O. E. Poulson, Inc. v. Hargleroad Van & Storage Co.

159 N.W.2d 302, 183 Neb. 201, 1968 Neb. LEXIS 519

• Court: Nebraska Supreme Court
• Decided: June 7, 1968
• Docket: 36707
• Status: Published

Opinions

Spencer, J.

This is an appeal by O. E. Poulson, Inc., from an order of the Nebraska State Railway Commission denying an application for an extended certificate of public convenience and necessity. On February 24, 1966, O. E. Poulson, Inc., filed its application requesting authority to transport acids and chemicals in bulk in tank or hopper-type vehicles between all points in Nebraska. On the, same date, identical applications were filed by Wynne Transport Service, Inc., and Paul Abler, doing business as Central Transport Company, and on March 17, 1966, by D & R Bulk Carriers, Inc. Thereafter, on March 21, 1966, applications were filed by Ruan Transport Corporation, Peake, Inc., and Wheeler Transport Service, Inc., for authority to transport acids and chemicals (except those which are derived from petroleum or petroleum products) in bulk, in tank or hopper-type vehicles. Ward Transport, Inc., filed an identical application on April 4, 1966. On April 12, 1966, Bridge Brothers filed an application identical with that of the four companies first-above mentioned. All nine applications were combined for hearing purposes although separate orders were subsequently entered with reference to each application. Appearances were made by Hargleroad Van & Storage Co. and Herman Bros., Inc., protesting all applications. For convenience, the parties interested will hereafter be referred to as Poulson, Wynne,, Abler, D & R, Ruan, Peake, Wheeler, Ward, Bridge Brothers, Hargleroad, and Herman Bros. Ruan, Peake, Wheeler, and Ward also protested with reference to the applications of all the other parties interested.

During the course, of the hearing, all applicants amended their applications to ask authority to transport “Fertilizers and fertilizer materials (with or without pesticides), feed ingredients, liquid feed supplements, anhydrous ammonia and urea, between points in Nebraska.” Then the applications of Poulson, Wynne,, Abler, and D & R were further amended by the insertion of the word “chemical” immediately ahead of the words “feed ingredients” so that the applications would read “chemical feed ingredients.” A lengthy hearing was had on the nine applications and the protests in regard thereto. At the conclusion of the hearing, all applications were granted, excepting that of Poulson which was rejected. Poulson appeals and protestants appear as appellees herein.

The record discloses that Bridge Brothers, prior to this hearing, held authority to transport fertilizers and anhydrous ammonia between all points in Nebraska. The seven other successful applicants had authority to transport petroleum products, but such authority was limited as to the territories which could be, so serviced in the cases of Wheeler, Abler, Wynne, D & R, and Ruan. Wheeler and Ruan also had authority to transport liquid fertilizers between all points in Nebraska. All of the carriers authorized to transport petroleum products, except those with liquid fertilizer authority, had made it a practice to transport anhydrous ammonia on the theory that it was a petroleum product, but there being considerable doubt on this point, it became apparent during the course of the hearing that there, was a need of a determination by the commission of the authority to transport anhydrous ammonia as a petroleum product. The evidence in fact discloses that anhydrous ammonia is generally derived as a product of natural gas but .-is; sometimes ' produced from coal and other sources . and that it cannot correctly be considered a petroleum product. This was a matter that apparently had not been previously investigated by the commission and it had-acquiesced in the transportation of anhydrous ammonia by those carriers holding authority to transport petroleum products. Poulson did not have authority to transport- either petroleum products or fertilizers. It is apparent that, generally speaking, all applicants sought an extension of their respective authorities to permit the handling of the materials mentioned in the amended applications. Those applicants which held authority to transport petroleum products wanted that authority broadened and clarified so that they could transport anhydrous ammonia which would be included in the term fertilizer and fertilizer materials. All applicants except one with general fertilizer transporting authority, including two with authority to transport liquid fertilizers, desired their authorities expanded to include all fertilizers and fertilizer materials. Generally speaking, all applicants desired a further expansion of their respective authorities to include feed ingredients ■ and liquid feed . supplements. All requested authority to transport the products in question on a statewide basis between all Nebraska points. All nine of the applicants held interstate authority to transport the materials involved in this proceeding.

