Case Name: THE PEOPLE, Appellant, v. WESTERN AIR LINES, INC. (a Corporation), Respondent
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1954-04-02
Citations: 42 Cal. 2d 621
Docket Number: L. A. No. 22881
Parties: THE PEOPLE, Appellant, v. WESTERN AIR LINES, INC. (a Corporation), Respondent.
Judges: 
Reporter: California Reports
Volume: 42
Pages: 621–657

Head Matter:
[L. A. No. 22881.
In Bank.
Apr. 2, 1954.]
THE PEOPLE, Appellant, v. WESTERN AIR LINES, INC. (a Corporation), Respondent.
Everett C. McKeage and J. Thomason Phelps for Appellant.
Guthrie, Darling & Shattuck, Hugh W. Darling, D. P. Renda, Donald K. Hall and Matthew S. Rae, Jr., for Respondent.

Opinion:
SHENK, J.
This is an appeal from a judgment of dismissal after a demurrer to the complaint had been sustained without leave to amend.
The action was brought to enforce the penalty provisions of section 2107 of the Public Utilities Code. It was brought in the name of the People at the instance of the Public Utilities Commission as authorized by section 2104 of that code. Companion cases are People v. United Air Lines, Inc., S. F. No. 18900, post, p. 878 [268 P.2d 745], and People v. California Central Air Lines, L. A. No. 22880, post, p. 877 [268 P.2d 744], this day decided.
After setting forth the status of the Public Utilities Commission as a public agency operating under the Constitution and statutes of this state, the complaint proceeds to allege that pursuant to law the commission has at all times had jurisdiction over the rates, fares, charges and tariffs of all transportation companies, common carriers and public utilities operating within this state insofar as their intrastate operations are concerned; that the commission directed its attorney to institute this action; that the defendant is a Delaware corporation having its principal place of business in the county of Los Angeles; that at all times involved the defendant was engaged in the intrastate transportation of passengers by air and furnishes such transportation for compensation to the public generally; that the defendant is a transportation company, a common carrier and a public utility by virtue of and within the contemplation and meaning of article XII of the state Constitution, and of chapter 11 of part 1 of division 1 of the Public Utilities Code, as amended.
The complaint further alleges that on September 1, 1949, the defendant filed with the commission its Local Air Coach Passenger Tariff No. 1, establishing its rates for one-way adult air coach service between Los Angeles and San Francisco, California, at $13.60 and $27.20, one-way and round-trip, respectively; that under date of March 14, 1950, pursuant to investigation and hearing, the commission, by its order No. 43932 (49 Cal.P.U.C. 494) found fares for this service of $9.95 and $19.90, one-way and round-trip, to be reasonable; that on April 14, 1950, the defendant filed its 3d Revised Tariff No. 1 establishing these rates commencing June 1, 1950; that these were the lawful rates for this service until May 9, 1951; that effective May 9, 1951, the commission by its decision No. 45624 (50 Cal.P.U.C. 563) [dated April 24, 1951] authorized the defendant to increase the fares applicable to this service to $11.70 and $23.40, one-way and round-trip, respectively; and that the defendant had increased its rates for this service on March 1, 1951, without prior or any authorization, to $11.70 and $23.40, one-way and round-trip, respectively, and had demanded and received this rate for each of the 69 days thereafter, to and including May 8, 1951.
It is further alleged that by reason of these acts the defendant had incurred a penalty to the People in the sum of $2,000 for each of the 69 days' violation of law, or a total penalty of $138,000. Judgment was prayed against the defendant in this sum, plus interest, costs of suit, and such other relief as to the court should appear just and proper in the premises.
The decision of the commission of April 24, 1951, No. 45624, was incorporated by reference in the complaint! It is there disclosed that this defendant, the United Air Lines, Inc., and California Central Airlines operated coach flights between the San Francisco Bay and the Los Angeles areas; that they had each made timely application to the commission to have rate increases to $11.70 and $23.40, one-way and round-trip, respectively, for this service approved as of March 1, 1951, but because sufficient data had not been furnished by them to the commission none of the applications had been granted as of that date. On March 6th the commission, on its own motion, ordered an investigation, and hearings were held as to the reasonableness, lawfulness and propriety of the fares of these companies for this San Francisco-Los Angeles air coach service. The carriers there challenged the jurisdiction of the commission to regulate in any respect the business of air transportation companies. Without waiving their objection to the jurisdiction of the commission they offered evidence to support the reasonableness of the increased fare and to show, in extenuation of their action, that the fare increase had been made in response to a request by the chairman of the federal Civil Aeronautics Board, which they believed to be compulsory upon them.
By its decision the commission determined that it had jurisdiction over transportation companies by virtue of sections 20 and 22 of article XII of the state Constitution; that this jurisdiction extended to air transportation companies; that the Civil Aeronautics Act has not purported to extend economic regulation to intrastate transportation of persons or property by air other than mail, and that the state was free to regulate intrastate rates and fares of air carriers to the same extent as it regulates intrastate rates of railroads, trucking and bus companies, and telephone and telegraph utilities. It found that the fare increases in question were justified and would be authorized "for the future" and that reparations should be made to passengers who had paid the excess fare since March 1, 1951. The decision expressly advised the companies that they would thereafter be deemed to be transportation companies, common carriers and public utilities within the meaning of the state Constitution and be subject to its prohibitions and requirements. It specifically called their attention to the provisions of section 76(a) of the Public Utilities Act, which provided as follows :
"Any public utility which violates or fails to comply with any provision of the constitution of this state or of this act, or which fails, . to obey . . . any order . of the commission, in a case in which a penalty has not hereinbefore been provided for such public utility is subject to a penalty of not less than five hundred dollars nor more than two thousand dollars for each and every offense."
