Summary
In Buckeye Stages, Inc. v. Public Utilities Commission of Ohio, 134 Ohio St. 395, 17 N.E.2d 645, the Supreme Court of Ohio upheld the issuance, by the Ohio Public Utilities Commission, of a certificate of public convenience and necessity for passenger bus operation to an Ohio corporation, organized by the receiver of an insolvent electric railway company, which had furnished interurban service between Cleveland and Toledo. The argument was rejected that the court of receivership possessed no authority to cause the new corporation to be organized.
Summary of this case from Roof v. ConwayOpinion
Nos. 26739, 26757, 26758, 26759 and 26762
Decided November 23, 1938.
Public Utilities Commission — Motor transportation companies — Certificate of public convenience and necessity — Authority of federal receiver to organize corporation to apply for certificate — Issuance of securities by corporation — Adequacy of financial resources of applicant for certificate.
APPEALS from the Public Utilities Commission.
Mr. D.H. Armstrong, Mr. Ralph W. Sanborn and Mr. R.A. Lindemann, for appellants.
Mr. Herbert S. Duffy, attorney general, and Mr. W.W. Metcalf, for appellee.
In these five proceedings, Buckeye Stages, Inc., Pennsylvania Greyhound Lines, Inc., and Central Greyhound Lines, Inc., presently operating transportation companies, claim that certain orders of the Public Utilities Commission of Ohio are unlawful and unreasonable.
In cause No. 26739, appellants, Buckeye Stages, Inc., Pennsylvania Greyhound Lines, Inc., and Central Greyhound Lines, Inc., challenge the validity of the incorporation of Lake Shore Coach Lines, Inc., and the order of the commission authorizing that company to issue certain securities.
In cause No. 26757, appellants seek to reverse the order of the commission granting to Lake Shore Coach Lines, Inc., a certificate of public convenience and necessity authorizing the transportation of passengers between Ceylon Junction and Toledo over certain routes in territory largely the same as heretofore served by The Lake Shore Electric Railway Company and The Sandusky, Fremont Southern Railway Company.
In cause No. 26758, appellant, Pennsylvania Greyhound Lines, Inc., seeks to reverse the order of the commission dismissing its application requesting that a restriction in its existing certificate No. 2961 be removed as between Norwalk and Toledo and intermediate points.
In cause No. 26759, Central Greyhound Lines, Inc., seeks to reverse the order of the commission refusing to remove restrictions contained in its existing certificate No. 2584 as between Norwalk and Toledo, and Sandusky and Toledo by two routes as shown in the record.
In cause No. 26762, Buckeye Stages, Inc., seeks to reverse the order of the commission dismissing its application for removal of restrictions contained in its existing certificate No. 4144 as between Norwalk and Toledo upon a route as shown in the record.
For a period of more than thirty years The Lake Shore Electric Railway Company has been operating an interurban railway system between Cleveland and Toledo. Between Toledo and Fremont there is only one line. From Fremont to Ceylon Junction there are two lines or divisions, the northern going by way of Sandusky and the southern by way of Bellevue and Norwalk. In these proceedings we are concerned only with the territory approximately covered between Ceylon Junction, Toledo and Sandusky.
In recent years both The Lake Shore Electric Railway Company and The Sandusky, Fremont Southern Railway Company have suffered severe financial losses, resulting in foreclosure proceedings being instituted against both corporations in the United States District Court at Cleveland. In those proceedings that court appointed one, F.W. Coen, receiver of both companies. By reason of operating deficts, the receiver, anticipating ultimate abandonment of the railway service, applied to and was granted permission by the federal court to cause to be organized an Ohio corporation to be known as Lake Shore Coach Lines, Inc., for the purpose of applying to the Public Utilities Commission of Ohio for a certificate of public convenience and necessity to operate passenger busses in the territory referred to. Thereafter such corporation was organized and made application to the commission for a certificate, which was granted. The applications of Pennsylvania Greyhound Lines, Inc., Central Greyhound Lines, Inc., and Buckeye Stages, Inc., for the removal of restrictions contained in their certificates were denied by the commission.
In their appeals these three motor transportation companies have contended that not only was the granting of a certificate of public convenience and necessity to Lake Shore Coach Lines, Inc., unreasonable and unlawful, but that the orders refusing to remove the restrictions should be reversed.
The principal claims of appellants are that Lake Shore Coach Lines, Inc., was not properly organized and that the certificate was granted to operate over U.S. Route No. 20 which had heretofore been declared to be a congested highway. See Bradley, d. b. a. Wolverine Motor Freight Lines, v. Public Utilities Commission, 125 Ohio St. 381, 181 N.E. 668.
