State ex rel. Smithco Transport Co. v. Public Service Commission, 22578

• Decision Date: 01 October 1957
• Docket Number: No. 22578,22578
• Citation: 307 S.W.2d 361
• Parties: STATE of Missouri, on the relation of SMITHCO TRANSPORT COMPANY, a corporation, Appellant, v. PUBLIC SERVICE COMMISSION of the State of Missouri and Tyre W. Burton, E. L. McClintock, Charles L. Henson, M. J. McQueen, and D. D. McDonald, as members of said Public Service Commission, Respondents.
• Court: Missouri Court of Appeals

Page 361

307 S.W.2d 361

STATE of Missouri, on the relation of SMITHCO TRANSPORT COMPANY, a corporation, Appellant, v. PUBLIC SERVICE COMMISSION of the State of Missouri and Tyre W. Burton, E. L. McClintock, Charles L. Henson, M. J McQueen, and D. D. McDonald, as members of said Public Service Commission, Respondents.

No. 22578.

Kansas City Court of Appeals, Missouri.

Oct. 1, 1957.

Motion for Rehearing Denied and Motion to Transfer to

Supreme Court Sustained Dec. 2, 1957.

Kyle D. Williams, Neale, Newman, Bradshaw, Freeman & Neale, F. B. Freeman, Jean Paul Bradshaw, Donald J. Hoy, Springfield, for appellant.

Glenn D. Evans, Gen. Counsel, Frank J. Iuen, Ass't Gen. Counsel, Jefferson City, for respondent.

Hendren and Andrae, Jefferson City, for Dairyland Transportation Corporation.

HUNTER, Judge.

This is an appeal from an order of the Circuit Court of Cole County affirming an order of the Respondent Public Service Commission, which order denied an application filed by Appellant, Smithco Transport Company, for a certificate of convenience and necessity for authority to operate intrastate as a freight-carrying common carrier in the transportation of fluid milk and other dairy products in vehicles used exclusively for this purpose over irregular routes in Missouri between certain points named in the application.

Smithco Transport Company previously had applied for and had been granted an interstate permit from respondent. It now seeks authority to transport milk and other dairy products in tank vehicles and bulk vehicles over irregular routes in Missouri between Springfield, Marshfield, Lebanon, Ozark, Mountain Grove, Hartville, Mansfield, Ava, Cabool, Willow Springs, Houston, Alton, Salem, Aurora, Monett, Mount Vernon, Bolivar, Buffalo, Eldon, Warsaw, Versailles, Eldorado Springs and Kansas City; and from these points on the one hand to St. Louis, Jefferson City, Columbia, Sedalia, Rolla, Joplin, Neosho, West Plains, Poplar Bluff and Cape Girardeau on the other hand. It asks authorization of this service irrespective of the location of the points on the route of regular route common carriers, or on the route of two or more common carriers, between which joint or through rates have been established. Applicant proposes in its application that the rates to be charged for the service rendered shall be fair and reasonable and such as the Commission may prescribe or authorize.

We feel that some preliminary and brief explanation of the factual situation of the interested parties and of the questions involved in this case would be helpful before turning to the detailed testimony given before the Public Service Commission.

In 1937, Congress enacted the Agricultural Marketing Agreement Act ¹ which authorized the Secretary of Agriculture to regulate the 'marketing conditions' affecting the movement and sale of certain farm products including milk in federal marketing areas to be established by the Secretary. ² Pursuant thereto the Secretary of Agriculture issued Order No. 3, in evidence herein, which established the St. Louis, Missouri, marketing area, composed of St. Louis City, St. Louis County and certain contiguous area in Illinois. Sanitary Milk Producers, a farmer co-operative, collects milk from its Missouri members and ships in intrastate commerce by means of common carrier service, this fluid milk in bulk primarily from its plant at Lebanon, Missouri, and possibly from its plant at Mountain Grove, Missouri, to processors in St. Louis, Missouri, in the Federal Marketing Area. Sanitary has varying but incidental amounts of surplus milk at its Lebanon, Missouri, plant which it processes into butter and cheese, and likewise ships to places in the St. Louis Marketing Area. It is these shipments of fluid milk primarily from its plant at Lebanon, Missouri, to the Federal Marketing Area that are involved ³ in the principal question raised here; namely, whether or not under the circumstances of this case the Missouri Public Service Commission has jurisdiction to require a transport carrier employed by Sanitary to first secure a certificate of convenience and necessity and subject itself to rate regulation in order to transport this bulk fluid milk from its Missouri plant at Lebanon to its destination in Missouri within the mentioned Federal Marketing Area.