The order was made effective as of May 9, 1951, 15 days after its date. Defendant's petition for review was denied by" an order of this court on August 2, 1951, without opinion. A petition for rehearing was denied August 30, 1951. The United States Supreme Court on January 7, 1952, dismissed an appeal from the order denying the writ (342 U.S. 908 [72 S.Ct. 304, 96 L.Ed. 679]) "for want of a substantial federal question."
The defendant demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action; that the court had no jurisdiction of the subject matter of the action; that the plaintiff has not the legal capacity to sue; and that the complaint is uncertain, ambiguous and unintelligible in that it cannot be ascertained therefrom under what law the defendant has incurred a penalty to the People.
The special demurrer is without merit and will receive no further notice. The jurisdiction of the superior court to entertain the action and the right of the commission to direct its prosecution are supplied by section 2104 of the Public Utilities Code. The consideration of the general demurrer will dispose of the pertinent "questions raised on the appeal.
At the outset it is urged by the plaintiff that the prior decision of the commission followed by the order of this court denying a writ of review and the dismissal of the defendant's appeal by the Supreme Court of the United States has resulted in res judicata as to certain issues involved in the present action. These include the determination (1) that the commission had jurisdiction to fix the intrastate fares of the defendant; (2) that the status of the defendant is that of a public utility subject to regulation as contemplated by the Constitution of this state;, and (3) that the Civil Aeronautics Act of 1938, as amended, has not deprived this state of the power, through the commission, to regulate the defendant's intrastate fares.
The determination as to these three questions was made, the plaintiff asserts, in the exercise by the commission of its judicial power, and was and is to that extent as conclusive as would be a final judgment of a court of record.
Under the Constitution and statutes of this state the commission is possessed of broad and comprehensive powers. It has wide administrative powers. It has legislative powers, such, for example, as the fixing of rates of public utilities, the exercise of which is prospective in operation and legislative in character. (Southern Pac. Co. v. Railroad Com., 194 Cal. 734, 739 [231 P. 28].) That it also possesses judicial powers may not be questioned. (People v. Lang Transportation Co., 217 Cal. 166, 170 [17 P.2d 721].) When its determinations within its jurisdiction have become final they are conclusive in all collateral actions and proceedings. (Pub. Util. Code, § 1709.) Direct attack is made available by application for writ of review to this court in accordance with the provisions of section 1756 of the Public Utilities Code. We are not herein dealing with a determination of the commission made in the exercise of its judicial power where no direct attack, on constitutional or other grounds, has been made within the time provided by section 1756. However, it seems clear that where those determinations have been appropriately and unsuccessfully challenged, as here, by direct attack and have run the gamut of approval by the highest courts, state and federal, they should have the conclusive effect of res judicata as to the issues involved where they are again brought into question in subsequent proceedings between the same parties. (Sunshine A. Coal Co. v. Adkins, 310 U.S. 381 [60 S.Ct. 907, 84 L.Ed. 1263].)
Whether the order of the Supreme Court of the United States dismissing the appeal of the defendant "for want of a substantial federal question" is res judicata in that court on the question of alleged federal control of intrastate rates, is not for this court to decide. It is established, however, -that the denial by this court of a petition for review of an order of the commission is a decision on the merits both as to the law and the facts presented in the review proceedings. (Southern Calif. Edison Co. v. Railroad Com., 6 Cal.2d 737, 747 [59 P.2d 808].) This is so even though the order of this court is without opinion. (Napa Valley Elec. Co. v. Railroad Com., 251 U.S. 366 [40 S.Ct. 174, 64 L.Ed. 310].) In the last cited case it was held at pages 372 and 373 that a denial by this court of an application for a writ of review is "tantamount to a decision of the court that the orders and decisions of the Commission did not exceed its authority or violate any right of the several petitioners under the Constitution of the United States or of the State of California"; that the "absence of an opinion by the Supreme Court did not affect the quality of its decision or detract from its efficacy as a judgment upon the questions presented, and its subsequent conclusive effect upon the rights of the Electric Company," and that it was "a final judicial determination" and "as effectual as an estoppel as would have been a formal judgment upon issues of fact." (See, also, Funeral Dir. Assn. v. Board of Funeral Directors & Embalmers, 22 Cal.2d 104,107, 108 [136 P.2d 785] ; Southern Calif. Edison Co. v. Railroad Com., supra, 6 Cal.2d 737, 747; People v. Hadley, 66 Cal.App. 370, 375 [226 P. 836]; Southern Pac. Co. v. Van Hoosear, 72 F.2d 903; Consolidated Freight-ways, Inc. v. Railroad Com. (1951), 36 F.Supp. 269, 270; Adams v. Decoto (1927), 21 F.2d 221.)
