Rutledge Co-Operative Ass'n v. Baughman

²⁹⁸ Offutt, J., delivered the opinion of the Court. The Rutledge Co-operative Association, Inc., the appellant in this case, is a co-operative association incorporated under the Public General Laws of Maryland, Bagby’s Code, art. 23, secs. 419-446. Its purpose, as declared in its charter, is “to market and transport milk and other farm products for its members and to procure and deliver for its members such materials and supplies as they may need; provided, however, nothing in this certificate shall be taken as authorizing the corporation hereby created to engage in the business of transportation, except as a carrier for its own members.” Its capital stock is $10,000, divided into five hundred shares of $20 each, and each of the stockholders is a member of the association. Article 23, section 419, of the Code.

In furtherance of the purpose stated in its certificate of incorporation, it purchased a truck, and prepared to collect and transport to market milk produced on farms carried on by its members. Before engaging in that business it procured from the Commissioner of Motor Vehicles of Maryland license tags, authorizing it to operate its truck over the highways of Maryland, but it failed to procure from the Public Service Commission of Maryland the permit required by sections 258 and 259, article 56, of the Code, as a condition precedent to its operation over such highways of its truck for the transportation of freight for hire. It nevertheless began to operate the truck over the state highways, to collect milk from its members and to transport it to and deliver it in the City of Baltimore, and to charge and receive payment therefor. Thereupon the Commissioner of Motor Vehicles caused the arrest of the driver of said truck, and announced that any person operating it to transport milk or other freight over such highways without the permission of the Public Service Commission would be prosecuted.' To prevent such threatened action the appellant filed in the Circuit Court for Harford County, in equity, a bill for an injunction restraining the Commissioner of Motor Vehicles from prosecuting the charge preferred against its truck ²⁹⁹ driver, and restraining him, Ms agents, employees, and servants, from interfering with its operation of said truck.

The respondent filed a combined answer and demurrer to that bill, which it later amended. A demurrer to the amended answer was overruled, testimony was taken, and the bill dismissed. Erom that decree the Rutledge Co-operative Association, Inc., appealed. It is apparent from this statement _of the case that the controlling question presented by the appeal is whether section 259, article 56 of the Code, is a valid enactment.

Section 258, article 56, in part provides: “It shall be the duty of each owner of a motor vehicle to be used in the public transportation of merchandise or freight, operating over state, state aid, improved county roads, and streets and roads of incorporated towns and cities in the State of Maryland, to secure a permit from the Public Service Commission of Maryland to operate over said roads and streets, and present same to the motor vehicle commissioner annually at the time and according to the method and provisions prescribed by law for owners of all other motor vehicles to make an application in writing for registration with the Commissioner of Motor Vehicles.” Section 259, Ibid, provides that: “Corporations, groups of individuals and associations engaged in the transportation of freight or merchandise of their stockholders, shareholders or members, whether on the cooperative plan or otherwise, shall be included within the provisions of this sub-title.” If the section last quoted is a valid enactment, it necessarily follows that the appellant is entitled to no relief, and its bill was properly dismissed. Because, by section 258, every owner of a motor vehicle used in the public transportation of merchandise or freight over improved state or county roads must before so using it secure from the Public Service Commission a permit authorizing such use, and, by section 259, every corporation engaged in the business of transporting freight or merchandise for its stockholders or members, whether on the co-operative plan or otherwise, is engaged in ³⁰⁰ public transportation within the meaning of section 258. And since the appellant was so engaged and had not secured the required permit, it violated the provisions of section 258, Ibid, and it became the duty of the Commissioner of Motor Vehicles to prosecute it for such violation. Sections 264, 263, Ibid.

