Hardman, Thomas P.

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Volume 48 Issue 3 Issues 3 & 4 Article 7 June 1942 Competition in Public Service--A New Interpretation Thomas P. Hardman Follow this and additional works at: https://researchrepository.wvu.edu/wvlr  Part of the Transportation Law Commons Recommended Citation Thomas P. Hardman, Competition in Public Service--A New Interpretation, 48 W. Va. L. Rev. (1942). Available at: https://researchrepository.wvu.edu/wvlr/vol48/iss3/7 This Editorial Note is brought to you for free and open access by the WVU College of Law at The Research Repository @ WVU. It has been accepted for inclusion in West Virginia Law Review by an authorized editor of The Research Repository @ WVU. For more information, please contact ian.harmon@mail.wvu.edu. West Virginia Law Quarterlyand The BarPublished by the Faculty of the College of Law of West Virginia University,and issued in December, February, April and June of each academic year.Official publication of The West Virginia Bar Association.Subscription price to individuals, not members of The West Virginia Bar As-sociation, $2.00 per year. To those who are members of the Association the priceis $1.00 per year and is included in their annual dues. Single copies, 50 cents.BOARD OF EDITORSFaculty of College of Law, ex officioEDITORS IN CHARGEALBERT S. ABELMARLYN E. LUGARBUSINESS MANAGERLOUISE FARRELL CONAWAYASSOCIATE STUDENT EDITORSWmLIAm HUGH STEED, PresidentGRACE WEsTALL EDGELL, SecretaryGILBERT SMITH BAoHMANN MILTON SIDNEY KOSLOWEDWARD ISRAEr EILAND HOWARD PRENTISS SHORESPETER WOODROW HENDRIOKS BENJAMNw DAvis TISSUEDONALD CLYDE HoTT KEMBLE WHITE, JR.DAVID DALE JOHNSON, JR. HORANCE LABAN WHITE, JE.COM PETITION IN PUBLIC SERVICE- A NEWINTERPRETATIONWhether the theory that competition is the life of trade beregarded as an economic maxim that does not rise to the stature oflaw or whether it be thought of as a "legal ideal" (accepted back-ground of judicial reasoning -an ideological starting point thatinfluences judges just as authoritatively, in its way, as ordinarylegal rules),' there can be no doubt that in decision after decisionthis theory has swayed our courts, consciously or unconsciously, to'As to "legal ideals", see Pound, The Ideal Element in American JdisalDecision (1931) 45 HARv. L. REv. 136; Pound, A Comparison of Ideals of Law(1933) 47 HAnv. L. REv. 1; Pound, What Is Law? (1940) 47 W. VA. L. Q. 1.Cf. Hardman, Public Utilities. I. The Quest for a Concept-Another Word(1934) 40 W. VA. L. Q. 230; Hardman, "The Law' '-in West Virginia (1940)47 W. VA. L. Q. 23. For a different approach, see Parry, Economic Theories inEnglish Case Law (1931) 47 L. Q. REV. 183.1Hardman: Competition in Public Service--A New InterpretationDisseminated by The Research Repository @ WVU, 1942EDITORIAL NOTESa remarkable and by and large predictable degree.2 In the lastdecade or two, however, an entirely different theory has evolvedinto rather definite form with respect to public utilities: a theoryto the general effect (in this state) that where an existing utilityis already rendering adequate service, or can be required to do so,free competition is injurious to the public interestr As our court2 See, e. g., Clarksburg Electric Light Co. v. Clarksburg, 47 W. Va. 739, 35S. E. 994 (1900); Pocahontas Coke Co. v. Powhatan Coal & Coke Co., 60 W.Va. 508, 56 S. E. 264 (1906) ; Charles River Bridge v. Warren Bridge, 11 Pet.420, 9 L. Ed. 773 (U. S. 1837); United Railroads of San Francisco v. City &County of San Francisco, 249 U. S. 517, 39 S. Ct. 361, 63 L. Ed. 739 (1919).See also Federal Communications Comm. v. Sanders Radio Station, 309 U. S.470, 60 S. Ct. 693, 84 L. Ed. 869 C1940), applying this theory today to radiostations.In England the attitude toward monopoly has not been altogether thesame as in the United States. See Hare v. London eto. Ry., 2 Johns. & H. 80,103. See also Simpson, How Far Does the Law of England Forbid Monopoly?