The defendant relies on the case of Stratton v. Railroad Commission, 186 Cal. 119, which contains declarations that appear to be contrary to other and later decisions of the courts on the subject. It was said in. that ease at page 126 that "the commission is not a judicial tribunal in the strict sense." That statement is of course true. The commission is not a judicial tribunal constitutionally established as a part of the judicial department of the state. It is also observed that the commission is in the position of acting at times as informer, prosecutor, jury and judge in matters coming before it. This takes place, for example, when the commission on its own motion issues an order directing some person, firm or corporation within its regulatory jurisdiction to show cause why it should not be required to perform or not perform a certain designated act or be subject to discipline for performing an act contrary to law or public utility regulation. The proceeding may take on the character of an adversary proceeding in which the commission furnishes evidence, judicially passes upon the competence and weight of that evidence and makes an order based upon it. This kind of establishment was seriously criticized in its early stages by those affected by it. But it is the law that when the system has been duly-authorized by the Constitution of the state and the procedure is such as to satisfy the requirements of due process, both state and federal, no valid objection can be made to it. Due process as to the commission's initial action is provided by the requirement of adequate notice to a party affected and an opportunity to be heard before a valid order can be made. (See Southern Pac. Co. v. Public Utilities Com. (1953), 41 Cal.2d 354, 365 [260 P.2d 70].) When the commission has acted and an interested party is dissatisfied due process is further afforded by the right of petition for a writ of review to this court. And of course no law of this state could deprive a party whose rights were prejudicially affected of the right to apply to the Supreme Court of the United States for relief on federal constitutional grounds.
So, while it is true that the commission is not a judicial tribunal in a strict sense, it does not follow that it does not possess well established and well understood judicial power.
It was also said in the Stratton case that "the commission is essentially an administrative and legislative tribunal, and not a court," and the fact that the commission must make determinations of fact for its own guidance ' ' does not make it a court or change the character of its decrees from administrative or legislative orders into judicial judgments." These and other statements in the opinion in that case are inconsistent with the decisions of this court both before and after it on the subject of the judicial power of the commission. Insofar as they are so inconsistent they are overruled.
There can be no question but that the commission exercised its judicial power in determining the three matters above referred to. They were involved and extensively presented to the commission in the prior proceedings and to this court on the application for the writ of review. They are at issue in the present case. The subject matter of the two proceedings is to that extent the same. The parties are essentially the same. (Sunshine A. Coal Co. v. Adkins, supra, 310 U.S. 381, 402.) The fact that other matters are also involved in the present case, such as the validity, force and effect of section 2107 of the Public Utilities Code, and the question whether the Constitution itself prohibits certain designated action by public utilities, does not detract from the effect of those determinations as conclusive insofar as this case is concerned. (See Dillard v. McKnight, 34 Cal.2d 209, 214, 215 [209 P.2d 387, 11 A.L.R.2d 835] ; Bernhard v. Bank of America, 19 Cal.2d 807, 811-813 [122 P.2d 892]; Todhunter v. Smith, 219 Cal. 690, 695 [28 P.2d 916].)
That conclusiveness arises by operation of law. It is the order and not the reasons for it that establishes its effectiveness. (Bank of Visalia v. Smith, 146 Cal. 398, 402 [81 P. 542]; 15 Cal.Jur. 66, 98-99, § 167.) Attention is again called to the fact that when this court denied the writ of review in the prior proceedings no reasons for the order were given. Since the conclusions on this appeal with reference to the three stated questions are to be the same as those which to that extent formed the basis for the order denying the writ, and the judgment herein is to be reversed, it is deemed desirable to state all of the reasons for the reversal including those which led to the denial of the writ, to the end that none of the reasons for such denial be left to implication or conjecture.
In order to determine whether the defendant is amenable to state rate regulation under the provisions of the Constitution and statutes as alleged in the complaint it is necessary to look first to the Constitution. As adopted in 1879, section 22 of article XII provided for the election of three Railroad Commissioners and stated in part: "Said commissioners shall have the power, and it shall be their duty, to establish rates of charges for the transportation of passengers and freight by railroad or other transportation companies. ." In 1911 this section was amended to create a Railroad Commission in lieu of the former commission, and to provide:
". . . Said commission shall have the power to establish rates of charges for the transportation of passengers and freight by railroads and other transportation companies, and no railroad or other transportation company shall charge or demand or collect or receive a greater or less or different compensation for such transportation . . . between the points named in any tariff of rates, established by said commission, than the rates . . . which are specified in such tariff. . . ."
Also added to this section in 1911 was the declaration:
"No provision of this Constitution shall be construed as a limitation upon the authority of the Legislature to confer upon the railroad commission additional powers of the same kind or different from those conferred herein which are not inconsistent with the powers conferred upon the . . . com mission in this Constitution, and the authority of the Legislature to confer such additional powers is expressly declared to be plenary and unlimited by any provision of this Constitution."
In 1946 section 22 was again amended, continuing the "Railroad Commission" in existence as the "Public Utilities Commission. ' ' The portions of the section above quoted were unchanged.
The commission is therefore a regulatory body of constitutional origin, deriving certain of its powers by direct grant from the Constitution which created it. (Pacific Tel. & Tel. Co. v. Eshleman (1913), 166 Cal. 640 [137 P. 1119, Ann.Cas. 1915C 822, 50 L.R.A.N.S. 652] ; Morel v. Railroad Com. (1938), 11 Cal.2d 488 [81 P.2d 144].) The Legislature is given plenary power to confer other powers upon the commission. Art. XII, §22 and 23.) As to the scope of those powers we look to the legislation enacted in the exercise of that power, principally the Public Utilities Code, and to the decisions of this court in construing them. Such additional powers "must be cognate and germane to the regulation of public utilities, and when the power thus conferred relates to the regulation of transportation companies, it must be cognate and germane to the regulation of railroads or other transportation companies that are in fact common carriers. [Citing cases.]" (Morel v. Railroad Com., supra, 11 Cal.2d 488, 492.)
