State ex rel. Utilities Commission v. Associated Petroleum Carriers

173 S.E.2d 25, 7 N.C. App. 408, 1970 N.C. App. LEXIS 1704

• Court: Court of Appeals of North Carolina
• Decided: April 1, 1970
• Docket: No. 7010UC37
• Status: Published

Opinion

Britt, J.

The protestants on appeal present the following issue: Is the order of the Utilities Commission in approving the transfer of common carrier franchise authority under the provisions of G.S. 62-111 erroneous as a matter of law and unsupported by competent, material and substantial evidence in view of the entire record? We think not.

The transfer of a carrier operating authority is governed by a comprehensive statutory scheme, which includes the following provisions of G.S. 62-111:

“(a) No franchise now existing or hereafter issued under the provisions of this chapter other than a franchise for motor carriers of passengers shall be sold, assigned, pledged or transferred, nor shall control thereof be changed through stock transfer or otherwise, or any rights thereunder leased, nor shall any merger or combination affecting any public utility be made through acquisition or control by stock purchase or otherwise, except after application to and written approval by the Commission, which approval shall be given if justified by the public convenience and necessity. Provided, that the above provisions shall not apply to regular trading in listed securities on recognized markets.

* * *

(e) The Commission shall approve applications for transfer of motor carrier franchises made under this section upon finding that said sale, assignment, pledge, transfer, change of control, lease, merger, or combination is in the public interest, will not adversely affect the service to the public -under said franchise, will not unlawfully affect the service to the public by other public utilities, that the person acquiring said franchise or control thereof is fit, willing and able to perform such service to the public under said franchise, and that service under said franchise has been continuously offered to the public up to the time of filing said application or in lieu thereof that any suspension of service exceeding 30 days has been approved by the Commission as provided in G.S. 62-112 (b) (5).”

In Utilities Commission v. Coach Co., 269 N.C. 717, 153 S.E. 2d 461, the court construed the “public convenience and necessity” test of G.S. 62-111 (a), enacted as part of the Public Utilities Act of 1963. The protestants in that case sought a construction of the statute which would provide them protection from competition: * * [PJrotestants contended in substance that G.S. 62-111 (a) ‘required the Commission to consider similar elements upon a transfer of franchise authority as upon the granting of an application for new authority,’ (our italics) including ‘public need for the service, the service already provided by existing carriers, and the effect of the service provided by the transferee on the operations of existing carriers.’ ”

To grant a new authority under G.S. 62-262 (e) (1), the Commission must find “that public convenience and necessity require the proposed service in addition to existing authorized transportation service.” The court held that the showing of public need which G.S. 62-262 (e) (1) required of an application for a new authority was not applicable in a transfer proceeding and was not written into it by G.S. 62-111 (a). The court observed: “The apprehension of protestants is that Caro-Line will undertake to exercise its franchise rights on a much larger and more varied scale, and in so doing act in competition with protestants and adversely affect their business. The record fails to show that operations by Caro-Line on a larger and more varied scale would be contrary to the public interest as distinguished from the interests of protestants.”

The decision and language of Coach Co., supra, supported the position of the Utilities Commission that “the policy of the State, as declared in the Public Utilities Act of 1963, * * * clearly favors transfers of actively operated motor freight carrier certificates without unreasonable restraint. A policy following protestant’s position would diminish the value of existing motor freight franchises and deprive the holders thereof of valuable rights.” In re Comer Transport Service, N.C.U.C. Docket No. T-821, Sub. 2, reported in N.C.U.C. Report 1965, p. 266. The Commission in effect interpreted the criteria “if justified by the public convenience and necessity” in G.S. 62-111 (a) to be a statutory basis for the test of dormancy. Where the authority has been abandoned or “dormant,” the Commission has denied applications for transfer because approval would in effect be the granting of a new authority without satisfying the new authority test of public need set out in G.S. 62-262 (e) (1). Where the authority has been actively operated, the applicants for sale and transfer of motor freight carrier rights “are under no burden to show through shipper witnesses that a demand and need exists.” Comer, supra. The rationale is that public convenience and necessity was shown to exist when the authority was granted or acquired under the 1947 grandfather clause, and the rebuttable presumption of law is that it continues. Thus, the Commission in Comer held that “the statutory requirement referred to [G.S. 62-111 (a)] is satisfied by a showing that the authority has been and is being actively applied in satisfaction of the public need theretofore found.” The position taken by the Supreme Court in Coach Co., supra, supports such an interpretation.

The General Assembly supplemented the general provision of G.S. 62-111 (a) that “approval shall be given if justified by the public convenience and necessity,” with subsection (e) effective 30 September 1967. The amendment sets out certain specific criteria to be considered in the Commission’s determination of whether approval in a given case is justified. It does not, on the other hand, indicate a policy change toward protecting existing certificate holders from lawful competition. Like the subsection (a) “public convenience and necessity” test, the requirement that the Commission find the transfer “in the public interest” does not write into the transfer approval procedure the G.S. 62-262 (e) (1) new certificate test of public need.

' Protestants contend that the G.S. 62-111 (e) clause requiring the'Commission to find that the proposed transfer “will not adversely affect the service to the public under said franchise,” prohibits approval where transfer of the franchise to a -more competitive -hauler would, as-they argue, “have a definite adverse effect on the existing carriers.” The language -“under said franchise,” however, indicates that thig finding will be satisfied by a Commission determination that;the pfoposed transferee-of the franchise is capable of rendering sendee .equal • to that of -the proposed transferor.