Appellant's first contention is that it does not because the Federal Government has so pre-empted the field through the Agricultural Marketing Agreement Act as to preclude the Public Service Commission from any jurisdiction to require a certificate of convenience and necessity, and to regulate the hauling rates. Protestant, Dairyland Transportation Corporation, contends that while Congress could have pre-empted the field to that extent it has not done so. Appellant makes a second contention that by statutory provision the State of Missouri itself has exempted carriers from Public Service Commission regulation while making these hauls of bulk fluid milk. Section 390.030, subsection (4), RSMo 1949, V.A.M.S. Appellant's third and final contention is that the order of the Commission refusing the certificate was in violation of Missouri's public policy of regulated competition.

During the hearing before the Public Service Commission there was evidence adduced in support of the application for the certificate of convenience and necessity to the following effect: Sanitary Milk Producers, referred to herein as Sanitary, is a large co-operative association composed of five thousand dairy farmers, who reside in twenty-five counties in Illinois and some sixty-eight counties in Missouri. This association was organized twenty-five years ago. At that time the bulk of its milk came from twenty-five Illinois counties and only eight Missouri counties. However, Missouri has become one of the leading dairy states, and is continuing to show growth in that capacity. Sanitary has operated in St. Louis since 1937 under a federal order program which presently is embodied in Order No. 3. Its intent and effect is to equalize prices among handlers for milk in liquid quantities, and it establishes the prices as well as the location of the zone differentials which reflect the cost of hauling from a given point to the city. Sanitary has a plant in Lebanon which is in the 27-cent zone, and one at Mountain Grove which is in the 29-cent zone. Under the order it is permitted to deduct that amount per hundred weight from the price paid to the producer. Sanitary supplies about seventy-five per cent of all the milk used in the St Louis market and 100 per cent of all the milk used in Jefferson City. It has other outlets in Missouri. Its business in the past year was in excess of 500 million pounds of milk and over $20,000,000 in revenue. Some time in the future it plans to expand its business to include Columbia, Rolla, Joplin, Neosho, West Plains, Poplar Bluff, and Cape Girardeau. Its principal occupation is to sell whole milk in fluid form to the processors or distributors in the city and surrounding territory for ultimate distribution in bottles to the customers. The milk is purchased from the farmers in the (southwest Missouri) area and is collected primarily at the Association's plant at Lebanon, Missouri, and to some small extent at its plant at Mountain Grove, Missouri. As expressed by one witness, '* * * the cows give the milk, you have to accept it'; thus, necessitating an operation 365 days of the year. When there is an excess of fluid milk as is frequently the case because the supply and demand varies from day to day, that excess is manufactured into some milk product such as cottage cheese, other types of cheese, powdered milk and butter. The heaviest volume at the plants of Sanitary is on week ends and holidays. Because of the type of product it must be handled and processed rather quickly to avoid spoilage. Its storage facilities are limited. It doesn't have warehouse facilities. It is primarily interested in transportation from Lebanon, and possibly Mountain Grove, where expansion is being considered, to the points within Missouri named in its application, and from those points to Lebanon and possibly Mountain Grove.

The only plant at which Sanitary manufactures cheese, butter and condensed products is located at Lebanon. As to its hauling problem concerning its non-fluid dairy products its manager's testimony was: 'Q. How many private trucks does your company (Sanitary) have at Lebanon to haul butter and cheese? A. One truck that is properly refrigerated.

'Q. And that one truck is sufficient to handle the overflow that you have at this time. A. That we haul.

'Q. Taking away from what the common carrier has been able to haul for you during the week, it leaves you with only an excess which can be handled by one truck of your own on week ends? A. By working around the clock and winding up with every facility loaded to the hilt on Monday we have been able to do it.

'Q. It is a full truckload on week ends? A. Yes, sir, and it makes more than one trip.' He further indicated that common carrier service is not available on Saturdays, Sundays, or holidays.

Sanitary has expansion plans which its manager says will change its picture entirely and will increase its need for transportation service. However, it was not willing to disclose those plans in any detail at the hearing. These plans for expansion may call for plants in other places and especially for enlargement of facilities at Mountain Grove.

The type of hauling service it believes necessary and desires, particularly for its fluid milk is indicated somewhat by the following testimony of its manager: 'We must have ample equipment available at our plant to be on call at a moment's notice. This morning we may call a plant and tell them to send us seven tanks of milk. At noon we may call them and tell them to cut off two of those tanks or we will at noon (call) and tell them to add one tank.'

Sanitary's manager further...