Peoples Cab Co. v. Pennsylvania Public Utility Commission

• Court: Superior Court of Pennsylvania
• Writing for the Court: ERVIN
• Citation: 185 Pa.Super. 628,137 A.2d 873
• Decision Date: 21 January 1958
• Parties: PEOPLES CAB CO., Appellant, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Appellee, and The Yellow Cab Company of Pittsburgh, Intervening Appellee.

Page 873

137 A.2d 873 185 Pa.Super. 628 PEOPLES CAB CO., Appellant,
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, Appellee,
and
The Yellow Cab Company of Pittsburgh, Intervening Appellee. Superior Court of Pennsylvania. Jan. 21, 1958.

[185 Pa.Super. 630]

Page 874

Campbell, Houck & Thomas, Harland I. Casteel, Weller, Wicks & Wallace, Clyde P. Bailey, Pittsburgh, for appellant.

Dickie, McCamey, Chilcote, Reif & Robinson, Harold E. McCamey, Pittsburgh, McNees, Wallace & Nurick, Gilbert Nurick, Harrisburg, for intervening appellee.

Ralph S. Sapp, Asst. Counsel, Pittsburgh, Thomas M. Kerrigan, Harrisburg, for Pa. Public Utilities Corp.

[185 Pa.Super. 629] Before RHODES, P. J., and HIRT, GUNTHER, WRIGHT, WOODSIDE, ERVIN and WATKINS, JJ.

[185 Pa.Super. 630] ERVIN, Judge.

Upon its own motion, the Commission initiated this proceeding on May 19, 1952 by an order directing 'an inquiry and investigation * * * into * * * the financial condition, the operating methods, and the method of financing the acquisition of new equipment of Peoples Cab Company; and further to determine whether because of violations of the Public Utility Law the certificate of public convenience held by Peoples Cab Company should be cancelled or other penalties invoked.'

The predecessor of Peoples Cab Co. (hereafter called 'Peoples') originally came into being by virtue of an order of the Commission entered February 18,1947. Yellow Cab Company of Pittsburgh (hereinafter called 'Yellow') opposed the application of Peoples before the Commission and appealed from the above order. This Court affirmed the Commission on July 17, in an opinion written by President Judge Rhodes, Yellow Cab. co. v. Pennsylvania Public Utility Comm., 161 Pa.Super. 41, 54 A.2d 301, 303. Reference to that opinion will reveal that the quality and quantity of taxicab service then being furnished by Yellow in the City of Pittsburgh was 'wholly inadequate[185 Pa.Super. 631] to meet the demands of the public.' The predecessor of Peoples became bankrupt in 1949. On March 27, 1950 the Commission approved the transfer of a certificate of public convenience from the receiver in bankruptcy to William H. Rothman. On January 8, 1951 the Commission approved the transfer of the certificate of public convenience from Rothman to Peoples. From then until May 1, 1952 Peoples operated the taxicab business in the normal, conventional manner.

Page 875

It suffered financial difficulties and on May 1, 1952 Peoples initiated its first driver incentive plan for the purpose of eliminating careless driving and excessive costs of operation. Peoples produced profits between the years 1952 and 1956. During this period of time the driver incentive plan was going through an evolutionary process. At the last hearings before the Commissioner in the spring of 1956, Peoples had in operation two plans. The first was a conventional one under which drivers were compensated a flat 47 per cent of fares received, had no ownership or equity in the taxicab, which was owned by Peoples, and Peoples paid all of the operating expenses. Only six of the drivers worked under this plan and they were not permitted to work during the peak period from 4:30 p. m. to 6:00 p. m. Ninety-seven men were operating under the 'single incentive plan.' A driver entered this plan by signing a written sales agreement in which Peoples agreed to sell to him and he agreed to buy a new taxicab. At the time of signing the purchase agreement he paid $265 down. Title was to be delivered to him at the end of 48 months. He had the custody of the cab and kept it at his home. Peoples could not assign his cab to any other driver. If the relationship was terminated before the end of the four-year period, he could complete purchase of the cab by making a final payment specified in a schedule contained[185 Pa.Super. 632] in the agreement. If he elected not to complete the purchase, he was to receive a refund during the first year of $150, second year $85, third year $57 and fourth year $28. The driver was obliged to pay to Peoples a weekly minimum 'book' of $63 regardless of whether or not he operated his cab. ¹ Peoples[185 Pa.Super. 633] ensured that the weekly payments

Page 876

were paid in cash whether or not the driver operated his cab, by the following means: in addition to the weekly 'book' the driver paid $1.25 per week to the sick and accident fund. ² Peoples paid into this fund one cent per gallon of gasoline which the drivers were required to purchase from Peoples. ³ The $63 for the first week of illness was paid by the driver and after the first week the subsequent weekly payments of $63 were made to Peoples from the fund described in §§ 22 and 25 of the labor agreement. The drivers were required to purchase from Peoples with their own money all gasoline, tires, oil, chains, anti-freeze and repairs. Peoples sold these items to the drivers at various markups. In addition, each driver was required to pay the first [185 Pa.Super. 634] $75 of damage to the cab and to provide insurance for the amount of damages in excess of the first $75. ⁴

The incentive plan has been exceedingly popular with the drivers, nearly all of whom have voluntarily chosen it. All of the evidence clearly indicates that the plan has created an incentive in the driver to carefully operate and care for his cab. Under this plan gas consumption changed from 8 miles per gallon to 12 miles per gallon; costs of parts averaged $1.95 per vehicle per month which formerly averaged $30 per month; the number of accidents has greatly decreased under the single incentive plan; ⁵ a great saving in [185 Pa.Super. 636] tires occurred

Page 877

under the single incentive plan. ⁶ Drivers operating under the single incentive plan are aware of the necessity of courteous treatment to the public and the monetary advantages in the form of generous tips arising therefrom and the advantages of operating a clean and properly maintained taxicab. The driver assists in cleaning and simonizing his cab. There is undisputed evidence in the record that operation under the single incentive plan has reduced waste and destruction and has established the lowest accident record found anywhere in the taxicab industry. Mr. Louis C. Dwyer, Supervising National Representative of International Transport Workers Union C.I.O., expressed the opinion that the single incentive plan enabled the [185 Pa.Super. 637] drivers to make more money than they ever did previously and resulted also in better service for the public. Notwithstanding the undisputed evidence that Peoples

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has increased its profits as well as the average pay of its drivers and has greatly decreased its operating costs and its accident record, the Commission has found that Peoples was improperly selling its taxicabs, gasoline, services, accessories and parts to its drivers and that the agreement with its drivers relating to the sale of taxicabs for delivery at a future date was improper. In the first two paragraphs of its final order the Commission has given the death knell to the single incentive plan. These paragraphs are as follows: '(1) That respondent pay directly all costs of performing its carrier service and cease and desist from collecting or receiving from its drivers, directly or indirectly, payments for materials, supplies, insurance and all other costs of the respondent's taxicab service.

'(2) The respondent shall enter into no agreement, arrangement or other understanding with any operator or driver whereby the operator or driver, as a condition of employment or as a condition of obtaining more favorable terms of employment, shall pay any sum to respondent on account of the purchase or use of a taxicab.'

Not one witness was called from the public to show that the single incentive plan operated against the public interest. On the contrary, all of the evidence in this record clearly indicates that the service to the public has been improved by the operation of the single incentive plan. The Commission called four driver witnesses. One was employed by Peoples at the time of the hearing and three were on strike and not employed...