Section 20 of article XII as originally adopted in 1879 prohibited any railroad company "or other common carrier" from combining or contracting with another "common carrier" to have the earnings of one doing the carrying shared by the other not doing the carrying, and provided that whenever a railroad corporation should lower its rates of fare for the purpose of competing with any other common carrier, such reduced rate should not again be raised from that standard without the consent of the governmental authority in which shall be vested the power to regulate fares and freights. In 1911 this section was amended to read:
"No railroad or other transportation company shall raise any rate of charge for the transportation of freight or passengers or any charge connected therewith or incidental thereto, under any circumstances whatsoever, except upon a showing before the . . . commission provided for in this Constitution, that such increase is justified, and the decision of the said commission upon the showing so made shall not be subject to review by any court except upon the question whether such decision of the commission will result in confiscation of property. "
Sections 20 and 22 directly confer upon the commission power over the rates of "transportation companies" and section 20 directly prohibits such companies from increasing their rates without commission authorization. The next inquiry is whether this defendant is a "transportation company" within the meaning of these sections.
From earlier times rates for the transportation of persons and property for hire as common carriers have been subject to government regulation and control. (Munn v. Illinois, 94 U.S. 113, 125 [24 L.Ed. 77] ; People v. Budd, 117 N.Y. 1 [22 N.E. 670, 682, 15 Am.St.Rep. 460, 5 L.R.A. 559].) In matters within the jurisdiction of a state, such control has existed in California almost from our beginning. While administrative bodies at first were concerned with railroads and their associated activities, the language employed in article XII of the Constitution of 1879, and subsequent amendments, clearly indicates the intention and purpose that such controls should extend not merely to "railroads" but to "railroads and other transportation companies." This latter phrase is so frequently employed in article XII as to leave no doubt as to its enlarging effect.
The fact that airline transportation companies were not in existence when the Constitution was adopted in 1879 does not make them any the less "transportation companies" within the meaning and contemplation of article XII. It was well said by the Supreme Court of Nebraska in State ex rel. State Railway Com. v. Ramsey (1949), 151 Neb. 333, at page 338 [37 N.W.2d 502] : ". . . A constitution is intended to meet and be applied to any conditions and circumstances as they arise in the course of the progress of the community. The terms and provisions of constitutions are constantly expanded and enlarged by construction to meet the advancing affairs of men. While the powers granted thereby do not change, they do apply in different periods to all things to which they are in their nature applicable. Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1, 24 L.Ed. 708; 11 Am.Jur., Constitutional Law, § 51, p. 660; 9 Am.Jur., Carriers, § 4, p. 430. These principles have been held to be applicable to transportation by air. 'Transportation, as its derivation denotes, is a carrying across, and, whether the carrying he by rail, by water or by air, the purpose in view and the thing done are identical in result.' Curtiss-Wright Flying Service v. Glose, 66 F.2d 710, certiorari denied 290 U.S. 696 [54 S.Ct. 132, 78 L.Ed. 599], . . . [citations omitted]."
The question in regard to each new type of transportation is whether the Constitution excludes by necessary or even by fair implication all control over transportation companies of the character here involved.
Section 17 of article XII of the Constitution provides:
"All railroad, canal, and other transportation companies are declared to be common carriers, and subject to legislative control...."
Section 23, as adopted and unchanged by the 1914 amendment, provides:
"Every private corporation, and every individual or association of individuals, owning, operating, managing, or controlling any commercial railroad, interurban railroad, street railroad, canal, pipe line, plant, or equipment, . . . within this State, for the transportation or conveyance of passengers . or freight of any kind, . . . either directly or indirectly, to or for the public, and every common carrier, is hereby declared to be a public utility subject to such control and regulation by the . . . Commission as may be provided by the Legislature, and every class of private corporations, individuals, or association of individuals hereafter declared by the Legislature to be public utilities shall likewise be subject to such control and regulation. The . . . Commission shall have and exercise such power and jurisdiction to supervise and regulate public utilities, in the State of California, and to fix the rates to be charged for commodities furnished, or services rendered by public utilities as shall be conferred upon it by the Legislature, and the right of the Legislature to confer powers upon the . . . Commission respecting public utilities is hereby declared to be plenary and to be unlimited by any provision of this Constitution. . . . Nothing in this section shall be construed as a limitation upon any power conferred upon the . . . Commission by any provision of this Constitution now existing or adopted concurrently herewith. ' '
This section as originally adopted in 1879 merely provided for the districting of the state into three districts.
The comprehensive grant of power over rates conferred upon the commission by sections 20 and 22 is not nullified or limited by the language appearing in section 17 and 23 to the effect that such rates are "subject to legislative control. ' ' The provisions of these sections are not out of harmony, but if there is any doubt about it the special provisions of sections 20 and 22 should prevail over the general provisions of sections 17 and 23. The concluding sentence of section 23 confirms this conclusion. Under familiar rules of construction, if it is impossible to harmonize or reconcile portions of a constitution, special provisions control more general provisions, and the general and special provisions operate together, neither working the repeal of the other. (Martin v. Election Comrs., 126 Cal. 404 [58 P. 932] ; 11 Cal.Jur.2d 352-353; 11 Am.Jur. 663.) Recourse may be had to the whole instrument to ascertain the intent and purpose of its provisions and it should, if possible, be construed so as to avoid a repugnancy.
The defendant urges that the provisions of sections 20 and 22 are too vague to be self-executing, and that the Legislature has not provided any implementing legislation. "A constitutional provision may be said to be self-executing if it supplies a sufficient rule by means of which the right given may be enjoyed and protected, or the duty imposed may be enforced. ." (Cooley's Const. Limitations, 8th ed., p. 167.)