Hargleroad, one of the protestants, is in the process of selling its business to the other principal protestant, Herman Bros., and the evidence indicates that the tractors and trailers or motorized equipment held by Hargleroad are not being transferred to Herman Bros. It appears that Hargleroad is probably no longer a real'party-at -interest in this action and that it is possible that-the Hargleroad'equipment may be removed from-service. in Nebraska. ■ ■

'■There:-is’some- évidence in the record by protestants-that they are capable of handling all of the Nebraská •intrastate business involving the products mentioned in the amended applications, but all parties conceded that there has been an extraordinary and phenomenal growth in the fertilizer business in Nebraska during recent years; that it increased about 25 percent in each of the past 2 or 3 years; and that it would continue such a rapid rate of development. Several new plants have been constructed in the area in the past 2 years and more are in the process of construction with old plants being rapidly enlarged. For example, a large storage facility is in the process of construction in Blair, Nebraska, on the Missouri River, with fertilizer products to be barged in on the river and thence to be distributed in Nebraska.

Representatives of shippers testified. These included Standard Chemical which handles feed products, Phillips Petroleum Company, Comineo American, Incorporated, Fél-Tex, Incorporated, Consumers Cooperative Association, and Gulf Oil Company which handle fertilizers and fertilizer materials. These witnesses testified in detail to the rapid expansion of the industry and contrary to the evidence, given by the protestants, they stated that during busy seasons they were frequently unable to get their products moved by the existing carriers authorized to transport such products. They further indicated that they expected this difficulty to continue; that it was frequently detrimental to thejr business, as fertilizers constitute a product that is seasonal and must be made available promptly during the seasonal demand therefor; and that when unable to move their products, it resulted in a loss of business to their respective firms. Four of these shippers specifically supported the granting of all applications, including that of Poulson. The Phillips Petroleum Company representative recommended all except the Poulson application but refused to give any reason whatsoever for failing to endorse this application. The sixth, Gulf Oil Company, did not specifically endorse any particular application but stated that it was primarily interested in seeing to it that sufficient transportation facilities were available for its use and that it certainly desired a continuance of the authority to handle its products insofar as the applicants were concerned with whom it had been doing business. It had not previously done business with Poulson, and possibly, inferentially, the testimony of this witness could be construed as not endorsing the application of Poulson, but on the other hand he was not objecting thereto.

It will be noted that in its original action, the commission granted authority to Poulson, Wynne, Abler, and D & R to transport anhydrous ammonia between all Nebraska points and withheld decision on the balance of the applications. This order was entered on March 14, 1967. On March 22, 1967, the commission countermanded the order of March 14, 1967, and authorized all nine applicants to transport: “Acids and chemicals used in the, manufacture of fertilizers, feeds and feed supplements, insecticides, herbicides and the liquid finished products thereof, including anhydrous ammonia, in bulk in tank or hopper type vehicle” between all Nebraska points. The orders contained no reservation but a motion for rehearing was filed by protestants. Thereafter, on April 5, 1967, the March 22, 1967, orders were set aside and the orders of March 14, 1967, were reinstated with a similar reservation for further hearing regarding products other than anhydrous ammonia. On May 18, 1967, the orders of April 5, 1967, were set aside and the final orders heretofore referred to were entered granting all applications except that of Poulson. In each of its previous orders, the commission found that Poulson was: “* * * fit, willing and able properly to perform the service proposed, and to conform to the provisions of Sections 75-301 to 75-347, R. R. S., 1943, and the requirements, rules and regulations thereunder.” It further found: “That the proposed service is or will be required by the present or future public convenience and necessity * * *.” In view of the previous findings of the commission, of the fact that eight of the nine applications were granted, and that no specific reason is given by the commission to justify its discrimination against Poulson, the question is posed as to what lies behind the broad finding that in the case of Poulson, public convenience and necessity do not require its services.

Appellees seek to justify the rejection of the Poulson application on three grounds: First, that it is a small concern; second, that it had not previously been transporting petroleum products and fertilizers; and third, a lack of shippers’ support. To ascertain the validity of these objections, resort must be had to the record.

