Opinion
No. 23995
Decided June 14, 1933.
Public Utilities Commission — Motor transportation company, defined — Section 614-84, General Code — Corporation not private, but common carrier, subject to regulation — Transportation service furnished film exhibitors subscribing to stock in corporation.
1. A motor transportation company is defined by Section 614-84, General Code, as one which provides or furnishes transportation service for hire for the public in general.
2. A corporation organized for profit, the capital stock of which compromises a number of authorized shares, offered to furnish transportation service to such exhibitors of films as might desire to subscribe for its shares; the number of shares so offered to that class of the general public being without limit except as limited by the aggregate amount of its authorized corporate shares. Held: A corporation, operating under such plan or device for furnishing its transportation service, is not a private but a common carrier and is subject to regulation by the Public Utilities Commission.
ERROR to the Public Utilities Commission.
On August 10, 1932, the Public Utilities Commission of Ohio issued a citation requiring the Affiliated Service Corporation to appear and answer whether it was operating as a common carrier and as a motor transportation company transporting for hire without obtaining a certificate of public convenience and necessity therefor. The commission ordered one W.C. Chesbrough, the president of the Affiliated Service Corporation, and others, to appear and answer such questions as might be propounded with respect to the character of the business transacted by the service corporation. A hearing was had on the citation, and upon its final consideration the commission found and held that the plaintiff in error, the service corporation, did not hold a certificate of public convenience and necessity for the operation of a motor transportation company, and issued an order requiring the company to cease from operating motor transportation service for the carriage of property over the public highways of the state in violation of law. A rehearing was granted, and further testimony was taken, but the commission adhered to its former order. Plaintiff in error thereupon filed its petition in error in this court seeking a reversal of the order of the commission.
The claim is made by the plaintiff in error that the record fails to show that it is engaged as a common carrier for hire; or that it held itself out as a motor transportation company hauling indiscriminately for the public. It therefore denies that it is subject to the jurisdiction of the commission, and bottoms its claim chiefly upon the pronouncement of this court in the case of Hissem v. Guran, 112 Ohio St. 59, 146 N.E. 808.
The only question presented is whether the method of the service company's operation and its activities in securing public co-operation by means of its stock subscriptions constitute it a common carrier and a motor transportation company as defined by our public utility statute; if so, it is subject to regulation by the commission, and before operating as such must secure a certificate of public convenience and necessity. W.C. Chesbrough, the president of the Affiliated Service Corporation, frankly concedes that its scheme of operation was to furnish service to such film exhibitors as would acquire stock in the concern. The following facts are gleaned from the record: On May 16, 1932, Chesbrough procured the incorporation of the Affiliated Service Corporation by filing articles of incorporation with the secretary of state. Its charter discloses that this corporation was formed for profit, its declared purposes being: "To engage in the business of hauling films, supplies and commodities for such persons or concerns as may be connected with this corporation, either as stockholder, officer, director or employe, and to render such other services to such class of persons and concerns as may be advisable from time to time," etc. The maximum number of shares authorized by the corporate charter was 250, without par value. Chesbrough was in the motion picture business and interested in various theaters in Columbus and elsewhere, either as an officer, stockholder or agent. At the time of the hearing before the attorney examiner it appeared that of the 250 shares authorized Chesbrough had subscribed for and owned 200 shares, his wife 29 shares, one Hazelton 10, shares; five theater companies subscribed one share each through. Chesbrough or his wife, the other six shares outstanding being held by other individuals. The underlying concept of the plan of operations was this: To distribute the corporate shares to such of the public as were interested in the motion picture business and who might need film transportation, and to secure their subscription for stock in the newly incorporated company. By the acquisition of a share of stock in the corporation the theaters securing the stock were to be served by the Affiliated Service Corporation, the expense of service to be allocated among them under an arrangement to be agreed upon between the several subscribers and the corporation. That this was the project is borne out by the evidence. Here follows the plan as detailed by Mr. Chesbrough himself: "Q. You would not object to selling any other stock if you had the chance? A. Absolutely not."
When questioned by the attorney examiner for the commission, Chesbrough testified as follows:
"Examiner: Suppose the Broad Theater in Columbus wanted to become a member of this Affiliated Service Corporation, would you sell them a share? Witness: I think so.
"Examiner: Would you haul their film for them? Witness: I think so.
"Examiner: And the same method would apply to any other applicant? Witness: Any others that wanted to come in, as long as we could handle them.
"Examiner: You have no limit to the number of shareholders you might have? Witness: Yes, there would be a limit because of the amount of shares of stock.
"Examiner: They would finally run out? A. Witness: Yes."
It is not necessary to further allude to the detailed activities of the Affiliated Service Corporation. Suffice it to say that the general design and purpose of the incorporated company was to secure theater film exhibitors to come within its fold by subscribing for a share of stock; and that under the plan so devised it held itself out as being willing to serve those of the general public who might subscribe for shares of its stock.
Messrs. Cowan, Adams Adams and Mr. Dale D. Rapp, for plaintiff in error.
Mr. John W. Bricker, attorney general, Mr. Thomas J. Herbert and Mr. James W. Huffman, for defendant in error.