Although a constitutional provision may be self-executing the Legislature may enact legislation to facilitate the exercise of the powers directly granted by the Constitution. (Chesney v. Byram (1940), 15 Cal.2d 460, 463 [101 P.2d 1106].) "It is not and will not be questioned but that if the constitution has vested such power, it is not within the legislative power, either by its silence or by direct enactment, to modify, curtail, or abridge this constitutional grant. ' ' (Western Assn. etc. R.R. v. Railroad Com. (1916), 173 Cal. 802, 804 [162 P. 391, 1 A.L.R. 1455].)
Furthermore, the omission of any express sanctions in article XII for enforcing the provisions of sections 20 and 22 does not justify the conclusion that those sections were not intended to be self-executing. Section 22 of article XII as adopted in 1879 directly imposed penalties, drastic ones, upon corporations and their officers, agents or employees for violation of the constitutional prohibitions against unauthorized rates, discrimination, etc. It is true that the 1911 amendment omitted these express sanctions. But the prohibitions of section 20 were added at that same time. Such prohibitions were not left to the discretion of the Legislature. No legislation was required to make the constitutional language more prohibitory and no legislation enacted could limit or detract from it. (Oakland Paving Co. v. Hilton, 69 Cal. 479, 483 [11 P. 3].) But to aid in its enforcement section 24 of article XII has at all times provided as follows: "The Legislature shall pass all laws necessary for the enforcement of the provisions of this article." Sections 20, 22 and 23 are a part of that article. This action was filed against the defendant because it violated the prohibitions of article XII and section 2107 of the Public Utilities Code was reenacted pursuant to the mandatory duty of the Legislature to pass all laws necessary to carry into effect the constitutional purpose.
Defendant urges that the Legislature did not intend an air carrier to be included within the category of a "public utility" for the purposes of section 2107 or of any other part of the Public Utilities Code and that, therefore, the penalties prescribed in section 2107 are not applicable to and cannot be imposed upon it. Legislative intent should be determined from the language of the statute. Significance should be given, if possible, to every word,- phrase, sentence and part of an act. (Gates v. Salmon, 35 Cal. 576 [95 Am. Dec. 139].) When a statute prescribes the meaning to be given to particular terms used by it, that meaning is generally binding on the courts. (Rideaux v. Torgrimson, 12 Cal.2d 633 [86 P.2d 826]; In re Monrovia Evening Post, 199 Cal. 263 [248 P. 1017].) Section 203 of the Public Utilities Code states: "Unless the context otherwise requires, the definitions and general provisions set forth in this chapter govern the construction of this part." The term "transportation companies" is nowhere defined in the code nor is there any specific reference therein to airline carriers. Section 211 defines "Common Carrier" and section 216 defines "Public Utility." Each definition states that it "includes" the corporations thereafter enumerated.
The term "includes" is ordinarily a word of enlargement and not of limitation. (Oil Workers Ini. Union v. Superior Court, 103 Cal.App.2d 512, 570 [230 P.2d 71].) The statutory definition of a thing as "including" certain things does not necessarily place thereon a meaning limited to the inclusions. (Gray v. Powell, 314 U.S. 402 [62 S.Ct. 326, 86 L.Ed. 301].) The definitions contained in sections 211 and 216 of the Public Utilities Code do not appear to be limited to the inclusions. Section 216, subdivision (a), leaves open for consideration what other types of entities are embraced within the words "Public Utility" when used in a particular context. (Pub. Util. Code, § 203.) Section 2107 subjects to penalties any public utility which violates "any provision of the Constitution of this State or of this part." To hold that this section applies only to public utilities enumerated in the definition of "Public Utility" or "Common Carrier" would ignore the words "of the Constitution" contained therein and would violate the letter and purpose of chapter 11 on violations, of which section 2107 is a part. Section 2101 commands the commission to see that the provisions of the Constitution affecting public utilities and violations thereof are promptly prosecuted. Other sections of that chapter provide the machinery for the prosecution of such offenses and the collection of penalties. Chapter 11 indicates an awareness by the Legislature of its duty to provide for the enforcement of the constitutional provisions and its intention to fix the punishment for such violations.
Confusion is asserted to have resulted from divergent holdings of this court on the question whether a carrier which is in fact a common carrier transportation company should be subject to rate regulation by the commission although not specifically mentioned in the Constitution or the statute. This question was raised in 1901 in Railroad Comrs. v. Market St. Ry. Co., 132 Cal. 677 [64 P. 1065]. In that case the commission sought to compel the Market Street Railway Company to submit its records to the commission for regulatory purposes. The proceeding involved a combination of the constitutional sections as adopted in 1879 and an act of the Legislature passed April 15, 1880, which specially excluded a street railroad from the definition of a "transportation company" as that term was used in the Constitution. It was held that a street railway company had not been specifically named in the Constitution; that under the statute a street railway company operating within a municipality was not a transportation company within the meaning of the Constitution and was therefore not subject to regulatory control by the commission. Obviously that ease is not applicable here.
