Edward S. Burton v. Matanuska Valley Lines, Inc., a Corporation in the Territory of Alaska

244 F.2d 647, 17 Alaska 298

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 5, 1957
• Docket: 15030_1
• Status: Published

Opinions

POPE, Circuit Judge.

Appellee Matanuska Valley Lines, Inc., a common carrier of passengers by bus, had operated for some years an integrated system of bus lines within the City of Anchorage, Alaska, within the nearby military bases known as Elmendorf Air Force Base and Fort Richardson Military Reservation, between those bases, and between the bases and the City of Anchorage, and throughout the public highways surrounding the City and the bases, and extending over a large aréa in South Central Alaska. It held a franchise from the City of Anchorage, a certificate of public convenience and necessity from the Territory, and licenses from the military authorities on the bases.

Appellant, Anchorage Bus Company (here called Anchorage Bus), through its officers, the individual appellants, shortly before this action arose, procured from the Military Commands contract permission to operate a bus business for hire between and within those bases, in competition with Matanuska Valley Lines (here called Matanuska). Anchorage Bus then announced that it was prepared, and was about to commence bus operation in direct competition with Matanuska in all the areas in which the latter had established lines, including those in the City, those between the City and the bases, and in the areas outside the City and the bases. Asserting that for these latter operations Anchorage Bus had no lawful franchise, certificate or permit to operate, and that the proposed competitive operation would be ruinous to Matanuska, and cause it irreparable injury and damage, the latter brought this action against Anchorage Bus, and its officers, seeking among other things, an injunction against its proposed operations outside the military bases. After notice and hearing upon affidavits and documentary evidence, the court granted Matanuska’s motion for a preliminary injunction. This appeal is from that interlocutory injunction.

The first complaint shown in this record (an amended complaint) was filed October 25, 1955. How long prior thereto the action was commenced does not appear. But it is apparent that shortly after the action was begun, Anchorage Bus began to take steps designed to assure the fulfillment of its intention to operate in competition with Matanuska. On October 21, 1955, Anchorage Bus obtained from the Alaska Bus Transportation Commission a certificate of public convenience and necessity to furnish bus transportation between the City and the military bases. Four days later that certificate was suspended “until a public hearing could be held.” The order recited that suspension was granted upon Matanuska’s protest that the certificate had been issued without notice, and that the Anchorage Bus operations would put Matanuska out of business. It was ordered that hearing would be had on December 6, 1955, as to whether the Anchorage Bus certificate should be reinstated and Matanuska’s certificate modified “to allow concurrent operations by other authorized bus companies.”

On October 31, 1955, Matanuska made its motion for a preliminary injunction. Hearing on the motion and the affidavits filed in its support and in opposition thereto was had on November 10, 1955. On November 14, 1955, the court announced its decision to grant a preliminary injunction effective until December 6, 1955, the date set for hearing by the Commission, and directed plaintiff to prepare findings and a form of arder.

When the Commission met, as contemplated, it made no decision as to either question, that is whether Anchorage Bus should have a certificate of public convenience and necessity, or whether Matanuska’s certificate should be ruled non-exclusive. The reason for this non-action was that the Commission believed (erroneously, it developed) that Anchorage Bus could travel between the City and the bases without traversing any Territorial roads. Making showing of this failure of the Commission to act, and that Anchorage was about to commence the operations which had been enjoined, Matanuska renewed its application for a temporary injunction asking that such injunction be continued during the pendency of the suit.