(1925) 41 L. Q. Rev. 393.3 See, illustrating various angles of this theory, Reynolds Taxi Co. v. Hudson,103 W. Va. 173, 136 S. E. 833 (1927); Quesenberry v. State Road Comm., 103W. Va. 714, 138 S. E. 362 (1927); United Fuel Gas Co. v. Public ServiceComm., 103 W. Va. 306, 138 S. E. 388 (1927); Monongahela West Penn Pub-lic Service Co. v. State Road Comm., 104 W. Va. 183, 139 S. E. 744 (1927);of. Mewha v. Public Service Comm., 9 S. E. (2d) 868 (W. Va. 1940). InUnited Fuel Gas Co. v. Public Service Comm., supra, the West Virginia courtsaid, inter alia, at p. 311: "'Why not reduce its rates if too high .. .. Theintervenor is fully equipped to render the service, is in the field with all neces-sary connections, and is ready and willing to serve its customers. Why dupli-cate the service to the ruination and destruction of the intervenor and its proper-ty?" The West Virginia legislature, like some other legislatures, has writtenthis theory into statutory form, at least as to a large class of public utilities.See W. Va. Acts 1939, c. 86, amending prior legislation. Article 2, § 5 (a) pro-rides in part as follows: I,... if the commission shall be of the opinion thatthe service rendered by any common carrier holding a certificate of convenienceand necessity over any route or routes in this state is in any respect inadequateor insufficient to meet the public needs, such certificate holder shall be givenreasonable time and opportunity to remedy such inadequacy or insufficiencybefore any certificate shall be granted to an applicant proposing to operateover such route or routes as a common carrier." The remainder of this sectionis set out infra in the body of this note, at p. 274. See, discussing this theoryand citing authorities, Hardman, The Changing Law of Competition in PublicService (1927) 33 W. VA. L. Q. 219; same title-Another Word (1928) 34 W.VA. L. Q. 123; but see Arnold, same title-A Dissent (1928) 34 W. VA. L. Q.183; see Hall, Certificates of Convenience and Necessity (1930) 28 MIoH. L.R-v. 107, 276.To be sure, this theory, like most legal theories, is not without somelimitations. For example, where one of the public utilities is owned or operatedor perhaps supported by the state, or by an arm thereof, such utility may beallowed to compete to a greater extent than that indicated in the general theoryas herein stated. See, e. g., Tennessee Electric Power Co. v. Tennessee ValleyAuthority, 306 U. S. 118, 59 S. Ct. 366, 83 L. Ed. 543 (1939); Puget SoundPower & Light Co. v. City of Seattle, 291 U. S. 619, 54 S. Ct. 542, 78 L. Ed.1025 (1934); Be Harrison Rural Electrification Ass'n, 24 P. U. R. (N. s.) 7(W. Va. Pub. Serv. Comm. 1938); also of. Federal Communications Comm. v.Sanders Radio Station, 309 U. S. 470, 60 S. Ct. 693, 84 L. Ed. 869 (1940).2West Virginia Law Review, Vol. 48, Iss. 3 [1942], Art. 7https://researchrepository.wvu.edu/wvlr/vol48/iss3/7WEST VIRGINIA LAW QUARTERLY 273expressed it, in palt, in referring to a prior decision which it didnot follow:"That ease [Charles River Bridge v. Varren Bridge]'was decided in 1837. Then 'Competition is the life of trade'was accepted as a guiding maxim of economics. That maximhas long since been rejected so far as it applies to publicutilities . . . 'The policy of the state ... is [now] not to in-vite or encourage ruinous competition between public car-riers; on the contrary its policy is to protect [them] ...sothat the public may be served most efficiently and economical-ly, and by the best equipment reasonably necessary.' "5In a number of comparatively recent adjudications, several ofwhich have heretofore been discussed in the Quarterly by thepresent writer,' the West Virginia court has yielded almost com-pletely to this new ideal, holding or indicating that in the long runthe public will be better served in every respect by requiring theexisting utility to serve adequately, where this is feasible, ratherthan by sanctioning the setting up of a competing service, thusavoiding a costly duplication of service with all its attendantevils.1 Moreover, the West Virginia legislature has written thisnew theory into an administrative scheme of public utility regula-tion, at least as to a large class of public utilities." In its latestdecision in point, however, handed down on February 3, 1942,9our court has reached a result which tempts one to query whetherbetween