Case Name: BROWN EXPRESS, INC., et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1967-04-12
Citations: 415 S.W.2d 394
Docket Number: No. A-11381
Parties: BROWN EXPRESS, INC., et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.
Judges: GRIFFIN, SMITH, NORVELL and HAMILTON, JJ., dissenting.
Reporter: South Western Reporter Second Series
Volume: 415
Pages: 394–403

Head Matter:
BROWN EXPRESS, INC., et al., Petitioners, v. RAILROAD COMMISSION of Texas et al., Respondents.
No. A-11381.
Supreme Court of Texas.
April 12, 1967.
Rehearing Denied June 21, 1967.
McKay & Avery, C. N. Avery, Jr., Austin, Mills, Shirley & McMicken, Galveston, James, Robinson, Felts & Starnes, Phillip Robinson, Austin, for petitioners.
Crawford C. Martin, Atty. Gen., Sam Kelley, Asst. Atty. Gen., Austin, Kelley, Looney, McLean & Littleton, Jackson Littleton and Rogers Kelley, Edinburg, Dean Moorhead, Austin, for respondents.

Opinion:
POPE, Justice.
The Railroad Commission entered an order approving a transfer of six certificates owned by Southern Plaza Express, Inc. Brown Express and a number of other interested motor carriers filed a complaint with the Railroad Commission in which they asserted that the certificates should be revoked. The Commission refused to hear the complaining carriers' complaint and their evidence that the transfer was not for the public convenience and necessity. The questions presented are whether the Commission acted arbitrarily (1) in approving the transfer and (2) in overruling the complaint without hearing the proffered evidence. The trial court on appeal set aside the Commission orders. The court of civil appeals reversed the judgment of the trial court and sustained the Commission orders. 399 S.W.2d 863. We reverse the judgment of the court of civil appeals and affirm that of the district court.
Southern Plaza is the owner of intrastate common carrier certificates numbered 3739, 2054, 4014, 3589, 3605, and 2119. Southern-Plaza was formerly known as Ryder Truck Lines of Missouri but, during the course of these proceedings, changed its corporate name. On June 29, 1964, Ryder Truck Lines of Missouri (Southern Plaza) contracted to sell and transfer the six certificates to Ryder Truck Lines of Texas for $1,000. The next day the corporations filed an application with the Railroad Commission for its approval of the sale and transfer. Brown Express and other competing carriers filed a protest to Ryder's application for the approval of the sale and transfer. They also filed a complaint with the Commission in which they asserted that the six certificates should be revoked for Ryder's failure to comply with the terms of the certificates. The Commission assigned docket number A-1531 to the transfer application and dockets numbered 3839, 2054, 4014, 3589, 3605, and 2119 to the complaints. Hearing in the sale and transfer proceeding began on September 16, 1964. The protesting carriers tendered but were not permitted to introduce evidence that no public convenience and necessity for the transfer existed. Their theory was that the transfer of the certificates to Ryder Truck Lines of Texas, Inc. who would fully operate the certificates constituted the authorization of new services. The complaining carriers also offered proof of non-operation of the certificates for such a period of time that they were subject to revocation. To this offer, the hearing examiner ruled:
"THE EXAMINER: 'It has nothing to do with the sale of the certificates. I am not going to listen to the issue of dormancy. In the first place, the Railroad Commission has no such proceeding. If we did have such a proceeding, it would be a show cause proceeding and would be instituted by the Commission. As long as these certificates are shown to be in good standing, we are not going into the subject of dormancy, nor convenience and necessity. This is purely a hearing on sale and transfer, and I am not going to get into the issue of dormancy.'
«
" 'There is no proceeding, as counsel well knows, before the Railroad Commission for abandonment. There is no proceeding before me at this time with reference to failure to operate, which is a statutory definition, and, consequently, I can't see where this testimony would be pertinent to the issue, and it will not be received.'
"
" 'They are not dormant, as far as the Railroad Commission is concerned. I am not going to hear any further testimony in accordance with what counsel has outlined. I don't think it is relevant to this hearing.' "
The complaining carriers insisted that they be granted a hearing on their complaint. On October 5, 1964, they filed a motion requesting that the complaint be set for hearing. They also filed a motion that the Commission defer action on the transfer application until the issue of the good standing of the certificates was heard and decided. They again tendered evidence in the transfer hearing that would bear upon their complaint. The Commission overruled all of these motions, and the complaining carriers were never accorded an opportunity to be heard on the complaint issue in either the transfer or complaint proceedings.
