicial power where no direct attack, on constitutional or other grounds, has been made within the time provided by section 1756. However it seems clear that where those determinations have been appropriately and unsuccessfully challenged, as...