Upon a review of the evidence the commission found that Lake Shore Coach Lines, Inc., was the only applicant which proposed to furnish service throughout the entire territory being served by The Lake Shore Electric Railway Company which proposed to abandon its service. Primarily because of this fact the application of Lake Shore Coach Lines, Inc., was granted, and the applications of Pennsylvania Greyhound Lines, Inc., Central Greyhound Lines, Inc., and Buckeye Stages, Inc., for the removal of restrictions were denied.
Upon a consideration of the entire record we are unable to hold that any of the orders of the Public Utilities Commission are erroneous to the extent of being designated as unlawful or unreasonable.
I concur in the affirmance of the orders of the Public Utilities Commission in all five cases.
However, I am in accord with the view expressed by Matthias and Myers, JJ., that at the time of the hearing there was not a sufficient showing by Lake Shore Coach Lines, Inc., that it had adequate financial responsibility to carry on a motor transportation line of the magnitude proposed. That defect has now been removed.
On January 29, 1938, Ohio Utilities Finance Company and Toledo Edison Company represented to this court that they had purchased the assets of The Lake Shore Electric Railway Company, and by proper order of court were permitted to intervene in this appeal. On February 11, 1938, these parties filed a motion to augment the record which would show that on February 8, 1938, Lake Shore Coach Lines, Inc., was authorized and did sell to Ohio Utilities Finance Company stock for $24,500. Certified copies of these orders were attached to the motion, and the fact that such additional capital has been obtained by Lake Shore Coach Lines, Inc., has never been challenged by appellants.
While at the time of hearing Lake Shore Coach Lines, Inc., did not have adequate financial responsibility, if we consider the order of February 8, 1938, it did have.
While under ordinary circumstances it would first be necessary to grant the motion to augment the record, in this instance it would be a vain thing to remand the cause because Lake Shore Coach Lines, Inc., did not possess sufficient financial resources, since the defect has been remedied by an order entered on February 8, 1938. The authenticity of this order is not questioned, and this cause has become moot upon appeal. No useful purpose would be served when, upon remand, the commission could immediately adhere to its former order.
For these reasons I therefore concur in the orders of affirmance.
Orders affirmed.
Dissents in cause No. 26739 on the ground that the receiver acted unlawfully in his attempt as receiver of an insolvent railway to use its assets to organize another corporation for the very different purpose of operating a motor bus business. For this reason all five cases should be reversed and remanded.
We concur in an affirmance of the order in cause No. 26739, but are of the opinion that the orders in causes Nos. 26757, 26758, 26759 and 26762 should be reversed and remanded.
Referring to cause No. 26739, we are not here concerned with the motive or jurisdiction of the federal court in authorizing the receiver to cause to be organized an Ohio corporation for the purpose of operating busses in the territory in question.
However, a court will examine the record to determine whether the organization of such a corporation followed the requirements of the statutes of Ohio. The record does not disclose any facts or circumstances that would render invalid the incorporation of Lake Shore Coach Lines, Inc. In reviewing the action of the Public Utilities Commission of Ohio, authorizing that company to issue certain securities, we are unable to say that the order of the commission was unlawful or unreasonable in cause No. 26739. Society Perun v. Cleveland, 43 Ohio St. 481, 3 N.E. 357; Gaff v. Flesher, 33 Ohio St. 107; Hagerman v. Ohio Building Savings Assn., 25 Ohio St. 186.
Once organized, however, Lake Shore Coach Lines, Inc., stands upon its own feet the same as any other newly created corporation. The new corporation is subject to Ohio law the same as any other corporation. It is a new creature and must be considered as any other new company coming into the transportation field and seeking a certificate of convenience and necessity from the Public Utilities Commission of Ohio.
There was no proof of adequate financial responsibility to warrant the issuance of the certificate sought by the Lake Shore Coach Lines, Inc. The total amount available at the time the certificate was granted was $500. Such a sum is obviously inadequate for equipment necessary for the route in question. The resources of the new company must be measured as of the time when the certificate was issued. Otherwise undue emphasis would necessarily attach to the value of the certificate itself, even as was testified to in the present proceedings. Pennsylvania Rd. Co. v. Public Utilities Commission, 116 Ohio St. 80, 155 N.E. 694; Estabrook, Recr., v. Public Utilities Commission, 112 Ohio St. 417, 147 N.E. 761.
It is claimed that the motion to augment the record, if granted, would show Lake Shore Coach Lines, Inc., to be possessed of financial resources ample and adequate for equipment to serve the needs of the territory involved. That motion was denied for the reason that this review is of the status of the proceedings at the time the certificate was granted to the new company. What financial responsibility might be shown by the new company upon a reconsideration of this question is not now before the court.
It being conceded that the action of the commission in causes Nos. 26758, 26759 and 26702 was primarily based upon the prior granting of a certificate to Lake Shore Coach Lines, Inc., in cause No. 26757, those cases should likewise be remanded to the Public Utilities Commission for further hearing, consideration and action.