the lines a still different theory of competition is not dis-cernible- whether, as to one class of public utilities at any rate,a theory of free competition, but with a limitation, is not nowthe accepted background of our judicial thinking.The facts of the case were as follows. The X Taxi Companywas operating a taxicab service from a stand in a city in West Vir-ginia. This service was not over any fixed route or routes. The YTaxi Company applied to the Public Service Commission for acertificate of convenience and necessity "to operate on call of thepublic over an irregular route" to and from a stand in that city.The established utility, holding a certificate of convenience andnecessity to operate a similar service, opposed the granting of thecertificate asked for, offered to furnish additional service as the411 Pet. 420, 9 L. Ed. 773 (U. S. 1837).r Monongahela West Penn Public Service Co. v. State Road Comm., 104 W.Va. 183, 139 S. E. 744 (1927).8 See Hardman, mspra n. 3.7 See cases cited supra n. 3.8 W. Va. Acts 1939, c. 86, amending prior legislation.9 McKee v. Public Service Comm.,18 S. E. (2d) 577 (W. Va. 1942).3Hardman: Competition in Public Service--A New InterpretationDisseminated by The Research Repository @ WVU, 1942EDITORIAL NOTESpublic needs might require, and requested an opportunity to rendersuch additional service as the commission might deem necessary.The commission, after a hearing, found that the existing servicewas inadequate and authorized the Y Taxi Company to set up acompeting service, without giving the established utility an oppor-tunity to remedy the inadequacy.The question to be decided by the court turned primarily onthe interpretation that should be given to the applicable provisionor provisions of the statute regulating the issuing of certificates to"common carriers by motor vehicles" to operate in this state. Interms of legislative intent, the issue, as the court reasoned, waswhether the statute had made a distinction between (1) commoncarriers by motor vehicle operating "over a route or routes", and(2) those operating "over a territory" and not "over a route orroutes", and whether the legislature had required that an oppor-tunity to remedy any inadequacies in service should be given to theformer class but had not required that a similar opportunity begiven to the latter class.The statute in point provided as follows: "(a) It shall be un-lawful for any common carrier by motor vehicle to operate withinthis state without first having obtained from the commission a certif-icate of convenience and necessity. Upon the filing of an applica-tion for such certificate and after hearing thereon, if the commis-sion finds from the evidence that the public convenience and ne-cessity require the proposed service or any part thereof, it shallissue the certificate as prayed for, or issue it for the partial exerciseonly of the privilege sought, and may attach to the exercise of theright granted by such certificate such terms and conditions as inits judgment the public convenience and necessity may require,and if the commission shall be of the opinion that the servicerendered by any common carrier holding a certificate of convenienceand necessity over any route or routes in this state is in any respectinadequate or insufficient to meet the public needs, such certificateholder shall be given reasonable time and opportunity to remedysuch inadequacy or insufficiency before any certificate shall begranted to an applicant proposing to operate over such route orroutes as a common carrier. Before granting a certificate to a com-mon carrier by motor vehicle the commission shall take into con-sideration existing transportation facilities in the territory forwhich a certificate is sought, and in case it finds from the evidencethat the service furnished by existing transportation facilities is4West Virginia Law Review, Vol. 48, Iss. 3 [1942], Art. 7https://researchrepository.wvu.edu/wvlr/vol48/iss3/7WEST VIRGINIA LAW QUARTERLYreasonably efficient and adequate, the commission shall not grantsuch certificate.' The statute also contained this "definition"of terms: "The term 'common carrier by