It is a well-established rule that a private carrier cannot be converted into a common carrier merely by legislative fiat. Frost Frost Trucking Co. v. Railroad Commission of California, 271 U.S. 583, 46 S.Ct., 605, 70 L.Ed., 1101, 47 A.L.R., 457. The Ohio Motor Transportation Act does not attempt this; it defines a motor transportation company as applying to a person or corporation providing or furnishing transportation service, for hire, for the public in general. Section 614-84, General Code. It is a question of law for the courts to determine what constitutes a common carrier, but it is a question of fact for the commission to determine whether one charged as a common carrier comes within that definition and is carrying on business in that capacity. 10 Corpus Juris, 40; Breuer v. Public Utilities Commission, 118 Ohio St. 95, 160 N.E. 623; New York Central Rd. Co. v. Public Utilities Commission, 121 Ohio St. 588, 170 N.E. 574; C. Sheets Sons v. Public Utilities Commission, 124 Ohio St. 347, 178 N.E. 416. Section 614-84, General Code, confers upon the Public Utilities Commission the power to determine such fact. Pursuant to this power the commission found that the circumstances detailed in the record and the method of plaintiff in error's operation were such as to constitute it not a private but a public carrier. This finding was evidently based upon the fact that the plaintiff in error held itself out ready to carry film commodities for any of that class of the public comprising motion picture exhibitors who might desire transportation service for their films, and upon the further fact that the number of the public secured was without limit except as limited by the aggregate amount of its authorized corporate shares.
The articles of incorporation of the plaintiff in error stipulated that its purpose was to engage in the business of hauling films and commodities "for such persons or concerns as may be connected with this corporation, either as stockholder, officer, director or employe, and to render such other services to such class of persons and concerns as may be advisable from time to time." While it is true that the question whether the plaintiff in error was or was not a public utility depends not upon its powers but upon its acts, still its charter purposes may be taken into consideration as reflecting in some degree upon the operative methods of the business in which it was engaged. Mr. Chesbrough, the head of the corporation, was its presiding genius. He frankly testified that if he had the chance of selling stock to any applicant that wanted to come into the scheme he would do so, and that the number of shareholders that might come into the plan of operation was limited only by the number of shares in the corporate structure. While there is some testimony that theater owners were solicited to enter into the scheme, Mr. Chesbrough denies that any one was authorized to solicit them to do so; however, he confesses that he himself "talked to several exhibitors around town" about his scheme of stock operations. He also testified that he would sell a share of stock to any applicant who wanted to become a member of the corporation, and would haul their films for them. And upon the feature touching the question whether the public in general could enter into the scheme he was asked the question: "Q. You would not object to selling any other stock if you had the chance? A. Absolutely not." We are inclined to the opinion that the commission was warranted in finding that, while the plaintiff in error was posing as a private carrier in name, it held itself out as a public carrier in fact and open for service to any film exhibitor who would subscribe for stock in its corporation.
If such a device, as here disclosed, were upheld there would be nothing to prevent other companies, similarly organized, from peddling their shares of stock to the public, thus securing public patronage limited only by the number of shares authorized by their charters. It is true that in the instant case but two hundred and fifty shares were authorized; but, if this sort of scheme were allowed, what would prevent similar corporations, with a much greater number of shares, from carrying on similar activities? Tire companies, automobile concerns, or dealers in other commodities could incorporate, and, by allocating their stock among their shareholders, and posing as private carriers, could use the highways of the state without any regulation by the Public Utilities Commission. The attorney examiner of the commission foresaw that eventuality when he stated: "You can readily see what would happen if the shippers of Columbus would get together and form an affiliated service corporation with every shipper of all kinds of freight holding a share of stock." The utilization of this corporate device, together with the fact that the president of the association admitted that he was peddling the shares of the corporate stock to any film exhibitor who desired to enter its scheme of operation, justified the order of the commission requiring the plaintiff in error to cease from operating as a motor transportation company, without a certificate, and from carrying property for hire over the public highways of the state.
In Motor Freight, Inc., v. Public Utilities Commission, 125 Ohio St. 349, 353, 181 N.E. 479, we had occasion to allude to the case of Frost Frost Truckmg Co. v. Railroad Commissions, supra, wherein the majority of the high federal court held that the Frost Trucking Company was a private carrier not subject to regulation. However it is therein stated that the Prost Trucking Company, the carrier, was "engaged under a single private contract" for the transportation of citrus fruit. Alluding to the claim advanced by the commission that it was within the power of any carrier, by the simple device of making private contracts with an unlimited number, to secure all the privileges afforded common carriers without assuming any of the latter's duties or obligations, Mr. Justice Sutherland closed his opinion with the following statement: "It is enough to say that no such case is presented here; and we are not to be understood as challenging the power of the state, or of the railroad commission under the present statute, whenever it shall appear that a carrier, posing as a private carrier, is in substance and reality a common carrier, to so declare and regulate his or its operations accordingly." We think that the operations of the plaintiff in error in this case fall within the implied condemnation of the language used by Mr. Justice Sutherland; that the device adopted and the method employed by the plaintiff in error in securing film exhibitors to become stockholders in its corporation, and agreeing to carry their products, characterize it as a "motor transportation company" as defined in Section 614-84, General Code, which is subject to regulation by the Public Utilities Commission.
Whether the principles announced in Hissem v. Guran, 112 Ohio St. 59, 146 N.E. 808, should be sustained or modified we leave for future determination depending upon the facts presented; but in any event we are not disposed to extend its application to a state of facts such as this case presents.
The order of the commission is neither unreasonable nor unlawful and it is therefore affirmed.
Order affirmed.
WEYGANDT, C.J., DAY, ALLEN and STEPHENSON, JJ., concur.
BEVIS and MATTHIAS, JJ., not participating.