On November 12, the Commission approved the sale and transfer of the certificates. The order provided, among other things, that "all motions, complaints or ancillary matters previously filed in connection with this application are expressly overruled On December 3, 1964, the Commission overruled the complainants' motion to set the complaint for hearing stating its reasons in the following order:
"The Commission has, subsequent to the filing of this complaint, heard the application for the sale and transfer of these certificates in another Docket and is of the opinion that this motion filed on July 7, 1964, should be in all things overruled."
The complainants then appealed from both orders of the Commission which were heard together by the trial court.
The Commission properly excluded the evidence about public convenience and necessity. That issue was determined upon the original authorization of the certificates. Section 5 of art. 911b, Vernon's Ann.Civ.St., states the nature of the proof an applicant must make to obtain the Commission's authorization of a transfer order. The applicant must show (1) the transfer is in good faith, (2) the successor to the certificate is able and capable of continuing the operation of the equipment "in such a manner as to render the services demanded by the public necessity and convenience and (3)1 the proposed sale is for the public interest.
This court in Tarry Moving & Storage Co. v. Railroad Commission, 367 S.W.2d 322 (Tex.1963) rejected the contention that public convenience and necessity was an issue in a hearing to divide a certificate as. to territory, although an additional carrier would be created, since there would be no change in the character of the service to be rendered. The court relied upon L. A. Norris Truck Line v. Railroad Commission, 245 S.W.2d 746 (Tex.Civ.App. 1952, writ ref.) which held that public convenience and necessity need not be considered in an application to divide a certificate as to commodities. Only when the orders will create or establish a new service about which there has never been a finding of public convenience and necessity must the issue be determined. Railroad Commission of Texas v. Jackson, 157 Tex. 32, 299 S.W.2d 266 (1957). Upon the basis of these authorities, the Commission correctly denied the protestants' offer of proof that there was no public convenience and necessity for transfer of existing certificates.
The Commission acted arbitrarily, however, in overruling the complaint filed by the protesting carriers without granting them a hearing. See, Stotts v. Railroad Commission, 236 S.W.2d 210 (Tex.Civ.App. 1951, writ ref.); Wattenburger v. Railroad Commission of Texas, 231 S.W.2d 924 (Tex.Civ.App. 1950, writ ref. n. r. e.). Since the protesting carriers operate over the routes and serve the points encompassed in the six certificates which are the subject of the transfer hearing, they are interested parties. Railroad Commission of Texas v. Red Arrow Freight Lines, Inc., 96 S.W.2d 735 (Tex.Civ.App. 1936, writ ref.). Being interested parties, they could complain about the transfer of a certificate which had no stand Ing. Sections 12(b) and 14(a) , art. 911b recognize their right to make complaints. See, Railroad Commission v. Winkle, 57 S.W.2d 287 (Tex.Civ.App.1933), affirmed in Texas & Pacific Motor Transfer Co. v. Railroad Commission, 124 Tex. 126, 73 S.W.2d 509 (1934). The Commission's Rule 59 further recognizes an interested carrier's right to complain.
The Commission made its final decision that the certificates are not subject to revocation without holding a hearing and receiving evidence. Complaints against certificate holders in the past have been determined by hearings after notice. Texas & Pacific Motor Transfer Co. v. Railroad Commission, supra; Wattenburger v. Railroad Commission of Texas, supra. A denial of the right to be heard is not excused by section 12(b) which permissively states that the Commission "may" revoke certificates if a holder discontinues operations or violates the terms of the certificate or the Commission's rules. Texas & Pacific Motor Transfer Co. v. Railroad Commission, supra. The power of the Commission to exercise its discretion after a hearing cannot be construed as the power to overrule a complaint without a hearing. The complaining carriers endeavored to get a hearing both in the transfer hearing and the complaint proceedings. The Commission first excluded the complainants' evidence in the transfer hearing and then overruled their motion for a complaint hearing on the grounds that the order in the transfer hearing rendered the issue immaterial. Evidence that the certificates are subject to revocation is material to the issue of the good standing of the certificates but has not yet been considered. The Commission's refusal to hear the complaining carriers' proof was arbitrary. Railroad Commission v. Alamo Express, Inc., 158 Tex. 58, 308 S.W.2d 843 (1958).
The Commission says that its departmental practice is to hear transfer applications without regard to a complaint which attacks the standing of the certificate in question. Departmental practice is important when an administrative agency is confronted with an ambiguous statute, but it affords no basis for practices which are contrary to the plain meaning of statutes. Eddins-Walcher Butane Co. v. Calvert, 156 Tex. 587, 298 S.W.2d 93 (1957); Humble Oil & Refining Co. v. State, 158 S.W.2d 336 (Tex.Civ.App.1942, writ ref.). Sections 12(b) and 14(a) of art. 911b, as well as Commission rule 59, supra, plainly contemplate a hearing before a complaint is adjudicated.
