Source: https://scocal.stanford.edu/opinion/keller-v-thornton-canning-co-32888
Timestamp: 2020-08-07 22:00:47
Document Index: 447607969

Matched Legal Cases: ['§ 3572', '§ 3572', '§ 3631', '§ 3574', '§ 3802', '§ 3572', '§ 3631', '§ 3515', '§ 3801']

Keller v. Thornton Canning Co. - 66 Cal.2d 963 - Mon, 07/03/1967 | California Supreme Court Resources
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Citation 66 Cal.2d 963
Keller v. Thornton Canning Co. , 66 Cal.2d 963
The original carrier involved in this matter was a partnership consisting of LeRoy Hessler, Norman Bosche, and James Kelley; these parties, operating under the name of L.N.J. Trucking Company, held a radial highway common carrier permit from the Public Utilities Commission. In January 1960 LeRoy Hessler and Bosche left the partnership, and David and Henry Keller, together with Roland and Alvin Hessler, became new partners with James Kelley. The organization conducted business under the name of L.N.J. Company. Although the new partnership continued to engage in trucking operations, it failed to secure a transfer of the old partnership's operating permit from the Public Utilities Commission. fn. 1 [66 Cal.2d 965]
Public Utilities Code section 3571 provides: "No highway contract carrier or radial highway common carrier shall engage in the business of transportation of property for compensation by motor vehicle on any public highway in this State without first having obtained from the commission a permit authorizing such operation." The applicant for a permit must provide the commission with "full information concerning the financial condition and physical properties of the applicant." (Pub. Util. Code, § 3572, subd. (c).) "If the commission finds that the applicant possesses the required financial responsibility to perform the operations proposed, it shall issue a permit." (Pub. Util. Code, § 3572.) fn. 2 The carrier must demonstrate its ability to afford some protection against liability for personal injuries and property damage. (Pub. Util. Code, § 3631.) fn. 3 [66 Cal.2d 966]
Since the L.N.J. Company did not secure the necessary transfer of the L.N.J. Trucking Company's permit from the Public Utilities Commission (see Pub. Util. Code, § 3574), the issue centers on whether such failure conclusively bars recovery in this action. [2] Chief Justice Traynor has succinctly stated the applicable considerations: "[T]he courts generally will not enforce an illegal bargain or lend their assistance to a party who seeks compensation for an illegal act. The reason for this refusal is not that the courts are unaware of possible injustice between the parties, and that the defendant may be left in possession of some benefit he should in good conscience turn over to the plaintiff, but that this consideration is outweighed by the importance of deterring illegal conduct. ... In some cases, on the other hand, the statute making the conduct illegal, in providing for a fine or administrative discipline excludes by implication the additional penalty involved in holding the illegal contract unenforceable; or effective deterrence is best realized by enforcing the plaintiff's claim rather than leaving the defendant in possession of the benefit; or the forfeiture resulting from unenforceability is disproportionately harsh considering the nature of the illegality. In each such case, how the aims of policy can best be achieved depends on the kind of illegality and the particular facts involved." (Lewis & Queen v. N.M. Ball Sons (1957) 48 Cal.2d 141, 150-151 [308 P.2d 713].) (Italics added.)
At the outset we note that the Highway Carriers Act contains no specific provision that a non-licensed carrier may not bring or maintain an action for the charges legally due to it, and that the Legislature may have, in "providing for a fine" [66 Cal.2d 967] and "administrative discipline [excluded] by implication the additional penalty involved in holding the illegal contract unenforceable." (Lewis & Queen v. N.M. Ball Sons, supra, 48 Cal.2d at p. 150.)
[3] The Public Utilities Commission has been insistent that the most effective deterrent to the destruction of the policy by undercharging is exaction from the profiting shipper of the legal rate. (See People ex rel. Public Util. Com. v. Ryerson (1966) 241 Cal.App.2d 115, 116 [50 Cal.Rptr. 246]; Pratt v. Coast Trucking, Inc. (1964) 228 Cal.App.2d 139, 140 [39 Cal.Rptr. 332].) As stated in Gardner v. Rich Mfg. Co. [66 Cal.2d 968] (1945) 68 Cal.App.2d 725, 732 [158 P.2d 23], the " 'pressure of the shippers upon the carriers for reduced rates in violation of the statute will almost entirely be relieved if the shippers know that notwithstanding any illegal bargain that is made, recovery may still be had on the basis of the minimum rates fixed by the commission.' " (Quoting Johnston v. L.B. Hartz Stores, Inc. (1938) 202 Minn. 132, 135 [277 N.W. 414, 416].)
To sustain their position that plaintiffs are barred from suit, defendants rely heavily upon Orlinoff v. Campbell (1949) 91 Cal.App.2d 382 [205 P.2d 67]. In that case when the shipper refused the carrier's proffered performance of the executory contract of carriage, the carrier sued for damages. The shipper defended upon the ground that the carrier held no permit from the Public Utilities Commission.
The Court of Appeal in Orlinoff correctly noted that the Highway Carriers Act "is clearly one for regulation of the industry and not for revenue alone." (P. 385.) After discussing the general purposes of the Highway Carriers Act the court held: "It is settled beyond question that the penalty of nonenforceability of contracts, in addition to those of fine and imprisonment, may be a necessary requirement to accomplish the results intended by the legislation, namely to restrict the regulated business to those who have been duly licensed. ... The primary purpose of the rule of nonenforceability being the discouragement of practices forbidden by law, no reason exists for declining to apply it to the contracts of unlicensed highway carriers, as it has been consistently applied to the contracts of unlicensed architects, brokers, and others for the rendition of personal services." (P. 388.) Finally, the court concurred in the shipper's contention that if it had continued performance, knowing of the carrier's illegal status, the shipper would thereby have exposed itself to possible civil and criminal penalties. (See Pub. Util. Code, §§ 3802, 3804.) [66 Cal.2d 969]
­FN 1. According to David Keller's testimony at trial the new partnership made application for a transfer in June 1960 but the application lacked the necessary signature of one of the partners.
­FN 2. The commission may, in its judgment, attach conditions to the permit. (Pub. Util. Code, § 3572; see also Pub. Util. Code, § 3631.)
­FN 3. A shipper's reliance on a carrier's permit is thus ordinarily limited to the knowledge that the commission has found the carrier "financially responsible" at the time of issuing the permit and that the carrier possesses some liability insurance. Unlike potential licensees in other occupations the carrier need not demonstrate ability, educational background, good character, or experience in order to obtain a permit.
­FN 4. Compare section 7031 of the Business and Professions Code: "No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this state for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract ...."
­FN [5]. "Highway permit carrier" does not mean a highway carrier who in fact holds a permit; it merely means a highway carrier who need not obtain a certificate of "convenience and necessity." (Pub. Util. Code, §§ 3515, 1063.)
­FN 6. Since the carrier operated under the jurisdiction of the Public Utilities Commission, it remains subject to the penalties provided by the code; the carrier and its officers and employees face criminal penalties and fines of up to $500 for each day of operation without the proper permit. (Pub. Util. Code, §§ 3801, 3803, 3805.)
Mon, 07/03/1967 66 Cal.2d 963 Review - Criminal Appeal Opinion issued
1 DAVID KELLER et al., Plaintiffs and Appellants, v. THORNTON CANNING COMPANY et al. (Defendants and Respondents)
2 THORNTON CANNING COMPANY et al. (Defendants and Respondents)
SCOCAL, Keller v. Thornton Canning Co. , 66 Cal.2d 963 available at: (https://scocal.stanford.edu/opinion/keller-v-thornton-canning-co-32888) (last visited Friday August 7, 2020).