When the matter came on for hearing before the Commission on 20 November 1968, all parties were present and represented by counsel. The record discloses a full hearing at which the exhibits, direct and cross-examinations, and questions presented by the commissioners produced a comprehensive factual basis for the Commission’s order. M & M’s exhibit included a financial statement, data on employment practices, insurance coverage, safety programs, and rolling equipment. L. J. Steele, coordinator for traffic and sales for M & M, testified as to his company’s ability and intention to “haul more product than Service Transportation has under the authority.”

There was competent, material and substantial evidence from which the Commission could find not only that “the purchaser, M & M, is fit, willing and able to perform the service to the public under said franchise,” but also that M & M could render service equal to that of Service Transportation Corp. The record clearly established that the service to the public under the asphalt franchise will not be adversely affected, but, in fact, the transfer will result .in the authority being held by a carrier that will be able to offer greater service to the public under the franchise. Protestants concede the point shying “that M & M Tank Lines, Inc., if it is permitted to acquire this franchise authority will conduct active and vigorous operations in the transportation of asphalt. M & M Tank Lines, Inc., has the financial ability and the equipment to become a major carrier in this product in intrastate commerce in North Carolina.” Although the testimony of Carl Helms asserts the protestants’ desire for protection, e.g., “We need to have some assurance, and we should have some protection, that someone is going to look after us because we have to put out thousands of dollars to do this,” we do not read this clause as a protection against competition. Also, the ■finding that the transfer “will not unlawfully affect the service to the public by other public utilities,” is fully supported; the record ■fails to disclose any unlawful affect upon the service rendered by 'the other utilities.

Protestants contend that increased competition such as M & M proposes to provide will not be “in the public interest.” Witnesses who were officials of Petroleum Transportation, Inc., Widenhouse, Inc., Schwerman Trucking Company and Carolina Asphalt and Petroleum Company testified as to a general decline in business in 1968. They pointed out that asphalt hauling is a sporadic business in which the shippers and road contractors demand instant service. Carl Helms testified: “Now, asphalt is very much different from the usual line of products because it has to be moved when the carriers receive a call. We cannot wait a period of four or five days to move that particular product. It has to be moved at once because there are men at various job locations waiting on this product.” The contention proceeds along the line that more competition would mean less business for the protestants and less business would result in a diminished capacity to render service to the public. William Thomas Barrow, Vice-President of A. C. Widenhouse, Inc., testified: “Sometimes we cannot give service because we don’t have any drivers. The main reason for this is we don’t have enough business to maintain 32 drivers.” It appears that this is a problem inherent in a seasonal, sporadic business like asphalt hauling. While other carriers had a decline in business in 1968, Service acquired business by offering only an “overflow service.” Jarrett testified: “In my solicitation of Chevron and American I asked them to call on us when they had a need for it and did not purport to handle all of their shipments. * * * I was offering to them an overflow service for any overflow that they probably could not get hauled by the regular shipper or haulers. This type of overflow would come when they had so many shipments at one time that their normal arrangements for shipping couldn’t handle it at that particular time.”

In an earlier “Coach Co.” case, Utilities Commission v. Coach Co., 261 N.C. 384, 134 S.E. 2d 689 (1964), the court, through Moore, J., said: “There is no public policy condemning competition as such in the field of public utilities; the public policy only condemns unfair or destructive competition.” The possibility that a transfer of authority to a more competitive carrier will adversely affect existing carriers does not make such a transfer contrary to “the public interest” as a matter of law. In G.S. 62-111 (e) the General Assembly has empowered the Utilities Commission to find in a proper case that transfer to a more actively competitive carrier might not be “in the public interest.” In the instant case, however, the record fails to show that operations by M & M would, as Bobbitt, J., expressed it in Coach Co., supra, “be contrary to the public interest as distinguished from the interests of protestants.”

Protestants contend that there is no competent, material and substantial evidence to support the Commission finding “that SERVICE (sic) under said franchise has been continuously offered to the public up to the time of the filing of said application.” The record shows that Service was originated in 1939 and certified as an intrastate carrier of petroleum, petroleum products, and asphalt as a result of the 1947 Truck Act. Jarrett’s father became principal stockholder in 1950 and Jarrett acquired control upon his father’s death in August 1968. Service has kept a tariff on file with the Utilities Commission and, as Jarrett testified: “I have participated in the petroleum or asphalt tariff section of the North Carolina Motor Carriers publication all the time that our company has held these rights. I think that this publication is circulated to shippers throughout the North Carolina intrastate area. It shows the scope of our company’s operations and the territory.” Although the company did not actively solicit business for the 1963-1966 asphalt hauling seasons, and no asphalt was hauled during those seasons, Jarrett testified: “Our company has never refused to handle any asphalt or any shipment from any point to any point.” Jarrett testified that he had been fairly active in the operations of Service over the past few years, although he primarily operates an oil distributing company. His involvement with Service and his interest in actively soliciting asphalt hauling business grew as his father became sick approximately three years before his death in 1968. Jarrett solicited business from Chevron and American, “who are the only shippers of the product that I knew of at the time I contacted them.” These solicitations resulted in Service hauling four or five loads during the 1967 season and approximately twenty-five during the 1968 season; rolling equipment to handle these jobs was obtained through a trip-lease arrangement with Davis Oil Company in 1967 and with M & M in 1968. Service and M & M discussed the proposed transfer during the 1968 season, worked out an agreement in August, and M & M filed its application on 4 September 1968. We hold that the record amply discloses competent, material and substantial evidence to support the Commission’s finding.

The order of the Utilities Commission is

Affirmed.

BROCK and Graham, JJ., concur.