We find no evidence in the record which supports the Commission's argument that it had a departmental practice of disregarding a pending complaint in acting upon a transfer application. Mr. Soule, the Director of Transportation for the Commission, testified that upon the filing of each transfer, the Commission makes a routine check to determine whether the applicant has maintained insurance and properly registered its equipment. If the applicant has met those requirements, the certificate is treated as one in good standing. Whether the certificates have been properly operated is not investigated. The only matter considered, according to Mr. Soule, is whether the purchaser of the certificate is capable of operating it. This evidence does not reach the question presented by this case. Mr. Soule's testimony concerns the usual situation in which no complaint is filed by interested parties. Neither Mr. Soule nor anyone else testified about any Commission practice for handling a bona fide complaint asserted against the good standing of a certificate which is the subject of a pending application.
The proof in fact shows that the Commission conditions its approval of a transfer application upon proof of the good standing of the certificates at the time of the transfer. The Commission has prescribed forms for use by applicants in transfer proceedings. They are the only evidence in this record of the departmental practice, and they embody the Commission's departmental construction of the law. See Huey & Philp Hardware Co. v. Shepperd, 151 Tex. 462, 251 S.W.2d 515 (1952). Southern Plaza's application for transfer was made on the Commission's prescribed form which contained these words:
"The operation is to be continued by the seller or lessor until the final approval of the sale and transfer, or lease, by the Commission, and the final approval of the sale, transfer, assignment or lease by the Commission is subject to the certificate or certificates being in good standing, and not subject to cancellation for failure to comply with the requirements of the law, rules and regulations of the Commission with respect to proper insurance, plate and tax fees and cab cards, or cancellation for other reasons authorized by law." (Emphasis added)
There is sound reason for such a requirement of proof of good standing in transfer hearings. It is stated in T. S. C. Motor Freight Lines v. Vanway Express Co., 148 S.W.2d 899, 903 (Tex.Civ.App. 1941, writ dism. judgm. cor.): "It follows, therefore, that the approval by the Commission in May 1939, of the sale and transfer of certificates no longer in force, could vest no rights thereunder in the purchaser." Section 5 of art. 911b requires a transferee to pay the State for the credit of the Highway Fund ten per cent of the amount paid as a consideration for the sale of a certificate. It would be unconscionable for the State to collect the ten per cent of the sale price and later determine that the transfer which it had approved was of invalid certificates.
We do not hold that the Commission should have revoked the certificates. Texas & Pacific Motor Transfer Co. v. Railroad Commission, supra. We hold that the order overruling the complaints without a hearing was arbitrary. Railroad Commission v. Red Arrow Freight Lines, Inc., supra. We accordingly reverse the judgment of the court of civil appeals and affirm that of the trial court which set aside the orders of the Railroad Commission.
GRIFFIN, SMITH, NORVELL and HAMILTON, JJ., dissenting.
. "The Commission at any time after hearing, had, upon notice to the holder of any certificate or permit and after opportunity given such holder to be heard, may by its order revoke, suspend or amend any certificate or permit issued under the provisions of this Act, where in such hearing the Commission shall find that such certificate or permit holder has discontinued operation or has violated, refused or neglected to observe the Commission's lawful orders, rules, rates or regulations or has violated the terms of said certificate or permit; provided, that the holder of such certificate or permit shall have the right of appeal as provided in this Act."
. "The Commission shall have the power and authority under this Act to hear and determine all applications of motor carriers; to determine complaints presented to it by such carrier, by any public of-cial, or by any citizen having an interest in the subject matter of the complaint, or it may institute and investigate any matter pertaining to motor carriers upon its own motion. The Commission, or any member thereof, or authorized representative or Examiner of the Commission, shall have power to compel the attendance of witnesses, swear witnesses, take their testimony under oath, make record thereof, and if such record is made under the direction of a Commissioner, or authorized representative or Examiner of the Commission, a majority of the Commission may, upon the record, render judgment as if the case had been heard before a majority of the members of the Commission.
."The Commission, either on its own motion or upon receipt of sufficient written complaints, may at any time after legal notice to all interested parties cite anyone operating under its jurisdiction to appear before it in a public hearing and re quire it to show cause why his or its operating authority should not be can-celled, or otherwise restricted and limited