Ordinarily the only questions to be determined on appeal from the Nebraska State Railway Commission are whether the commission acted within the scope of its authority and whether the order complained of is reasonable and not arbitrarily made. Petroleum Transp. Co. v. All Class I Rail Carriers, 173 Neb. 564, 114 N. W. 2d 34. The only question to be determined here is whether the finding of the, commission that the proposed service offered by Poulson is not required by the present and future public convenience and necessity is arbitrary and unreasonable under the evidence.

Regarding the first objection, it is true that it appears from the record that Poulson was a small operator; however, it may be pointed out that at one time probably all parties concerned were, small operators and remained such until opportunities for growth were found in line with the increased demands of shippers and expanded certificates of public convenience and necessity were obtained from the commission. In the present instance, the evidence of the shippers completely refutes the statements of protestants to the effect that they can handle all business in the rapidly growing fertilizer and feed industrv. Protestants have not been, and it is not anticipated that they will be, able to meet the shippers’ demands. It is, therefore, apparent that there is room for a newcomer on the scene. “In determining the issue of public convenience and necessity, in cases where new or extended operating rights are sought, controlling questions are whether the operation will serve a useful purpose responsive to a public demand or need; whether this purpose can or will be, served as well by existing carriers; and whether it can be served by applicant in a specified operation without endangering or impairing the operations of existing carriers contrary to the public interest.” Petroleum Transp. Co. v. All Class I Rail Carriers, supra. The only reasonable conclusion to be drawn from the evidence in this case is that the, services offered by Poulson will serve a useful purpose responsive to a public demand or need, that this purpose cannot be served by existing carriers, and that the issuance of a certificate to Poulson will not endanger or impair existing carriers adversely to the public interest. In this respect, it may be pointed out that we have an unusual situation presented in this case. Ordinarily existing carriers will grow to meet the growing requirements of the companies or people they serve. Here we have an industry expanding so rapidly that existing carriers have not kept up with it and apparently they can not do so as they had not been able to satisfy anticipated demands of the shippers up until the time of hearing. The entry into the field of another carrier will not result in a loss of business to the existing carriers but will simply enable it to participate in the unprecedented growth of the business in respect to the transportation of the products in question here.

Regarding the second objection to the effect that Poulson had not been in this particular branch of the transportation business, it would seem that the statements made with reference to the first objection would be sufficient to show the invalidity of this argument. However; it may also be pointed out that each and every one of the successful applicant's under the authority receive,d in the recent orders entered by the commission are authorized to enter into certain fields in which they had not been previously operating, and several of them have had their field of operations widened so that they are no longer restricted to certain specified territories, but may now do business between all Nebraska points. Those, that had been previously transporting anhydrous ammonia under their petroleum product authority now appear' to have been handling this commodity without authority, and the fact that they had previously so handled anhydrous ammonia does not appear to be pertinent to the present situation or to justify the exclusion of other applicants, particularly in view of the fact that Poulson had interstate authority to handle the same commodity and had been doing so for some time.

Regarding the third objection of lack of shippers’ support, as previously pointed out, four out of the six shippers definitely supported the Poulson application. One objected thereto but refused to give any reason for such objection, and one adopted what might be considered a neutral attitude on the subject, but all shippers agreed that in the past and at the present time existing carriers had not been able to meet their demands and thereby inferentially supported the Poulson application.

“The purpose of the Nebraska Motor Carrier Act was regulation for the public interest. Its purpose was not to stifle legitimate competition but to foster it. Its purpose was not to create, monopolies, in the transportation industry, but to eliminate discrimination, undue preferences or advantages, and unfair or destructive competitive practices. Legitimate competition is a normal attribute of our free enterprise system. It must be permitted to exist and the law contemplates that it shall.” Shanks v. Watson Bros. Van Lines, 173 Neb. 829, 115 N. W. 2d 441.

As observed in the foregoing auotation, it is not the purpose of the Nebraska Motor Carrier Act to promote unnecessary'' monopolies or to indiscriminately limit competition. It would appear that the natural consequence of the commission’s action in the present case would do just that and it must be concluded that the denial of the Poulson application was arbitrary and unreasonable.

Reversed.