At this stage of the proceedings, the commanding officer of the Elmendorf Air Force Base moved into the arena on the side of Anchorage Bus. According to an affidavit of a local business man, the deputy base commander, who issued the telegram shortly to be mentioned, stated that commitments had been made to Anchorage Bus for an exclusive contract to operate on the bases, and that to make that operation successful, Anchorage Bus needed the revenue from base to City operations, and the officer felt bound to support the new company to the limit. On December 21, 1955, the Commission received from the Commander of the Air Force Base a telegram stating that Mata-nuska’s liability policy was insufficient coverage for operation on the military reservation and that it was not adhering to schedules; hence he was seeking authority from the Secretary of the Air Force to cancel Matanuska’s license; that if this occurred hardship would result unless operation between the City and the bases by another operator was authorized; and that the insurance, equipment and on-base service of Anchorage Bus was entirely adequate and satisfactory. Upon receipt of this telegram, the Commission, immediately, and without notice, issued a temporary certificate to Anchorage Bus.¹

Contrary to the hope implied in the Commander’s telegram, Matanuska’s service on the bases and between them and the City was never suspended. This was the first time in the more than three years it had held a license on the base, that any suggestion of lack of adequate insurance had been made, and at once Matanuska procured additional coverage to meet the Commander’s complaint.² It is also plain that the parties and the _ court considered that the court’s rulingtr of November 14 preceding, that a pre-‘\ liminary injunction should issue, was , still in effect, for on December 23 An- , chorage Bus moved the court to dissolve the temporary injunction, mainly on the ground of the action of the military authorities and the issuance of the tempo-[ rary certificate. This was heard, on affi-' davits filed in support and in opposition,! and denied on December 27. During a portion of the period since November 14, the court had been considering proposed findings offered by Matanuska, and exceptions of Anchorage Bus thereto. On January 16, 1956, the court made and filed its findings and conclusions and issued the preliminary injunction from which this appeal is taken. The injunction was conditioned upon plaintiff giving a bond in the sum of $40,000 to cover costs and damages. It enjoined operations between the City and the bases, in the City, and in the Territory, but expressly excepted and permitted operations within the military bases. J

On this appeal much of the argument by appellant relates to the question as to whether Matanuska should prevail upon the final trial of this action. Plaintiff cannot win, it is said, for two reasons: (1) Anchorage Bus had a certificate of convenience and necessity,—the one issued December 21,1955, described above; and- (2), Matanuska’s certificate from the Commission, and its franchise from the City are neither of them “exclusive,” notwithstanding they purport to be such.

Before we go into the questions which must be answered in order to evaluate either of these two points,— questions, which we shall note, are not easily answered, we should first observe the limited scope of review which is permitted us upon an appeal from a temporary injunction. This limitation arises from the nature of an interlocutory injunction, and from the purposes to be served thereby. Such an injunction preserves the status quo and protects plaintiff from irreparable injury during the pendency of a suit until such time as the court may adjudge and finally determine the rights of the parties. Necessarily the court must presuppose that in the case at bar it may turn out that plaintiff will ultimately lose. Thus the court may finally find the facts against the plaintiff who procured the temporary injunction. But this possibility does not compel a denial of a temporary injunction if proper showing be made therefor; otherwise a court, which necessarily requires time to reach a final determination, would have no way to protect a party who may suffer irreparable loss if the status quo be not preserved. Without this power to issue interlocutory injunctions, courts would be unable to make their final judgments effective, for the very right to be protected, or the subject of the action itself, might be destroyed irreparably during the period required to arrive at an ultimate determination of the action.

And just as a court must of necessity obtain time in which to determine which party is right upon the facts, so in a substantial number of cases time is necessarily required to resolve grave, difficult and complicated questions of law. If, in such a case, it is ultimately decided that the party who obtained the temporary injunction cannot win, that in itself does not demonstrate that it was wrong to issue the injunction. For a considerable latitude of judicial discretion is allowed the trial court in its determination whether the situation requires a preservation of existing conditions through an injunction pendente lite, and our more deliberate conclusion that the ultimate decision must be against a permanent injunction does not in itself warrant a reversal of the interlocutory order.