The scope of the regulatory powers of the commission under the Constitution as amended in 1911 was considered in 1916 in Western Assn. etc. R. R. v. Railroad Com., supra, 173 Cal. 802. In that case the association, consisting of some 15 railroads, filed a petition with the commission seeking to have it assume the regulation of certain motor truck and transportation companies conveying freight and passengers on the public highways as common carriers. The commission declined to entertain the petition on the ground that the law had not vested in it the power to do so. Mandamus was sought to compel the commission to assume jurisdiction. It appeared that the freight truck lines and the electric and motor bus passenger conveyances were transportation companies and common carriers operating intercity. It was held that notwithstanding the fact that they were not specifically mentioned in the Constitution or the statutes they were undeniably public utilities and subject to the regulatory power of the commission. It was said at page 808 with regard to motor trucks and stages, that "nothing in the language of the grant excludes them, and no legitimate construction upon the phrase so oft quoted demands their exclusion. It must be and therefore is held that the constitution has granted regulatory powers over such corporations to the . . . commission by virtue of section 22, article XII, of the Constitution. ." The Market Street Railway case was distinguished on the ground that that company was operating within a municipality and was not under the law subject to the commission's power of regulation.
The question of the power of the commission to regulate rates of taxicab companies operating wholly within a municipality required the attention of this court in In re Martinez, 22 Cal.2d 259 [138 P.2d 10]. The question there was whether the fares of taxicabs so operating were subject to regulation by the commission or pursuant to the provisions of a city ordinance. In that proceeding in habeas corpus the commission, as amicus curiae, stated that it had consistently taken the position that its jurisdiction pursuant to statutes enacted under the authority of section 23 of the Constitution did not extend to the regulation of local taxicabs and for that reason it had never attempted to regulate their operations. This court concurred in that view and also held that consistently therewith there was a legislative intent to exempt taxicabs from state regulation. The court discharged the writ. An additional reason for the order was stated to be that no authorization in the commission to regulate taxicab fares could be found in the statute because taxicabs were not specially mentioned therein as common carriers. There was no occasion to indicate in that case that a private corporation, admittedly and conclusively shown to be in fact a transportation company, a statewide common carrier of passengers for hire, and a public utility, should be freed from regulation as to its intrastate rates pursuant to the grant of power to the commission under section 22 merely because it was not specifically named as such in that section or in the statute passed by the Legislature under the authority of section 23.
The argument of the defendant that the specific references in Article XII to "railroads and other transportation companies" must for certainty limit the "other transportation companies" mentioned to ground carriers, is without merit. Airline carriers, like motor trucks and automobile stages, are forms of transportation unknown at the time the Constitution was adopted, and whether or not the Legislature has since that time acted with reference to them, they are within the regulatory powers of the commission under the principles laid down in the Short Line Railroad cases.
It follows that the defendant air carrier is a public utility within the ordinarily accepted meaning of that term and within the meaning and contemplation of sections 20 and 22 of article XII of the Constitution. It has violated the prohibitions of section 20 of that article. It is therefore subject to the penalties of section 2107 for violation of the constitutional provision.
Our conclusions in the present ease are in accord with the determinations of this court in 1916 in the Short Line Railroad cases and with the holding in the proceedings wherein this court in August, 1951, denied the petition of this defendant for a writ of review to annul the order of the commission. Anything in the Martinez case which is out of harmoney with these conclusions is overruled.
In further support of its demurrer the defendant argues that the provisions of section 2107 as applied to it are unreasonable and oppressive and therefore in violation of the due process and the equal protection clauses of the federal Constitution, citing Ex Parte Young, 209 U.S. 123 [28 S.Ct. 441, 52 L.Ed. 714]; Cotting v. Kansas City Stock Yards, 183 U.S. 79 [22 S.Ct. 30, 46 L.Ed. 92]; Beckler Produce Co. v. American Ry. Exp. Co., 156 Ark. 296 [246 S.W. 1, 26 A.L.R. 1197]; and Natural Gas Pipeline Co. v. Slattery, 302 U.S. 300 [58 S.Ct. 199, 82 L.Ed. 276]. There is no merit in this contention. The defendant was not under any compulsion to increase its rates without a hearing before subjecting itself to the risk of penalties. It could have obtained a determination of its rights and obligations under California law without exposing itself to the risk of penalties.
No showing is made that the penalties prescribed by section 2107, $500 to $2,000 a day, are oppressive. While factors in extenuation of defendant's action may be considered by the trial court in determining the merits of this controversy, they are not proper matters for consideration on this appeal. It is observed, moreover, that under section 2104 of the Public Utilities Code, the action may be "compromised or discontinued on application of the commission upon such terms as the court approves. ."
It is further contended by the defendant that any regulation of air carriers by states is barred by the Civil Aeronautics Act of 1938, as amended (52 Stats. 977, 49 U.S.C. §401 et seq.), and is against the national interest. This question was squarely raised in the hearings before the commission in the prior proceedings and was determined by the commission and by this court contrary to the contention. It formed one of the bases of the appeal to the Supreme Court of the United States. The jurisdictional statement on that appeal recited the issues there to be: "(1) Has the Civil Aeronautics Act of 1938, as amended, pre-empted the entire field of civil aviation to the exclusion of the right or power of any state or state agency to exercise jurisdiction or authority over commercial air transportation" and "(2) Is the Order of the Public Utilities Commission of the State of California, purporting to regulate the air coach tariff over ' an [intrastate] segment of a federally certificated interstate air route, a burden on interstate commerce and thus in violation of subsection 3 of Section 8, Article I of the Constitution of the United States?" (See Jurisdictional Statement, Western Air Lines, Inc., Petitioner, v. Public Util. Com. of the State of California, Respondent, S. F. No. 18427, p. 13.) That appeal was dismissed by the Supreme Court "for the want of a substantial federal question." (342 U.S. 908 [72 S.Ct. 304, 96 L.Ed. 679].) Mr. Justice Black and Mr. Justice Burton were of the opinion that probable jurisdiction should be noted. While it would seem that the right of the state commission to regulate the intrastate rates of this defendant and of others similarly situated has been judicially established and that this might be sufficient for the determination of this issue so far as this court is concerned, again we prefer, in view of the present arguments, to state the reasons why the defendant's contentions are not persuasive.
