Marks, James M.

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University of Kentucky

Kentucky Law JournalVolume 39 | Issue 3 Article 61951Is a Lessor of Motor Vehicles a Contract Carrier?James M. MarksUniversity of KentuckyFollow this and additional works at: https://uknowledge.uky.edu/kljPart of the Transportation Law CommonsRight click to open a feedback form in a new tab to let us know how this document benefitsyou.This Note is brought to you for free and open access by the Law Journals at UKnowledge. It has been accepted for inclusion in Kentucky Law Journal byan authorized editor of UKnowledge. For more information, please contact UKnowledge@lsv.uky.edu.Recommended CitationMarks, James M. (1951) "Is a Lessor of Motor Vehicles a Contract Carrier?," Kentucky Law Journal: Vol. 39 : Iss. 3 , Article 6.Available at: https://uknowledge.uky.edu/klj/vol39/iss3/6KENTUCKY LAW JOURNALchildren as heirs.' This view is positive in that adoption does not )ustify exclusionin the absence of intent to limit heirs to blood relations.Although the Kentucky Court -of Appeals, in the latest interpretation of theword "heirs" has apparently adopted a liberal attitude, the decision falls squarelywithin the scope of the general rule construing "heirs" in reference to an adoptedchild taking under a will. The factual situation of Isaacs v. Manning would sup-port the conclusion that a reasonable interpretation shows the existence of thenecessary intent to include the adopted child.DEmPSEY CoxIS A LESSOR OF MOTOR VEHICLES A CONTRACT CARRIER?An increasing number of manufacturers and shippers who are located agreater distance from their consumers than their competitors face the realizationthat the soanng cost of transportation has materially weakened their competitiveposition. Others find that new markets have opened up for their products inplaces which are served by the existing carners only indirectly or not at all withthe result that the new markets are to them no markets at all. These and othersituations have resulted in a diligent search by the shipper for a cheaper, morerapid, and more direct conveyance of his products.One way in which shippers have avoided these difficulties has been the trans-portation of their goods by some motor earner under contract to haul goods accord-ing to the route, schedule, and rate which is most suitable for their specific typeof hauling. A route can thus be worked out which is more direct and a scheduledrawn in accordance with production plans. The effect of this is a quicker turn-over with less need for a large amount of working capital. The one thing thatdeters every shipper from accomplishing this seemingly Utopian result is the factthat every interstate contract earner must obtain a permit from the InterstateCommerce Commission before he will be allowed to operate over a new route orhaul a new type of goods.' The chances of the manufacturer being able to findan operating contract earner with the authority to transport the particular goodsover the particular route wanted are comparatively nil. He must then find acarrier willing to transport his goods according to his specifications. Once this isdone, the carrier must file an application to secure a permit allowing him to sotransport the goods. Due in part, no doubt, to the opposition of nearly everycommon earner which operates over any part of the proposed route and the over-crowded condition of our highways, the Commission has become increasingly reluc-tant to issue any new permits.'The shipper may avoid the necessity of complying with these Governmentalcontrols which are incident to obtaining permits for contract carriers and still re-tain most of the benefits which are concomitant with that type of shipping by usinghis own trucks and men. This method of transportation brings with it, however,the necessity of buying trucks and repair equipment which might be too great a" Restatement, Property, sec. 305, comment Y (1940).149 Stat. 552 (1935), 49 U.S.C. see. 309(a) (1946).49 Stat. 552 (1935), 49 U.S.C. sec. 309(b) (1946).' From October 31, 1948, to October 31, 1949, the Interstate CommerceCommission 'withdrew 186 more permits than it granted. Sixty-Third AnnualReport of the Interstate Commerce Commission 104 (1949).NOTES AND COMAENTSburden for a smaller business. Even the larger businesses dislike the idea oftying up their capital to go into the "trucking business" with which they are un-familiar. Many feel that such an expenditure of capital could more profitably beinvested in the expansion of their own businesses.It was long ago discovered that an arrangement by the shipper with a