We know of no better statement of this principle than that found in Love v. Atchison T. & S. F. Ry. Co., 8 Cir., 185 F. 321, 331, as follows: “But the granting or withholding of an interlocutory injunction rests in the sound judicial discretion of the court of original jurisdiction, and where, as in the case in hand, that court has not departed from the equitable principles established for its guidance, its orders may not be reversed by the appellate court, without clear proof that it has abused its discretion. * * * An appeal from an order granting or refusing an interlocutory injunction does not invoke the judicial discretion of the appellate court. The question is not whether or not that court in the exercise of its discretion would make or would have made the order. It was to the discretion of the trial court, not to that of the appellate court, that the law intrusted the granting or refusing of these injunctions, and the only question here is: Does the proof clearly establish an abuse of that discretion?”

And in Ohio Oil Co. v. Conway, 279 U.S. 813, 815, 49 S.Ct. 256, 73 L.Ed. 972, the Supreme Court, expressly citing with approval the Love case, said: “Where the questions presented by an application for an interlocutory injunction are grave, and the injury to the moving party will be certain and irreparable, if the application be denied and the final decree be in his favor, while if the injunction be granted the injury to the opposing party, even if the final decree be in his favor, will be inconsiderable, or may be adequately indemnified by a bond, the injunction usually will be granted.”

When the tests thus stated are applied to the facts of the present case, we are forced to conclude that the interlocutory injunction here under review must be sustained. The court below was presented with a number of questions which were both serious and difficult. One of these was whether the certificate of convenience and necessity authorizing Matanuska’s maintenance of transportation facilities between the military bases and the City was an exclusive one.³

Matanuska’s certificate, dated September 17, 1949, and issued by the Transportation Commission, was expressly stated to be an exclusive one. The Territorial Act of March 23, Chap. 93, Sess. Laws of Alaska, 1949, provided in § 2(e) * that the Commission should have power to issue certificates of convenience and necessity, which authority “shall include the discretion to issue exclusive certificates on such routes and upon such conditions as the Commission deems necessary or advisable * * It is contended that this legislative provision is null and void because it violates the provisions of the Act of Congress enacted in 1886, now found in 48 U.S.C.A. § 1471, and providing in part as follows: “The legislatures of the Territories of the United States now or hereafter to be organized shall not pass local or special laws in any of the following enumerated cases, that is to say: * * * Granting to any corporation, association, or individual any special or exclusive privilege, immunity, or franchise whatever. In all other cases where a general law can be made applicable, no special law shall be enacted in any of the Territories of the United States by the Territorial legislatures thereof."⁴

It is by no means clear that this language of the 1886 enactment was intended to prohibit this or other territorial legislatures from recognizing that public utilities are natural monopolies and providing for. regulation of such utilities by means comparable to that commonly provided by state legislatures, which often find that such public utilities may best be regulated by making them monopolies. In Idaho Power & Light Co. v. Blomquist, 26 Idaho 222, 141 P. 1083, 1088, the court said: “There is nothing in the Constitution that prohibits the Legislature from enacting laws prohibiting competition between public utility corporations, and the Legislature of this state no doubt concluded that a business like that of transmitting electricity through the streets of the city and furnishing light and power to the people must be transacted by a regulated monopoly, and that free competition between as many companies or as many persons as might desire to put up wires in the streets is impracticable and not for the best interests of the people.”

We know of nothing either in the legislative history of this congressional provision or in the decided cases dealing with it, which would suggest that it was intended to be a limitation upon the Alaska legislature’s power to provide a normal system for regulation of bus companies. Nixon v. Reid, 8 S.D. 507, 67 N.W. 57, 32 L.R.A. 315; Henderson v. Ogden City Railway Co., 7 Utah 199, 26 P. 286, are cases dealing with the same Act of Congress, and both reject the interpretation of the Act which appellants urge upon us here. Certainly the assertion that the provisions of the Alaska statutes authorizing the Commission and the City Council to grant exclusive certificates and franchises, are null and void, presented a grave problem to the trial judge and one which, to say the least, required much time for study and consideration. The position taken by the appellant on this point is so doubtful that we think the trial court could not properly accept its argument without careful investigation and extended consideration.

