Petition of Fritz Trucking, Inc.

407 N.W.2d 447
CourtCourt of Appeals of Minnesota
DecidedJune 9, 1987
DocketCX-86-2173
StatusPublished
Cited by2 cases

This text of 407 N.W.2d 447 (Petition of Fritz Trucking, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Petition of Fritz Trucking, Inc., 407 N.W.2d 447 (Mich. Ct. App. 1987).

Opinion

OPINION

SEDGWICK, Judge.

The Minnesota Transportation Regulation Board (the Board) rescinded a permit transfer when it was informed that the transferee’s, M.V. Fritz Trucking, Inc., officers were “figureheads,” and the stock was actually held by two individuals who also owned’ all the stock in a second trucking operation. The transferor and transferee appeal. We affirm.

FACTS

On March 31, 1986 the Board received a joint petition from Fritz Trucking, Inc. and a new entity, M.V. Fritz Trucking, Inc. (the joint petitioners), requesting the transfer of Fritz’s irregular route common carrier permit to M.V. Fritz Trucking. On June 4th, the Board transferred the permit to M.V. Fritz Trucking.

Later that month the Board was informed by the joint petitioners’ counsel that the order granting transfer incorrectly listed M.V. Fritz’s corporate officers as shareholders. The corporation’s stock was held not by M.V. Fritz, Todd or Gerald Ammerman, but by John Dawson (60%) and Donald Kloster (40%). The Board then ascertained that Dawson and Kloster were also the owners of MATS, Inc., another trucking operation. The Board ordered petitioners to show cause why the transfer of the permit, which gave Dawson and Klost *449 er control of two permits, did not violate Minn.Stat. § 221.151.

The permit transfer was canceled October 21, 1986.

The Board concludes that by “piercing the corporate veil” of the Transferee corporation [M.V. Fritz Trucking] * * * that the Transferee corporation was formed to circumvent the provisions of Minn. Stats. Chapter 221.151, and that the order issued June 4, 1986 * * *' should be rescinded * * *.

Petitioners requested a stay of the rescission alleging they were denied due process because no hearing was provided. The Board granted a stay, held a hearing, and reaffirmed its cancellation of the permit transfer.

The Board concluded, inter alia, that it would not have authorized the transfer if the joint petition had disclosed that Dawson and Kloster were owners of transferee; that Minn.Stat. § 221.151 prohibits the transfer of authority to a corporation or a person who already has authority issued by the Board; that M.V. Fritz Trucking, Inc. was formed to circumvent Minn.Stat. § 221.151 by achieving the transfer of authority by not disclosing the true owners of M.V. Fritz Trucking, Inc.; and that the Board’s published notice of transfer did not adequately apprise potential competitors of the principals behind the request for transfer of authority because of misinformation supplied by the applicants.

ISSUES

1. Did the Board correctly interpret Minn.Stat. § 221.151 to forbid a permit transfer to a corporation when its shareholders also wholly owned and controlled a corporation with a permit?

2. Was the Board’s determination that the joint petition contained a “material misrepresentation” supported by substantial evidence?

3. Were the joint petitioners denied due process?

4. Should the Board be estopped from canceling the permit transfer? .

DISCUSSION

1. Minn.Stat. § 221.151 (1986) states the conditions for the transfer of permits.

Subdivision 1. Petition. Permits * * issued under section 221.121 may be assigned or transferred but only upon the order of the board approving the transfer or assignment after notice and hearing.
The proposed seller and buyer * * * of a permit * * * shall file a joint notarized petition with the board setting forth the name and address of the parties, the identifying number of the permit, and the description of the authority which the parties seek to sell * * *, a short statement of the reasons for the proposed sale * * *, a statement of outstanding claims of creditors which are directly attributable to the operation to be conducted under the permit, a copy of the contract of sale * * *, and a financial statement with a balance sheet and an income statement, if existent, of the buyer * *. If it appears to the board, after notice to interested parties and a hearing, from the contents of the petition, from the evidence produced at the hearing, and from the department’s records, files, and investigation that the approval of the sale or lease of the permit will not adversely affect the rights of the users of the service and will not have an adverse effect upon other competing carriers, the board may make an order granting the sale * * *. Provided, however, that the board shall make no order granting the sale * * * of a permit to a person or corporation or association which holds a certificate or permit other than local cartage carrier permit from the board

Minn.Stat. § 221.151, subd. 1 (1986) (emphasis added). The statutory language does not expressly prohibit an individual from having an interest in more than a single permit-holding corporation. The Board, however, interprets the statute to forbid not only an individual or corporation from holding two or more permits but also to prevent an individual from utilizing separate corporations, nominally independent *450 and distinct, in order to control two or more permits.

Dawson and Kloster owned 100% of the stock in a corporation with a permit. They formed a second corporation, in which they also held 100% of the stock, for the purpose of holding a second permit. The Board attributed the permits of Dawson and Kloster’s corporations directly to the two shareholders to prevent the partners’ effective control of more than one permit. The petitioners argue that the corporations are managed by separate independent officers and the Board cannot ignore a legitimate corporate form in order to attribute ownership to the shareholders.

The scope of judicial review for agency decisions is provided by Minn.Stat. § 14.69 (1986). The court may reverse if the petitioners’ substantial rights may have been prejudiced by error of law. Minn. Stat. § 14.69(d). Although administrative agency decisions are presumed to be correct and typically are accorded deference by the judiciary, deference does not automatically extend to an agency’s interpretation of a statute or case law. Beaty v. Minnesota Board of Teaching, 354 N.W.2d 466, 470 (Minn.Ct.App.1984). “It is the function of the court in reviewing administrative agency decisions to settle questions of law.” Id. Statutory interpretation is the province of the judiciary.

[O]n matters of statutory interpretation, this court is not bound by the determination of an administrative agency. The manner in which the agency has construed a statute may be entitled to some weight, however, where (1) the statutory language is technical in nature, and (2) the agency’s interpretation is one of long-standing application.

Arvig Telephone Co. v. Northwestern Bell Telephone Co., 270 N.W.2d 111, 114 (Minn.1978).

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