truck-ing company whereby the company would lease the trucks needed to the shipperwould incorporate nearly all the advantages found in both transportation by con-tract carrier and private carrier. Under such arrangement, the shipper couldtransport his goods at the time and by the route best suited to his needs withouthaving to tie up his capital in a phase of business which he probably could notoperate as efficiently as the lessor, a person who devotes his full time to the busi-ness. The leasing of trucks has the added advantage of allowing the shipperwhenever he begins to ship a new type of goods to change the trucks then in useto different ones more suitable to his needs without having to bear the loss whichcomes with the buying and selling of motor vehicles.However, the Interstate Commerce Commission will not accept without ques-tion every transaction which purports on its face to be a bona fide lease and hencewithout its control. It quickly recognized that a lease of trucks at a stated amountper mile or week or month may be no different than payment on a 100 poundbasis,' and that it might be nothing more than a subterfuge to circumvent thenecessity of applying for the permit required for contract earners.The distinction between a bona fide lease and unauthorized operation on thepart of the alleged lessors has not been easy to make or to apply. The Commis-sion has stated that, "One of the major difficulties with which we have been facedin connection with regulation of common and contract earners subject to ourjurisdiction has been the practices of such carriers in the so-called leasing ofvehicles to shippers and private earners. ", The myriad [number of] varia-tions in which leases can be and are drawn has resulted in the Commission settingup, in the case of H. B. Church Truck Service Co. Com. Car. Application,' a broadtest to determine whether the lease is effectual in creating the lessee a privatecarrier; and, therefore, making the lessor not subject to the Commission s regula-tions. The test was "who has the right to control, direct, and dominate the per-formance of the service," and this is to be determined by the surrounding circum-stances and actual practices. The right to direct denotes more than the right toinstruct where the motor vehicle is to go and the time at which a trip is to beoperated because such right is the natural attendant of any contract carmer opera-tion under which specified vehicles are used exclusively by a single shipper.'In the recent case of Interstate Commerce Commission v. Isner,' the courtformulated the test that the Motor Carrier. Act of 1935 is applicable to "all ofthose who, not matter what form they used, are in substance engaged in the busi-ness of transportation of property on the public highways for hire."" Althoughthis case was brought to enjoin the lessor from continuing to transport goods fromICarroll Contract Carrier Application, 1 M.C.C. 788 (1937).'Sixty-Second Annual Report of the Interstate Commerce Commission 101(1948).'27 M.C.C. 191 (1940).Id. at 195.'Centre Trucking Co. Inc., Common Carrier Application, 32 M.C.C. 313(1942).'92 F Supp. 582 (E. D. Mich. 1950).'Id. at 587.KENTUCKY LAW JOuja-NALMichigan to NeWvJersey without a permit, the court chose to rely principally on aclosely. analogous case which arose out of the three percent tax on charges of car-riers for hire. The supporting case held that the decision of whether a lessor wasa motor carrier for hire and, hence, subject to the tax rested on the determinationof the following simple question. "Did the appellant [lessor] in fact furnishsubstantially all the facilities for, and perform substantially all the functions of,transporting the property of the forty-two customers [lessees] whose payments toit were taxed?.... This court stated specifically, however, that it made no attemptto tag the lessor a contract carner. In end result these tests are the same, for aperson who has the right to control, direct and dominate a business may fairly besaid to be in substance engaged in that business. In each of them, the courts lookbeyond the lease to see the facts as they actually are in the light of surroundingcircumstances. The Act is a remedial statute and liberally interpreted to effectits evident purpose.'The one exception to this attitude of the courts is the case of Schenleu Dis-tillers Corporation v. United States," wherein the lessor corporation, a whollyowned subsidiary of the lessee, was held to be a contract earner despite the factthat if the corporate veil were pierced the result would be that the lessee had theright to control, direct and dominate