There was also an important question as to whether Matanuska was not entitled to an injunction even if its certificate was not an exclusive one. That would be particularly true if Anchorage Bus was without a valid certificate of its own. See Frost v. Corporation Commission, 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483; Wichita Transportation Co. v. People’s Taxicab Co., 140 Kan. 40, 34 P.2d 550, 94 A.L.R. 771; Puget Sound Traction, Light & Power Co. v. Grassmeyer, 102 Wash. 482, 173 P. 504, L.R.A.1918F, 469; Adam v. New York Trust Co., 5 Cir., 37 F.2d 826. Furthermore, there appears to be substantial authority for the proposition that the holder of a non-exclusive public utility franchise who is first in the field may enjoin the second and later holder of a franchise who threatens competition which seriously or unnecessarily interferes with the first holder’s property or operations. See the cases collected in the Note and Annotation, 119 A.L.R. 432.

As we have indicated in the statement of facts here, Anchorage Bus received a temporary certificate from the Commission on December 21, 1955. If the plaintiff's certificate of convenience and necessity dated September 17, 1949, was an exclusive one, as it purported to be, the issuance of the temporary certificate would constitute no bar to plaintiff’s injunction.⁵

But there is a further difficult question presented here, and not an easy one, namely, whether the temporary certificate was valid.

The statute (see footnote 1, supra) contemplates the issuance of such a certificate only to provide for service between points “having no carrier service capable of meeting such need.” As has been indicated, there was enough reason to believe that the Commission issued the temporary certificate under a misapprehension and a belief that an emergency existed. The certificate so shows on its face.⁶ The communications of the commanding officer had led the Commission to believe that Matanuska could not operate. However, it actually never ceased operating, and the court was justified in assuming that no emergency of the kind contemplated by the statute had arisen; —hence, that the conditions upon which the Commission might issue the certificate were non-existent.⁷

In suggesting as we have done here that the trial judge was confronted with serious and thorny questions for decision in this case, we are not undertaking to decide how those questions should ultimately be resolved. As this court had occasion to say in Trautwein v. Moreno Mut. Irr. Co., 9 Cir., 22 F.2d 374, 376, a case quite similar to the present one, “[Bjut those are all questions for consideration when the case is heard on the merits. On the present hearing, the courts are only concerned with the single question: Did the plaintiffs make out a prima facie case?”

Further pursuing the inquiry suggested by the Supreme Court’s statement, supra, in Ohio Oil v. Conway, it should be noted here that the injury to plaintiff would be certain and irreparable if the application for an injunction would be denied and the final decree be in its favor. Matanuska was the owner of a long established business thoroughly integrated and serving an immense area in that portion of Alaska, an area with a population in excess of 100,000. We know judicially, as the district court knew, that final determination of the issues presented in the case would come only after long delay because of the condition of the court calendars in Alaska. Without an injunction Matanuska would have no adequate remedy against Anchorage Bus which was a newcomer with a smaller and very limited investment and nothing but an expectancy in the way of a business. The injunction was issued upon condition that the defendant be indemnified by a bond and the amount of the bond required was in an amount substantially equal to the defendant’s total investment. The injury to the latter from the injunction, even if the final decree went in its favor, would obviously be inconsequential.

It is our opinion that in issuing the temporary injunction the court was following the rules applicable in such cases as Ohio Oil v. Conway, supra; Deckert v. Independence Shares Corp., 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189, and Prendergast v. N. Y. Tel. Co., 262 U.S. 43, 43 S.Ct. 466, 67 L.Ed. 83. Cf. High on Injunctions, 4th Ed. § 1510.

Anchorage Bus has undertaken to urge in its brief here a number of other points which we think have no bearing upon the substantial issues in the case. Thus it complains that the trial court failed to consider its contention that the Commission improperly suspended its certificate of October 21, 1955. It is our view that the suspension was within the power of the Commission but that the right to present this contention was waived at the hearing in the court below.⁸

It is also argued that the court was in error in granting a temporary restraining order pending the hearing on the temporary injunction. As we have held that the temporary injunction issued after hearing was properly granted, it necessarily follows that the temporary restraining order was an appropriate step preliminary to that injunction.

