Merchants Parcel Delivery, Inc. v. Pa. Public Utility Commission

I am in substantial accord with the views expressed by Commissioner Buchanan in his dissenting opinion. For the reasons given by him in that opinion, I enter my dissent.

The opinion of Commissioner Buchanan is as follows:

It is my opinion that the present application for a contract carrier's permit should be refused because the applicant is actually engaged in common carriage. United Parcel is presently serving four mercantile stores as a contract carrier. Through solicitation, persuasion, coercion and purchase, it now seeks to increase that number to twenty-nine and retain its standing as a contract carrier.

It has been not only the practice and the policy of this Commission, but also of its predecessor, to hold that contract carriage vanished when the number of contracts was increased through solicitation to the point where the application "contract carriage" became merely camouflage for common carriage. This opinion has been sustained without exception by the appellate courts of Pennsylvania. Erb v. Public Service Commission, 1928,93 Pa. Super. 421; Keystone Warehousing Company v. PublicService Commission, 1932, 105 Pa. Super. 267, 161 A. 891;Bingaman v. Public Service Commission, 1932, 105 Pa. Super. 272,161 A. 892; Marshall v. Public Service Commission, 1937,129 Pa. Super. 272, 195 A. 475; Gornish v. Public UtilityCommission, 1938, 134 Pa. Super. 565, 4 A.2d 569; Spackmanv. Public Utility Commission, 1940, 141 Pa. Super. 164,14 A.2d 839.

I have been unable to discover one case before the appellate courts of Pennsylvania where a carrier, engaged solely in the transportation business, serving a class of shippers to the extent proposed to be served in this case, has not been held to be a common carrier.

On the same day the present application was approved, the application (A. 34506, Folder 4) of Arthur W. Klose and Walter G. Klose, trading as Klose Brothers, was also approved. In that case, the applicant sought the right to transport, as a common carrier, parcels, packages, and merchandise, from 14 retail department stores and specialty shops in the City of Chester, the identical type of service rendered by the applicant. The Commission authorized the issuance of a certificate as a common carrier. The most consistent element in both cases is that the attorney for the applicant in the Klose case was attorney for protestant in the instant case.

A service similar to that of applicant has been rendered in Pittsburgh by Stores Delivery Service. This Commission held it to be a common carrier and a certificate was issued to the Stores Delivery on November 9, 1936, and amended August 7, 1940, for service as a common carrier. Like the applicant, Stores Delivery is nationwide in its activity.

The cases of Weisberger v. Public Utility Commission, 1939,137 Pa. Super. 17, 7 A.2d 731; Aronimink Transportation Co. v.Public Service Commission, 1934, 111 Pa. Super. 414,170 A. 375, and Brink's Express Co. v. Public Service Commission, 1935,117 Pa. Super. 268, 178 A. 346, relied upon by applicant, are not in point. In the Weisberger case, the appellant was hauling milk to its own dairy as part of its dairy business. Such transportation was held to be private carriage. In the Aronimink case, the appellant was transporting its tenants to and from its apartment house, without charge, as an incidental part of its business of operating an apartment house and it also was held to be private carriage. In the Brink's case, the appellant was in the business of safeguarding and protecting money and valuable securities and the transportation of the valuables was held to be merely incidental to its business of guarding them. In the present situation, the only business of applicant is the transportation of merchandise for retail stores. There can be no more comparison between the Brink's service and United Parcel service than between the store payrolls transported by the former and a tin coffee pot transported by the latter.

United Parcel Service is well known in the transportation field as being in the business of transporting merchandise for retail stores. It now serves four department stores and out of a list of a possible 100 shippers now served by a certificated common carrier it picked out 28 which it was desirous of serving. It actively solicited the business of the 28. In three weeks it succeeded in obtaining contracts with 26 of them, one of which was later cancelled. Two other large stores in Philadelphia were called upon but no contract was consummated with either. Applicant, upon request, considered the advisability of serving an additional dozen stores. It even approached the protestant in an effort to take over some of its accounts.

Service to the 25 new shippers will be rendered without the addition of any new equipment except, possibly, a few new trucks for reserve and the Christmas holiday season. Applicant has thus steadily increased the number of its shippers so that it will serve, with virtually the same equipment, a total of 29 shippers, and, it further admits it would serve, up to the limit of its facilities, any additional shippers that satisfied its required standards if the additional service did not impair its efficiency. Carrying property to the limit of facilities and holding out to the public willingness to serve subject to tariff requirements are incidents of common carriage. Piercely v. PublicService Commission, 1919, 73 Pa. Super. 212.

The fact that contracts have been entered into does not by that alone constitute contract carriage. Contracts, express or implied, are an incident to nearly every form of transportation, whether common or private carriage. Erb v. Public ServiceCommission, supra; Keystone Warehousing Co. v. Public ServiceCommission, supra; Bingaman v. Public Service Commission, supra.

Refusal or rejection of service does not remove the transportation from common carriage. Keystone Warehousing Co. v.Public Service Commission, supra; Gornish v. Public ServiceCommission, supra; Erb v. Public Service Commission, supra.