It appears beyond question that the power of Congress under the commerce clause extends to the regulation of "modes of interstate" commerce unknown to the fathers" (In re Debs, 158 U.S. 564, 591 [15 S.Ct. 900, 39 L.Ed. 1092]) and includes the regulation of the interstate operation of air carriers. The extent to which Congress has asserted such jurisdiction over civil aviation depends upon the terms of the legislation which it has adopted. This legislation is chiefly embodied in the Civil Aeronautics Act of 1938, as amended. A review of that act indicates that two kinds of jurisdiction have been there asserted by Congress, —one over safety factors, the other over economic factors. We are not here concerned with the provisions of the act applicable to safety regulations except to note that the extent of federal jurisdiction over those factors (§§601-610, 49 U.S.C. § 551-560) seems to be based on the definition of "air commerce" contained in section 1(3) (49 U.S.C. § 401(3), (1940)). It is there provided:
" 'Air commerce' means interstate, overseas, or foreign air commerce or the transportation of mail by aircraft or any operation or navigation of aircraft within the limits of any civil airway or any operation or navigation of aircraft which directly affects, or which may endanger safety in, interstate, overseas, or foreign air commerce."
The jurisdiction asserted by Congress in the local economic regulatory field is not covered. Section 1(2) (49 U.S.C. § 401(2)) defines "air carrier" as one engaged in "air transportation." "Air transportation" is defined in section 1(10) (49 U.S.C. §401(10)) to mean "interstate, overseas, or foreign air transportation or the transportation of mail by' aircraft." "Interstate air transportation" is defined by section 1(21) (49 U.S.C. § 401(21)) to mean "the carriage by aircraft of persons or property as a common carrier for compensation or hire or the carriage of mail by aircraft, in commerce between, respectively,
"(a) a place in any State of the United States, of the District of Columbia, and a place in any other State . or between places in the same State of the United States through the air space over any place outside thereof . . .
"(b) a place in any State of the United States . . . and any place in a Territory or possession of the United States . . .
"(e) a place in the United States and any place outside thereof. ."
Sections 601-610 (49 U.S.C. § 551-560) state the jurisdiction asserted over safety factors of air carrier regulations; sections 401-416 (49 U.S.C. § 481-496) over economic factors. Rates and tariffs are controlled by the latter sections. Under those provisions and the definitions contained in section 1 (49 U.S.C. § 401) it seems clear that Congress has not sought to extend the economic regulation of the board to intrastate transportation of persons or property other than mail; nor has it attempted to oust the states of control over such rates.
Defendant urges that section 401(2) (49 U.S.C. §481(2)) is of special significance on the question of the jurisdiction of the board over intrastate rates because it authorizes the issuance of certificates of public convenience and necessity for the transportation of mail and all other classes of traffic for which authorization is sought between such points as "from Brownsville, Texas . to San Antonio, Texas." Obviously that section pertains to the necessity of federal certification.
No question is here presented or determined as to the effect of this provision upon state certification; and the requirement of federal certification does not necessarily preclude state control of intrastate rates. The same observation applies to the provisions of section 403 (49 U.S.C. § 483) requiring air carriers to file tariffs with the board, of section 404 (49 U.S.C. § 484) requiring the observance of reasonable rates and charges, and of section 406 (49 U.S.C. §486) empowering the board to fix the compensation to be paid to air carriers for the transportation of mail. The latter section authorizes the board to take into consideration "all other revenue of the air carrier" in determining the "need" of such carrier for compensation for carrying the mail to enable it under "honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense." This language does not make it imperative that the board have exclusive control of "all other revenue." The only mandate is that it shall take all other revenue [including intrastate revenue] into consideration.
There is no language indicating that Congress intended to preempt the field of economic regulatory control of air transportation so as to include the transportation of passengers solely between points within a state and not involving the use of the airspace outside of the state. We are not concerned on this appeal with the question whether Congress could properly assert such power. There appear to have been no decisions of the United States Supreme Court defining the limits of such regulatory control.
Attention has been called to numerous recommendations and bills presented to Congress, prior to and since the enactment of the Civil Aeronautics Act of 1938 seeking to extend federal economic regulation to include intrastate operations of air carriers, and also to the fact that none of these has been enacted into law. This would seem to strengthen the conclusion that Congress has not assumed control over carriers to the exclusion of state control as to their intrastate rates.
Any doubts on the subject should be resolved in favor of state power for the principal reason, as stated, that the regulation of intrastate fares of common carriers traditionally has been subject to state regulation. It is true, as defendant points out, that Congress did not use language in the Civil Aeronautics Act of 1938 such as that employed in different legislation asserting its control over other kinds of common carriers in which it was expressly stated that such regulations shall not be construed to interfere with the exclusive exercise by each state of the power to regulate intrastate commerce. (See §1(2) Interstate Commerce Act (49 U.S.C. §1) (railroads) ; § 202(b) Part II, Interstate Commerce Act (49 U.S.C. § 302) (motor carriers); § 303 (j) Part III, Interstate Commerce Act, (49 U.S.C. 903) (water carriers).) The failure to use such language in the Civil Aeronautics Act does not necessarily imply that federal regulation of air transportation was intended to exclude all state control. Railroads and motor carriers began as short-haul carriers. In their operations wholly within a state they have been traditionally subject .to state regulation. In the early days of aviation the operating costs and necessarily the fares of the pioneering airlines were very high and as a consequence they could compete with surface carriers only on long hauls. Consequently air transportation in this country has been predominately interstate and as such subject to federal control.
