Parlett Co-Operative, Inc. v. Tidewater Lines, Inc.

Oeeutt, J., delivered the opinion of the Court. The Tidewater Lines, Incorporated, is a Delaware corporation engaged in the business of transporting milk and other freight under a permit from the Public Service Commission ⁴⁰⁷ of Maryland over these routes: Scaggsville to Highland to Clarksville, via Clarksville Road to Simpsonville, via Simpsonville Road to Elioak, via Cedar Lane thence by Clarksville Road and Frederick Pike to Baltimore; and from Dayton to Baltimore, via Clarksville, Ellicott City, and Frederick Road. Parlett Co-operative, Incorporated, is a Maryland corporation authorized “to collectively produce, prepare for market, handle, store, and market, and particularly to transport milk and other products of its members, and of acting as the selling and buying agent or both, for its members, and also for any other purposes permitted to such co-operative associations by virtue of the General Laws of the State of Maryland authorizing the formation of co-operative associations.” It has a capital stock of $2,000, divided into two hundred shares of $10 each. It operates a truck over a part of the route served by the Tidewater Lines trucks, and transports for hire for its stockholders milk and other freight in competition with Tidewater Lines, Incorporated, but without the permission of the Public Service Commission of Maryland required by Code, art. 56, secs. 258-266 (as amended by Acts 1927, ch. 152, secs. 1, 2).

On Lovember 10th, 1931, the Tidewater Company filed in the Circuit Court for Howard County its bill of complaint against the Parlett Company, in which, after reciting these facts, it charged that the unauthorized operation of the Parlett Company’s truck subjected it to unlawful and ruinous competition, and prayed that said corporation be enjoined from transporting freight or merchandise for hire over the routes served by the Tidewater Lines. A demurrer to that bill was sustained, and the plaintiff with the leave of the court filed an amended bill in which it alleged that it was a Delaware corporation, duly qualified to transact business in Maryland, was engaged in the business of transporting for hire passengers and freight between points in Maryland and Pennsylvania and Baltimore City, that all its operations in Maryland were carried on pursuant to permits or certificates of public convenience issued by the Public Service Commis ⁴⁰⁸ sion. of Maryland, and that especially under such permits it operated over the routes above described, and that such permits were issued under the provisions of Code, art. 56, secs. 258-266. It then alleged: That the defendant operated a motor vehicle in the transportation of merchandise and freight of its stockholders for hire from a point on the Simpsonville Road to the farm of De Wilton C. Parlett, thence to the Scaggsville-Clarksville Road, where it stops at the milk stand of one Adams at Clarksville, and thence to Baltimore, over the old Frederick Road, carrying or transporting such merchandise and freight between said termini in the said truck or motor vehicle owned and operated by the said respondent to dairies located in the City of Baltimore, in the case of milk so transported, and, in the case of freight transported from Baltimore, to the farms or residences of the various consignees of such freight, being members or alleged to be members of the said co-operative association. That the said' respondent has not procured from the Public Service Commission of Maryland any permits or certificates of public convenience and necessity as required by the aforementioned sections 258 to 266, inclusive, of article 56, of the Annotated Code of Public General Laws of the State of Maryland, has not paid the taxes or other public charges required and imposed by the said sections, and is operating in violation of the provisions of said sections and of the laws of Maryland generally relating to the transportation of freight or merchandise for hire.

It further stated: That members of the defendant company protested.to the Public Service Commission against the renewal of the permits or certificates issued to the plaintiff permitting it to operate over said routes, and that applications were made for permits authorizing a co-operative association to be formed to operate over the same, 'but that the protests were overruled and the applications denied. That the defendant nevertheless was formed and did operate over said routes, “thereby depriving your complainant of a considerable volume of business which it would otherwise carry or transport by means •of its trucks or vehicles and to which it is lawfully entitled ⁴⁰⁹ and which merchandise and freight so carried or transported by the respondent was, prior to the beginning of respondent’s operation, carried or transported by the complainant, and that the respondent has therefore materially injured and impaired your complainant’s business and property and threatens by a continuance of its aforementioned operation to continue so to do, all to the irremediable loss and damage of the complainant. That prior to the beginning of the operation complained of, by the respondent as above, your complainant was hauling milk for approximately sixty-seven (67) shippers over the routes in question, thirty-three (33) being located on the Scaggsville route and thirty-four (34) on the Dayton route, and that the number of gallons of milk daily carried over the said routes by the complainant was respectively nine hundred and twenty-five (925) gallons and seven hundred and ninety-four (794) gallons and that your complainant’s monthly gross revenue therefrom was approximately thirteen hundred and fifty dollars ($1,350). That your complainant is informed and believes that the respondent is now carrying milk for the following shippers heretofore served by the complainant and located on or adjacent to its lines (with the exception of R. Maurer, who is located on complainant’s line, but is a new shipper) and carrying the approximate number of gallons, daily, set opposite their respective names: “Scaggsville Route Name Gallons Per Day J. W. Parlett......................... 17 gallons D. W. Parlett......................... 47 gallons “Dayton Route 0.

