Tarry Moving & Storage Co. v. Railroad Commission, A-9210

• Decision Date: 03 April 1963
• Docket Number: No. A-9210,A-9210
• Parties: TARRY MOVING & SORAGE CO., Inc. et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.
• Court: Texas Supreme Court

Page 322

367 S.W.2d 322

TARRY MOVING & SORAGE CO., Inc. et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.

No. A-9210.

Supreme Court of Texas.

April 3, 1963.

Rehearing Denied May 22, 1963.

Christopher & Bailey, Fort Worth, for petitioners.

Will Wilson, Atty. Gen., Austin (Waggoner Carr, Austin), Marvin Sentell, Asst. Atty. Gen., Lanham & Hatchell, Austin, for respondents.

CULVER, Justice.

Originally the Railroad Commission granted four specialized motor carrier certificates authorizing the transport of certain goods to and from the following areas: (1) within a 50-mile radius of Olney; (2) within a 50-mile radius of Seymour; (3) within a 25-mile radius of Henrietta, and (4) within a 25-mile radius of Wichita Falls. The territories so allotted under these certificates overlap to a considerable degree.

In 1957 the Commission granted the application of James Jeter consolidating these four certificates. Some years later, after a hearing, the Commission granted Jeter's application to divide the consolidated certificates as they existed before the consolidation so as to enable him to sell three certificates to three separate individuals, retaining for himself the territory within a 50-mile radius of Olney. The case here arises out of the latter order.

On appeal by Tarry Moving & Storage Company et al. the orders of the Commission were sustained by the district court and the Court of Civil Appeals. 359 S.W.2d 62.

(1) We brought the case here to determine the principal point in controversy, to wit: does Section 5a(a) of Article 911b, authorizing the Commission's disapproval of a sale if 'not best for the public interest' when construed in the light of other provisions of the statute, impose the duty upon the Commission to consider the question of public convenience and necessity in passing upon the application to divide and sell the consolidated certificate or a part thereof under the facts above outlined? We now concur with the Court of Civil Appeals in answering that question in the negative.

This exact question had not heretofore been passed upon by our appellate courts not does the statute itself expressly provide an answer.

Tarry Company contends that this transaction comes squarely within Section 5a(a) which provides that, before a specialized motor carrier certificate may be sold or transferred, an application therefor must be presented to the Commission and the Commission may disapprove if it determines that the sale is not (a) in good faith or (b) that the purchaser is unable to continue the operation so as to render the services demanded by public necessity and convenience or (c) that the sale is not best for the public interest. It further contends that since the Commission did not in its hearing require any showing that this transaction was 'best for the public interest,' the orders of the Railroad Commission cannot stand and must be stricken. Tarry insists that when a certificate has been purchased and consolidated with another certificate, the two have been unified and merged into a single certificate; that the original certificate is dead and cannot be revived; that in fact and in law, the application here was for the issuance of three new certificates, and therefore it would require all the proof and procedure as outlined for a new certificate under the statute. Tarry argues that three additional carriers have been authorized by this order, which indicates necessity for the consideration of public interest.

On the other hand the Commission takes the position that since no service to the public has been eliminated nor any new service provided and the proposed new carriers possess the necessary qualifications to render the same service that was furnished by Jeter, the interest of the public is not in issue. The Commission says that this is a division order and controlled not by Section 5a(a) but by Section 4(a) which vests the Commission with the power and duty to prescribe rates and all rules and regulations necessary to govern motor carriers and for the safety of their operations, and to supervise and regulate motor carriers in all matters affecting the relationship between such arriers and the shipping public.

The Commission says that no new operating rights have been created and it is only until they are sought that the issue of public interest becomes an issue.

The Commission insists that the situation here no more affects the public interest than would be the case if the original four certificate holders had sought permission to sell their certificates to four other individuals. Convenience and necessity for the service had already been determined, and by the sale the service would not be altered where the Commission had found upon a hearing that the purchasers had bought in good faith and would continue the operation so as to render the service demanded by public interest and convenience.

In L. A. Norris Truck Line v. Railroad Commission, Tex.Civ.App., 245 S.W.2d 746, wr. ref., the application was to divide from the certificate and sell the right to transport oil-field equipment. The attack made on the Commission's order granting the application was based on the fact that there had been offered no evidence of public convenience and necessity to support that order. The Court of Civil Appeals in upholding the order observed: 'The question of necessity and convenience having been determined by the Commission at the time the original certificate was granted, there was no occasion to or authority for the reopening of such question upon the application for the sale and transfer of the divided portion of the certificate.' That holding is strongly persuasive in favor of the Commission's contention here. If the public interest need not be expressly shown where the application is to divide the certificate as to commodities, then it would be logical to assume that the public interest would not be impaired where the application is to divide the territory. In each case an additional carrier will be created, but no change effected in the character of the service to be rendered. See also Roberdeau et al. v. Railroad Commission, Tex.Civ.App., 239 S.W.2d 889. ¹

Tarry Company demonstrates the similarity between the Federal Interstate Commerce Act, Sec. 5(2) affecting unifications, mergers and acquisition of control, with 5a(a) of our act and cites certain federal decisions which lend support to its contention, among them being Southwest Transportation Company-Purchase-Johnson, 35 M.C.C. 437; McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544; and Pacific Intermountain Express Company-Control and Merger-Union Transfer Co., 12 F.C.C. 40724. These generally hold that operating rights may not be indefinitely removed from active use and preserved for subsequent transfer to an additional motor carrier when conditions may have materially changed in the territory both as to competition and traffic and to allow this practice would be inconsistent with the public interest.

(2) We quite agree that the paramount consideration, in both State and Federal regulations controlling public transportation and common carriers, is that of the public interest. But whether in this case the old certificates lie dormant and thus are subject to sale with the Commission's approval or new certificates issued to the purchasers is largely theoretical.

It makes no practical difference whether we say the old certificates were revitalized or that new certificates were issued; the result of the division and sale is the same, at least so far as the public is concerned.

Tarry Company also cites Houston & North Texas Freight Lines v. Johnson, 140 Tex. 166, 166 S.W.2d 78, for the proposition that in order to authorize the division of an existing certificate into two parts and the sale of one of the parts, the Commission should find that the division and sale will not impair the service to the public. In that case the holding was, that before an application to divide and sell a portion of the certificate could be approved, it must be considered and acted upon at a regular or called meeting of the Commission. Since that procedure had not been followed we reversed and remanded. We did, however, take occasion to point out in view of the possibility of a later consideration of the matter, the Commission should take the matter of public interest into account. The application there sought to break up one through route into two connecting short routes, thus necessitating an interchange on commodities billed for shipment over the original through route, which in some instances might not serve the public as adequately as before the route was broken up. The application called for a change in the character of service rendered.

It may reasonably be said that since the Commission has found in this case that (1) the purchaser is financially able and capable of maintaining the service authorized; (2) the equipment proposed to be used by him meets all requirements; (3) he agrees to conduct operations in the same manner as theretofore authorized; (4) the application is made in good faith; and the further fact that the Commission found initially that 'convenience and necessity' required this service, the public interest has been sufficiently considered.

(3) There is substantial merit in Tarry's contention. The question is a close one; however, the scales are weighted with the departmental construction consistently given over the past 25 years, namely, that 'public convenience and necessity' is not involved in consolidations or divisions of specialized motor carrier certificates. The Director of the Motor Transportation Division, employed in that capacity since 1938, testified the Commission has allowed carriers to divide certificates since 1934 and that at the hearing on such an application no proof of convenience and necessity would be required. He further testified neither division nor...