There were in issue before the trial court certain questions of fact in the case, as to whether the appellant was not incorporated as a mere device to evade the force of the statute, and as to whether it was not a common carrier at common law, but as the determination of these issues cannot affect the validity of the statute, it is unnecessary to refer particularly to them, and for the purpose of this case we will assume that appellant was incorporated in good faith for the purposes stated in its certificate of incorporation, and that its business is not that of a common carrier. The power of the Legislature to require common carriers, operating motor vehicle trucks over state roads for the transportation of freight, to secure the permission of the Public Service Oommission, before engaging in that business, was recognized by this Court in Public Service Commission v. Western Maryland Dairy Co., 150 Md. 647. But the appellant contends (1) that while that may be true, the Legislature had no power to require a private carrier to secure such permission, (2) that it is a private carrier and as such is entitled to operate its trucks over the highways of the state for the transportation of the goods, wares and merchandise of its members with or without the permission of the Public Service Oommission, and (3) that the Legislature has not the power to convert it from a private to a common carrier without its assent, and that section 259, article 56, of the Code, attempts to do that and is therefore void. Conceding for the purpose of this opinion that the appellant is a private carrier in its relation to the general public, and that the Legislature had not the power to' convert its status as such into that of a common carrier, it does not' follow that section 259 is void.

Because that section does not ³⁰¹ in terms or by implication affect the status of the appellant as a private carrier, nor does it enlarge or change the scope of its corporate powers, functions, or duties in the operation of the business in which it is engaged. But what it does is to impose upon the operation of that business the same limitations and restrictions which it imposes upon common carriers. And the question therefore is, Has the Legislature the power to require a private carrier, before operating a business such as that conducted by appellant over the public highways of the state, to first secure the permission of the Public Service Commission? The power conferred by these two sections is prohibitory, not regulatory, and the question may be further narrowed to this: Has the Legislature the power to authorize the Public Service Commission to prohibit the appellant from transporting freight for hire for its members over the public highways of the state, when in its judgment such prohibition is essential to the public welfare.

We have said that the statute does not change the status of the appellant as a private carrier at common law in so far as its relations to the general public are concerned, because the test generally recognized for distinguishing a private from a common carrier is that a common carrier is obliged within the limits of its ability to serve all who apply, while a private carrier is under no such obligation. Michie on Carriers, 312; Hutchinson on Carriers, par. 48, etc. And as the statute under consideration does not impose upon the appellant any broader duty in respect to such service than that stated in its charter, it does not convert the appellant into a common carrier at common law. But it does affect its right to use the public highways of the state in the operation of its business of transporting freight there-over for hire. That part of the statutory law of the state which deals with the regulation of the service and rates of common carriers, and defines that term, is found under the' head of “Corporations” (article 23, sections 346-418, of the Code), while the statute under consideration is found under the title “Licenses,” sub-title “Public Freight Motor Velii ³⁰² cles” (article 56, section 258), and although there is no actual connection between the statutes codified in the article dealing with corporations, and those codified in that dealing with public freight motor vehicles, they both look to the same end.

The purpose of the former was to insure reasonable rates and adequate service from common carriers, while the purpose of the latter was to aid that purpose by preventing destructive competition, whether by private or common carriers operating over public highways. The purpose of the Public Service Commission law was considered by this Court in Crisfield v. Ches. & Pot. Tel. Co., 131 Md. 446 , where it was said: “In the present case material assistance will be derived from the consideration of that which was predominant in the mind of the Legislature of 1910, by which both the Public Service Commission Law and the Charter of Crisfield were enacted.

The Legislature of 1910 took up, and for the first time in this state, enacted a law for the purpose of regulating in various ways the class of corporations or firms conducting public utilities. The grant of power as contained in the act, while in general language, was intended to be extremely comprehensive. There was a specific jurisdiction given to it over telephone lines and telephone companies; provision was made for the making of complaints, either by individuals or corporations, and also the power that the commission created by the act might, upon its own initiative regulate the charges demanded, exacted, charged or collected, and its power extended throughout the state, into every municipality, county or political division, so that the said commission should, in the interest of the public, be invested with ample powers for regulation, both as to service and charges, of all public utilities operating within the state. It was a jurisdiction determined by the subject matter, rather than any other consideration.

If an action of the commission was deemed erroneous or beyond its power, a right of appeal was given to the courts.” If that purpose is to be accomplished, it is essential that ³⁰³ the commission have the power to prohibit such competition between common carriers as would prevent the rendition of adequate public service by those engaged in it. That power was conferred upon it with respect to common carriers by rail by section 379, article 23 of the Code, which prohibited such carriers from exercising any right or franchise not theretofore exercised, without first having obtained the