the trucks and drivers even though theywere on the payroll of the lessor. The court based its decision on the fact thatcorporate entities will not be disregarded where those in control have deliberatelyadopted the corporate form to use advantages derived therefrom and where noviolence is done to legislative pumose by treating them as separate entities.In determining whether the lease is bona fide, no one factor is conclusive, butundoubtedly the most important of all the factors is whether the driver of thetruck is an employee of the slupper or the lessor. This was amply illustrated inthe case of John J. Casale, Inc., Contract Carrier Application," where the Com-mission held that the lessor was a contract carrier where he leased his trucks anddrivers together, and he was not so considered where he leased his trucks only,although, the other factors surrounding the transactions were substantially similar.Yet, this factor is of little importance when the lease is of the driver alone withoutan accompanying truck, for in the Church case," the Commission held that a re-buttable presumption arose in favor of the lessor being a contract carner when thelessor is a motor earner and leases equipment with drivers to the shipper. Thispresumption will yield when the evidence shows that the shipper has the exclu-sive right and privilege of directing and controlling the transportation service.Nevertheless, the case of Motor Haulage Co. Inc. v. United States" might well becontended to stand for the rule that a lease of trucks and drivers by a motor carrierto a private carrier raises a conclusive presumption that the lessor is operating asa contract carrier. In that case, the lessor was held to be a contract carrier eventhough he was without any responsibility if the cargo was lost or damaged. Thecourt in upholding the Commission s finding stated "That even when plaintiffturned the driver and truck over to a lessee who then used the vehicle for its" Bridge Auto Renting Corp. v. Pedrick, 174 F 2d 738 (C.C.A. 2d 1949).12 See Georgia Truck System, Inc. v. Interstate Commerce Commission, 1293F 2d 210, 212 (C.C.A. 5th 1941).326 U.S. 432 (1946)." 44 M.C.C. 45 (1944)."See note 6 supra."70 F Supp. 17 (E.D.N.Y. 1947).NOTES AND COMMENTS 341own purposes prescribing routes, there still remained a presumption of controlby the plaintiff wich brought it within the category of a contract carrier underthe act."' None of the surrounding factors which are usually found along withthe lease of driver and truck was present in this case. As already mentioned, thelessor did not carry cargo insurance as lie was not responsible to the lessee forany damage done to the cargo. Neither did he have a lease for-one trip only- asituation which has been held invalid so consistently as to constitute it a positiverule of law that such "trip-leases" of trucks and drivers are always deemed invalidas creating the lessor a non-carrier. Further, he did not issue bills of lading tothe shipper as evidence of the cargo hauled, did not collect compensation on ratescomputed on a 100 pound basis, nor did he assume liability for operation of theleased vehicle on the lughway2' If the absence of every single factor which theCommission usually relies on to support a finding that the lease is ineffectual isnot enough to rebut the presumption that a motor carrier is a contract carrierwhen it leases both its trucks and drivers, it is dubious whether anything couldrebut such presumption, and no cases which have done so have been found.Further evidence of this is the fact that the Commission pursuant to an in-vestigation instituted on its own motion, Ex parte No. MC-43, Lease and Inter-change of Motor Carriers," handed down an order, which was to be effectiveSeptember 18, 1950, but suspended indefinitely before that time,' that prohibitedthe renting of equipment and drivers to non-carners, and the assisting of suchnon-carners in the selection or obtainment of drivers for such equipment rentedto the non-earners. Both this suspended order and the presumption formulatedby Commission decisions apply only to "carers" who rent to non-carners; and,therefore, they are inapplicable to a mere lessor of motor vehicles who does notengage in any carnage of goods for hire in interstate commerce."t However, alessor is deemed a motor earner if it has its-controlling interest owned by a earnerin interstate commerce. -zThe necessity for making a bona fide lease is important to the lessor and thelessee. The Commission has the power to enjoin the operations of any motorearner under its jurisdiction which are earned on in a manner not authorized byit.' It can also charge both the lessee and the lessor with criminal pumshment ifthey knowingly and wilfully violate the Motor Carrier Act." In addition, thereis a three per cent tax levied on all charges of motor carriers for hire' and hisnonpayment of it will subject him to pecuniary penalties."17 Id. at 21."Interstate Commerce Commission v. F & F Truck Leasing Co., 78 FSupp. 