The applicant sets up 14 requirements which its customers must meet in order to qualify for the service which it renders and upon those 14 requirements it bases its right to a contract carrier's permit. "The test [of common carriage] is, therefore, whether or not such person holds himself out, expressly or impliedly, as engaged in the business of supplying his product or service to the public, as a class, or to any limited portion of it, as contradistinguished from holding himself out as serving or ready to serve only particular individuals. . . . . ." Masgai v.Public Service Commission, 1936, 124 Pa. Super. 370,188 A. 599, 600.

Rules under which a carrier operates or conditions under which a service will be rendered are usual incidents of any filed tariff. These 14 requirements could be incorporated in the filed tariff of the applicant as a common carrier and restrict the operation if not held to be discriminatory. Every carrier, common or contract, would like to confine itself to the most lucrative part of its business, as described by the standards of the applicant. But if such were permitted, transportation would immediately fall into a chaotic state. "No carrier serves all of the public. His customers are limited by place, requirements, ability to pay and other facts. The public does not mean everybody all the time". Piercely v. Public Service Commission, 1919, 73 Pa. Super. 212, 214. Dairymen's Cooperative SalesAssociation v. Public Service Commission, 1934, 115 Pa. Super. 100, 174 A. 826.

There are two additional reasons for denial of this application. First, an examination of our files clearly reveals a monetary reason why applicant desires to be classed as a contract carrier, rather than a common carrier. In the year 1938, the applicant grossed $817,224 in operations for the four department stores between September 1 and December 31. (Applicant did not begin to render service until September 1, 1938). Under the law, as a contract carrier, it contributed nothing toward paying Commission regulatory expenses. In the same year, the protestant, for the full year, grossed only $130,784. On that sum it paid as a common carrier an assessment of $738.80. For the year 1939, the applicant did a gross business of about $1,940,000 with the four department stores. It will pay no assessment on that volume. For the same year, the protestant did a gross business of $152,731. Although the assessment for 1939 has not, as yet, been determined protestant will be required to pay a further assessment for regulation of the motor vehicle industry and applicant will pay nothing.

The applicant is thus receiving the benefit and protection of Commission regulation but contributes nothing to the expenses of the Commission. Applicant, if classed as a common carrier, as in fact it is, would be subject to an assessment and would pay its way equally with the one truck operator and all other common carriers, big or little. It should be emphasized that the fact applicant does not pay an assessment gives it a big competitive advantage against a common carrier in the matter of rates.

Secondly, the approval of the present application is inconsistent with the public interest and the policy declared in Section 801 of the Public Utility Law, 66 P. S. § 1301, and our prior decisions on this subject. In Application of Contract Trucking Corporations, 31 P.U.R., N.S., 403, 1939, we said, at page 406 that: ". . . . . . the purpose of the Legislature, in addition to its primary desire to develop and preserve a safe highway transportation system properly adapted to the needs of commerce, in extending the jurisdiction of the Public Utility Commission to cover contract carriers, is ``to promote safe, adequate, economical and efficient service by common carrier by motor vehicle, . . . . . . and just and reasonable rates therefor, without unjust discrimination, and unfair or destructive practices,' and ``to regulate . . . . . . the service of common carriers by motor vehicle . . . . . . in such manner as to recognize and preserve the inherent advantage of, and foster sound economic conditions in such service . . . . . . in the public interest. . . . . .' The service of common carriers by motor vehicle and contract carriers by motor vehicle were found by the Legislature to be closely interwoven and interdependent, and so directly affect each other, that in order effectively to regulate common carriers by motor vehicle it was found necessary to regulate the service of contract carriers by motor vehicle. Therefore, it seems to us, that the purpose in regulating contract carriers is the preservation of the inherent advantages of common carriage by motor vehicle and the fostering of sound economic conditions in such service in the public interest."

From that standpoint, the approval of the present application does not preserve the inherent advantages of common carriage by motor vehicle and the fostering of sound economic conditions in such service in the public interest. On the contrary, the exact opposite will result. A contract carrier is here permitted to obtain the cream of the parcel delivery traffic without a corresponding duty to serve those who may require service but whom applicant will refuse to serve because their business is not highly profitable to applicant. The inevitable result will be a gradual shrinkage of common carrier service to all other specialty shops in the Philadelphia area and a multiplicity of contract carriage over present concentrated common carriage. The only specialty shops left to common carriers, if any, will be those having such a small volume of business that the carriers will not survive. This is clear from the present record. Certainly, approval of the application, as a contract carrier, is not in the public interest.

United Parcel Service is a common carrier because it renders a common carrier service to a certain class of merchants in the Philadelphia area; because it is in direct competition with other common carriers performing a similar service in that area; because it solicits shippers presently doing business with common carriers, because contract carriage permits discrimination in rates and service and finally, because it is contrary to the public policy as declared by the Legislature and all of the prior decisions of this Commission and the appellate courts of this Commonwealth.