The temporary injunction order appealed from is affirmed.

1 . It is not entirely clear just when this temporary certificate would go into effect. Section 9(d), Chap. 93, Session Laws of Alaska, 1949, provides: “Except as otherwise provided in this Act, all orders of the Commission, other than orders for the payment of money, shall take effect within such reasonable time, not less than thirty days, as the Commission may prescribe * *

The statute’s provision for temporary certificate, § 7(a), provides: “To enable the provision of service for which there is an immediate and urgent need to a point or points having no carrier service capable of meeting such need, the Commission may, in its discretion and without hearings or other proceedings, grant temporary authority for such service by a common carrier by bus or a contract carrier by bus, as the case may be. Such temporary authority shall be valid for such time as the Commission shall specify, and shall create no presumption that corresponding permanent authority will be granted thereafter.”

2 . On December 22, 1955, the Commander wrote Matanuska suspending its authority to operate on the base, and directing that it cease operations on December 27. On December 23 Matanuska procured the additional coverage to meet the officer’s complaint. (The letter had suggested that Matanuska might make “further demonstration to us of your financial responsibility and evidence that you carry adequate liability insurance” and then the officer would consider granting a new license to operate.)

3 . A related question of somewhat less significance here is whether Matanuska had an exclusive franchise to operate its bus transportation system in the City. The franchise, granted by ordinance to Matanuska, provided that the grantee “shall have the exclusive right or franchise to operate a motor bus service, or trolley bus service as a common carrier over the streets of the City of Anchorage, Territory of Alaska, and other points without the City of Anchorage to points within the City of Anchorage. * * * ” The ordinance granting such franchise was enacted January 24, 1956. By Chap. 91, SossXaws of Alaska, 1919, the city councils of such cities as Anchorage were authorized to grant franchises “including exclusive franchise privileges” for bus transportation systems and the same chapter provided that exclusive franchises theretofore approved were ratified and given full force and effect under the Act. It is noted that a portion of the operations of Anchorage Bus which were enjoined by the court below were within the City and upon the City’s streets. See also footnote 6 infra.

4 . Substantially the same language was incorporated in the Alaska Organic Act of 1912, 37 Stat. 514, see Title 48 § 77, where in stating certain restrictions imposed by the territorial legislature, it was said: “Nor shall the legislature grant to any corporation, association, or individual any special or exclusive privilege, immunity, or franchise without the affirmative approval of Congress.”

5 . Under the authorities listed in the note and annotation cited above, even if plaintiff’s certificate were non-oxcinsive, yet since it was the first one, it might procure an injunction against the defendant even though the latter had the temporary certificate.

6 . The certificate recites that Matanuska “has been denied access to the said military installations.”

7 . A further question as to the validity of the temporary certificate is presented by the language of § 2(e), supra. There, the Commission’s power to issue certificates is set forth as follows: “(e) Issue certificates of convenience and necessity, conformable to the provisions of this Act as hereinafter set forth. This authority shall include the discretion to issue exclusive certificates on such routes and upon such conditions as the Commission deems necessary or advisable in the public interest to secure continuous, efficient and dependable bus services in the affected areas, provided that in malting such determinations with respect to routes partly within and partly without incorporated towns, an order for issuance of a certificate shall not be final until concurred in by the city council or councils of the affected town or towns by a majority vote of the members to which such bodies are entitled.”

The portion we have emphasized is significant, for the City of Anchorage was incorporated, it never approved any operation by Anchorage Bus, and the certificate purported to authorize operation within the City to the City bus terminal.

8 . When the legality of the suspension was under discussion the following colloquy took place between the court and counsel for appellants: “The Court. In that respect, Mr. Butcher, I do not feel it is controlling in an injunctive proceeding, and, therefore, that would be a collateral matter to be tried before the court at this time, which I do not feel would be proper. I think that the case itself should stand or fall upon the merits of the cause of action which the [appellee] has at this time.

“Mr. Butcher. That is exactly our position, Your Honor.”