13 (- Minn. 1948); John J. Casale Inc., Contract Carrier Application, 44M.C.C. 45 (1944); Centre Trucking Co. Inc., Common Carrier Application, 32M.C.C. 313 (1942); Columbia Terms. Co. Contract Career Application, 18M.C.C. 662 (1939), 32 M.C.C. 177 (1942); Herbert Buesing Exemption Applica-tion, 32 M.C.C. 731 (1941); H. B. Church Truck Service Co. Comm. Car. Appli-cation, 27 M.C.C. 191 (1940); Forsyth Common Carrier Application, 16 M.C.C.267 (1939); Carroll Contract Carrier Application, 1 M.C.C. 788 (1937)." Mimeograph.Suspended September 5, 1950."2See John J. Casale, Inc., Contract Carner Application, 44 M.C.C. 45,52 (1944).22Id. at 52, 53."49 Stat. 543 (1935), 49 U.S.C. see. 322(b) (1946)."'49 Stat. 543 (1935), 49 U.S.C. sec. 322(a) (1946).56 Stat. 979 (1942), 26 U.S.C. see. 3475 (1946)." 49 Stat. 1027 (1935), 26 U.S.C. sec. 3612 (1946).KENTUCKY LAW JOURNALIf the draftsman will beep in mind the general principle and the relativelyfew pitfalls which stand in the way of a lease being deemed bona fide, it willenable him to draft the lease so that it will be upheld by the Commission andthe courts. If the lessor is a motor carrer, he must first look to see if there hasbeen an order pursuant to Ex Parte MC-48. The magnitude of the investigation,which concerns itself mainly with interchanging and augmenting equipment be-tween contract and common earners, necessarily delays any permanent orderbeing formulated; still, one will be forthcoming which might well contain furtherprohibitions. The guiding principle in all these lease cases is to look through theform of the lease to see whether the lessor is in substance engaged in transporta-tion for hire, and this includes the situation where he has control, direction anddomination of the performance of the service. However, it has been deemed al-most without exception that leases of vehicles and drivers together and "trip-leases" constitute the lessors contract earners. Other factors which have fre-quently occurred in the cases and given weight in determining that the lessor wasa contract carrer are compensation computed on the amount of the cargo earned,the lessor being responsible to the lessee for the safe delivery of the cargo and tothe public for any liability that may be incurred, and the vehicle having marks ofidentification that indicate that it is owned and operated by the lessor. Still, ifthese factors can be avoided and transportation by leased motor vehucles can bearranged, it might well be the remedy so diligently sought by the shippers toameliorate the present transportation situation which has so burdened themwith worry.JAMES M. MARSTHE MISDEMEANOR MANSLAUGHTER DOCTRINE UNDERMODERN STATUTES*There are many problems facing the prospective codifier of the law of homi-cide. Of these, one of the most interesting is the crime of involuntary man-slaughter. The usual common law definition of this crime is similar to that usedby a United States District Court, "Involuntary Manslaughter is where death re-sulted unintentionally, so far as the defendant was concerned, from an unlawfulact on his part, not amounting to a felony, or from a lawful act negligently per-formed."' The same label and punishment are attached to a homicide committedin the perpetration of a misdemeanor ("an unlawful act not amounting to afelony"), and to a homicide resulting from the negligent commission of a lawfulact.This note will be concerned only with the so-called misdemeanor manslaughterphase of the crime of involuntary manslaughter as it now exists under statutes inthe United States. A brief discussion of the common law rules of the crime willbe in order to lay a foundation for the analysis of the statutes.Hale stated that an unintentional homicide occurring in the course of anymisdemeanor was manslaughter. He, however, suggested a limitation on thisharsh rule by making a distinction between those misdemeanors malum in se and* This is a companion note to the one by Mr. Cromley on page .........'U.S. v. Meagher, 37 Fed. 875, 880 (C.C. W.D. Tex., 1888).

Is a Lessor of Motor Vehicles a Contract Carrier?

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Is a Lessor of Motor Vehicles a Contract Carrier?

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