O. Adams.......................... 35 gallons E. S. Zepp............................ 35 gallons R. H. Groomes...........'............. 34 gallons E. S. Kendall......................... 66 gallons R. Maurer ........................... 7 gallons “That immediately upon learning that the Respondent’s Demurrer to the Bill of Complaint filed in this case had been sustained, the following persons, ship ⁴¹⁰ ping over Complainant’s line approximately the number of gallons daily, set opposite their respective names, notified the Complainant that they no longer desired its service, but would ship in the future by the Respondent’s truck, the change to be made immediately : “Dayton Route ÍTame Gallons Per Day D. Blaney..................... ... 19 gallons J. P. W. Brown................ ... 12 gallons O. L. Brown................... ... 19 gallons O. B. Zepp..................... ... 38 gallons S. T. Nichols.................. ... 26 gallons R. W. Lloyd................... ... 14 gallons Prank Westfield ............... ... 28 gallons C. Howard.................... ... 14 gallons” It further charges: “That the complainant’s present monthly loss of business by reason of respondent’s operations, without including the shippers who have notified it of their intention of leaving it for respondent’s line, as above, is approximately two hundred and seventy dollars ($210). That the transfer of milk from complainants lines to respondent’s by persons who have already notified complainant of their desire to discontinue its service will increase this figure to approximately four hundred and twenty-five dollars ($425). That complainant has already lost in revenue up to February 1st, 1932, by reason of respondent’s operation as above, approximately fifteen hundred and fifty-five dollars ($1,555) and will suffer materially heavier loss in the future, unless the respondent be restrained from operating, as herein prayed. That unless the said respondent be restrained and enjoined by this honorable court from continuing to engage in the transportation of merchandise and freight for hire between the various points and places above referred to, without having first obtained a permit or permits or a certificate or certificates of public convenience and necessity issued by virtue of the orders of the Public Service Commission of Maryland, the complainant’s business and property will be ⁴¹¹ subjected to ruinous and unlawful competition, and that the complainant will suffer irreparable loss and injury not susceptible of adequate compensation in the ordinary courts of law and is without relief except such as may be afforded by a court of equity.” Upon these allegations it renewed its prayer made in the original bill.

To that bill the defendant refiled its answer to the original bill, and also a demurrer which it subsequently amended. In its answer it denied all material allegations of the bill except such as were matters of record, and charged that the “complainant has for a long time past wilfully and flagrantly violated the provisions of said laws, by charging excessive and unreasonable rates, by charging unequal rates, and by deliberately and wilfully charging, collecting and receiving rates other than those specified in the schedules of rates and charges filed by it with the Public Service Commission of Maryland, and that the service rendered by the complainant upon the routes referred to it in the bill of complaint has been inadequate, inefficient and carelessly rendered for a long time past, in spite of repeated complaints of its customers.” In its demurrer in final form it stated that: “Sections 258 to 266, inclusive, of article 56 of the Annotated Code of Public General Taws of Maryland, entitled ‘Public Ereight Motor Vehicle Law,’ as well as sections 346 to 418, inclusive, of article 23 of the Code of Public General Taws of Maryland, by any construction which would render the same applicable to the operations of the Defendant Company are unconstitutional and void for the following reasons, viz: “(a) Because said laws contravene article 41 of the Declaration of Rights of the Constitution of Maryland, which declares ‘that monopolies are odious, contrary to the spirit of a free government and the principies of commerce, and ought not to be suffered.’ “(b) Because the taxes required to be paid thereunder are discriminatory in that they are not payable alike by all users ⁴¹² of the road, and are not uniform as required by article 15 of the Declaration of Rights of the Constitution of Maryland. “(c) Because the denial to this defendant and its members of the right to haul their milk to market is a denial of the equal protection of the laws, and deprives them of their liberty and property without due process of law in contravention of the 14th Amendment to the Constitution of the United States. “(d) Because the incorporation of the Defendant Company under the provisions of sections 419 to1 446, inclusive, of Article 23 of the Code of Public General Laws of Maryland, as amended by the Acts of 1931, chapter 456, declaring that such Associations shall have power ‘to transport the products of its members even though in so doing it may compete with licensed common carriers,’ created a contract between the incorporators and members of this Defendant Company on the one hand, and the State of Maryland on the other hand, and that the denial of the enumerated power by any Commission, Court or authority other than the Legislature itself, would impair the obligation of said contract, and would deprive this Defendant and its members of their property without due process of law contrary to the provisions of the Eourteenth Amendment to the Constitution of the United States.” Ko action was taken on the final demurrer, but the case was heard on bill, answer, and evidence, and, after a hearing, the court signed a decree perpetually enjoining the defendant as prayed in the plaintiff’s bill. From that decree this appeal was taken. The case made out by these pleadings and the evidence, more simply stated, is this: The Tidewater Lines, Incorporated, operates with the approval and sanction of the Public Service Commission of Maryland two truck lines for the transportation of freight between points in Howard County and the City of Baltimore.

