Madonna & Shawsville Co-Operative Co. v. Public Service Commission

Urner, J., delivered the opinion of the Court. The Madonna and Shawsville Co-operative Company of Harford County is a corporation engaged, under a permit from the Public Service Commission, in the transportation, by motor truck, of the products of its stockholders. In May, 1984, the company notified the commission to add the names of three stockholders to the list of those pre-. viously reported. The new members had joined the com ⁹⁷ pany, by the purchase of shares of its stock, for the purpose of availing themsleves of its transportation service for the shipment of milk produced on their farms.

The result of this enlargement of its membership and extention of its service was to bring the appellant in competition with the Greer Transportation Company, a common carrier, which was already serving, under a permit from the Public Service Commission, the route on which the farms of the appellant’s new stockholders were located. Upon protest by the Greer Transportation Company, and after a hearing, the appellant was ordered by the commission to discontinue that competition. By way of appeal from the commission’s order, the appellant filed a bill in equity to have it vacated, in accordance with the procedure to that end prescribed by section 404 of article 23 of the Code. The appeal is from a decree sustaining the commission’s demurrer, and dismissing. the bill of complaint as amended.

In addition to the facts already indicated, the bill alleged that the three new members of the co-operative company joined it voluntarily and without its solicitation, and that they secured thereby better, quicker, and cheaper delivery of their milk to the Green Spring Dairy, their consignee, in Baltimore City. The bill described the order complained of as unreasonable and arbitrary, and contrary to the act of the General Assembly of Maryland passed in 1931, and known as chapter 456, which particularly provides that a co-operative association should have the power, among others, to “transport the products of its members, even though in so doing it may compete with licensed common carriers.” The effect of that provision, enacted as an amendment to section 425 of article 23 of the Code, was considered in Parlett Co-operative, Inc., v. Tidewater Lines, Inc., 164 Md. 405 , 165 A. 313 , where it was relied upon as a defense to an injunction suit by a common carrier to prevent competition by the defendant co-operative company, which was rendering transportation service for hire over a part of the same public highway route without a permit from the ⁹⁸ Public Service Commission. After reaffirming the view expressed in Rutledge Co-operative Assn. v. Baughman, 153 Md. 297 , 138 A. 29 , that such a co-operative transportation company is a public carrier, and as such is subject to the permit requirements of sections 258-266 of article 56 of the Code (as amended by Laws 1927, ch. 152, secs. 1, 2), we said, in the opinion by Judge Offutt (pages 419, 420 of 164 Md., 165 A. 313, 318) : “The second question is whether chapter 456, Acts of 1931, denies to the Public Service Commission the right to refuse a permit to the appellant to operate its truck line even though it finds such operation would be prejudicial to the public welfare and convenience. “That statute amended Code, art 23, sec. 425, by adding to it the words, ‘and to transport the products of its members, even though in so doing it may compete with licensed common carriers.’ It is contended that those words evince a legislative intent of exempting co-operative associations from the application of Code, art. 56, sec. 258 et seq. The original act did not expressly grant to such associations the right to transport the products of their members over the public highway for gain, and whether it had any such right was not considered in Rutledge Co-operative Assn. v. Baughman, supra, but for the purposes of the opinion it was assumed that it was an incident of the right to market.

Chapter 456 of the Acts of 1931 was obviously intended to remove that ambiguity and to remove the' right of such companies to engage in the business of transporting the products of their members as a proper corporate function from the field of conjecture and construction. It dealt solely with the corporate structure, and has no apparent relation to article 56, sec. 258 et seq., which relates to the use of the highways. By no ordinary process of reasoning can the conclusion be reached that, when the Legislature granted such an association the right to compete with ‘licensed common carriers,’ it intended to exempt it from those provisions of the Code which apply to all carriers using the highways of the state for the public transportation of ⁹⁹ freight and