Also of significance in considering the extent of congressional action is the attitude of the Civil Aeronautics Board in the exercise of its powers under the act. As stated this defendant and the other carriers concerned had put the questioned increase in fares into effect on March 1, 1951, without commission authorization because they had been requested to make such increase as of that date by the chairman of the Civil Aeronautics Board and they had considered his request to be tantamount to a demand. In the proceedings subsequently initiated by the commission the carriers denied jurisdiction on the part of the commission over their rates and asserted the exclusive jurisdiction of the board. On the appeal to the United States Supreme Court from our order denying a writ of review the question whether the board had exclusive jurisdiction was precisely in issue. The board apparently did not have sufficient interest to intervene. The commission states that in more recent litigation in which the board did intervene (United Air Lines v. Pub. Util. Com. of California, 74 Sup.Ct. 151, Nov. 30,1953) it has indicated its present attitude that its jurisdiction does not extend to intrastate rates.
Since 1939 the carriers authorized to transport passengers by air between the mainland of California and Santa Catalina Island have been subject to detailed regulatory control by the federal board. Tariffs for those operations were filed with that board but had never been filed with or required by the state commission. Santa Catalina Island lies about 30 miles westward of the mainland and is a part of California. In September and December, 1951, the commission requested United Air Lines to file tariffs with it, asserting that the Catalina operations were not within the coverage of the Civil Aeronautics Act but were intrastate and subject to state regulation. No formal order was issued by the commission. In June, 1952, United Air Lines and Catalina Air Transport, a corporation, joined in a complaint filed in the United States District Court for the Southern District of California praying for declaratory and injunctive relief, alleging that the California commission was threatening to bring penalty and reparation proceedings against them. The board intervened for the purpose of asserting its exclusive jurisdiction. A three judge court ordered an injunction, upholding the exclusive jurisdiction of the board. That judgment was reversed by the Supreme Court [346 U.S. 402 [74 S.Ct. 151, 98 L.Ed. -], Nov. 30, 1953) on technical grounds, citing Public Service Com. of Utah v. Wycoff, 344 U.S. 237 [73 S.Ct. 236, 97 L.Ed. 291]. However in the brief on appeal filed on behalf of the board it was stated that there "is no issue here presented of whether the Civil Aeronautics Act would pre-empt the field of economic regulation of the Catalina operations if those operations involved only flights over California territory, as, for example, do flights between Los Angeles and San Francisco. United Air Lines v. Public Utilities Com. of California, 342 U.S. 908 [72 S.Ct. 304, 96 L.Ed. 679], where this court dismissed an appeal from a rate order of the California Commission for want of a substantial federal question, involved air transportation between Los Angeles and San Francisco only, and is inapposite here." (Brief for Appellee Civil Aeronautics Board, p. 13.)
The argument that the interests of the United States require national uniformity in the regulation of air transportation through the total exclusion of state control is addressed to a matter of public policy which requires no consideration here.
From the foregoing it follows that the demurrer was improperly sustained.
Judgment reversed.
Gibson, C. J., Carter, J., Traynor, J., and Spence, J., concurred.
This section was reenacted in 1951 as section 2107 of the Public Utilities Code with no substantial change.
§ 211. "Common carrier" includes:
(a) Every railroad corporation; street railroad corporation; express corporation; freight forwarder; dispatch, sleeping ear, dining car, drawing-room ear, freight, freight-line, refrigerator, oil, stock, fruit, ear loaning, ear renting, car loading and every other car corporation or person operating for compensation within this State.
(b) Every corporation or person owning-, controlling, operating or managing any vessel engaged in the transportation of persons or property for compensation between points upon the inland waters of this State or upon the high seas between points within this State. . . .
(c) Every "passenger, stage corporation" operating within this State.
(d) Every highway common carrier and every petroleum irregular route carrier operating within this State.
§ 216. (a) "Public utility'' includes every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, wharfinger, warehouseman, and heat corporation, where the service is performed for or the commodity delivered to the public or any portion thereof.
Report of the Federal Aviation Commission, Sen. Doc. No. 15, 74th Cong., 1st Sess. (Jan. 30, 1935) 237-239;
78th Congress: Lea-Bailey Aviation Bill introduced as H.R. 1012 and S. 246; revised form of Lea-Bailey Aviation Bill, H.R. 3420; Boren Bill, H.R. 4845; Reece Bill, H.R. 4848.
79th Congress: Lea Bill, H.R. 674; Johnson Bill, S. 541; Lea Bill, H.R. 3383.
80th Congress: Wolverton Bill, H.R. 2337.
81st Congress: Brewster Bill, S. 423; Johnson Bill, S. 445; Johnson Bill, S. 2435.
See, also, 1944 Natl. Assn. RR and Util. Comrs. Proceedings 221; 1945, id. p. 299; 1946, p. 210; 1947, p. 128; 1948, p. 69; 1949, p. 166; 1950, p. 106.
See 11 Law & Contemporary Problems (1946), p. 429, at pp. 459 et seq. and pp. 488 et seq. for a symposium on this problem.