The Parlett Co-operative,- Incorporatedj is attempting without the approval or sanction of the commission to operate a truck line over parts of the same route in competition with Tidewater Lines, Incorporated. ⁴¹³ Tidewater Lines, Incorporated, contends that in doing that Parlett Co-operative, Incorporated, violates Code, art. 56, secs. 258-266, and deprives it of patronage which it would otherwise receive, to its loss and detriment, and that for that reason it has the right to maintain a hill to enjoin such unlawful and injurious competition. Parlett Co-operative, Incorporated, on the other hand, contends (1) (a) that it is a private person and not a public carrier, (b) that, being a private and not a public carrier, the State has no power to condition its right to use the public highways of the state-, for the transportation of the property of its stockholders for hire, upon public welfare and convenience, and that, as to it, Code, art. 56, secs. 258-266, is in conflict with the Fourteenth Amendment to the Constitution of the United States, unconstitutional and void; (2) that chapter 456 of the Acts of 1931 manifests a legislative intent “denying to the Public Service Commission the right to decide the question of ‘public welfare and convenience’ adversely to Cooperative Marketing Associations”; and (3) that in no event has the plaintiff shown a case for equitable relief. Assuming that Code, art. 56, secs. 258-266, is a valid legislative enactment, without pausing to analyze it in detail, it is sufficiently clear that the pleadings and the evidence present a case for equitable relief, so that the controlling questions in the- case are (1) the validity of Code, art. 56, secs. 258-266; and (2) whether the Legislature by chapter 456 of the Acts of 1931 intended to- exclude co-operative associations from the scope of those provisions of Code, art. 56, secs. 258-266, which require persons engaged in the public transportation of freight over the public highways of the state for hire to first obtain a permit from the Public Service Commission. The first question has been so recently considered by this court (Rutledge Co-operative Assn. v. Baughman, 153 Md. 297, 138 A. 29 ) that further reference to it would not be called for except for the contention that what was said and decided in that case was in effect overruled by the decision ⁴¹⁴ in Smith v. Cahoon, 283 D. S. 553, 51 S. Ct. 582, 587 , 75 L. Ed. 1264 .

But the fallacy of that contention appears from an examination of the two cases. The Florida statute under consideration in • the Gaboon case undertook to make the right of all persons, saving certain exempted classes, operating motor vehicles over the state highways between fixed termini or over a regular route, regardless of whether such service was public or private in its nature, to so operate such vehicles, depend upon compliance with conditions which could not validly be exacted of a private carrier. The Maryland statute affects only motor vehicle transportation affected by a public interest. The appellant in that case served a single person under an exclusive contract, and there was no controversy as to his status as. a private carrier, and the service was in no way affected by a public interest.

There the statute was held void because it failed to make any distinction between the right of such a person to use the highways in the course of its business, and the right of one engaged in public transportation to so use them. In this case the statute itself applies only to> persons engaged in the “public transportation of merchandise or freight,” and, under