motor vehicle' means.any person who undertakes, whether directly or by lease or anyother arrangement, to transport passengers or property, or anyclass or classes of property, for the general public over the high-ways of this state by motor vehicles for hire, whether over regularor irregular routes..."IThe court interpreted the statute to mean (1) that a taxicabcompany operating "over a territory" but not "over any desig-nated route or routes" was a common carrier by motor vehiclewithin the statute and must secure a certificate of convenience andnecessity before it could operate; (2) that the legislature hadmade a distinction between the two classes of carriers and that ataxicab company, inasmuch as it did not operate "over a route orroutes", need not be given an opportunity to remedy any inade-quacies in service found to exist -that competition might beauthorized forthwith. Accordingly the court affirmed the orderof the commission.If the starting point in our legal reasoning is the old idealthat, competition is the life of trade even in public service, the con-clusion reached by the court may be readily enough deduced fromthe statute, for the legislation, being, from this point of view, inderogation of an accepted (and supposedly sound) common lawtheory, may, in accordance with orthodox reasoning, be construed"strictly" -' If, however, our starting point be the more recentlyaccepted theory that, under present-day methods of public utilityregulation, competition is not desirable in public service if theexisting utility is rendering adequate service or can be required todo so, this conclusion follows much less easily, if at all, for thenthe statute would be "remedial" (essentially declaratory of anaccepted common law doctrine) and should, according to orthodoxreasoning, be construed "liberally" so as to effectuate the generalpurpose of the statute.3That the words "route or routes" are not so "unambiguous"as to have only one possible meaning seems fairly clear from manylO W. Va. Acts 1939, c. 86, art. 2, § 5 (a).- Id. at art. 1, § 2 (e). Italics supplied.12 See Newhart v. Pennybacker, 120 W. Va. 774, 200 S. E. 350 (1938); 2Lmws' SUTHERLAND, STATUTORY CONSTRUCTION (2d ed. 1904) § 573.13 See Hasson v. City of Chester, 67 W. Va. 278, 282, 67 S. E. 731 (1910):"The rule of liberal construction applies, since the statute is remedial ...See 2 LEWIs' SUTHERLAND, STATUTORY CONSTRUCTION § 582 et seq.5Hardman: Competition in Public Service--A New InterpretationDisseminated by The Research Repository @ WVU, 1942EDITORIAL NOTESdecisions of our court, for our court has been very liberal on ques-tions of interpretation, 14 having recently held, for example, thatwhere a written contract contained words purporting to sell "allmining posts that the party of the first part has made and nowhas on hand," the word "all" could be construed,. in the light ofsurrounding circumstances, to mean only a part." Indeed onvarious recent occasions our court has, in general, gone along withMr. Justice Holmes in his famous dictum in Towne v. Eisner" inwhich the learned judge said: "A word is not a crystal, transparentand unchanged, it is the sldn of a living thought and may varygreatly in color and content according to the circumstances andthe time in which it is used."17If the word "all" can be construed, in the light of the sur-rounding circumstances, to mean only a part, there would seemto be - in the absence of accepted theory to the contrary - nolegal obstacle in the way of construing the words "route or routes"to include the irregular courses traversed by a taxicab companyover the highways, especially in the light of the statutory definitionof terms, declaring to be within the act any common carrieroperating "over the highways of this state by motor vehicles forhire, whether over regular or irregular routes."Is The problemtherefore would seem to resolve itself into the simple question ofwhether the ideal in this class of cases is the theory that, underpresent-day methods of regulating public utilities, free competitionis not desirable where the existing utility is rendering adequateservice or can be required to do so. If this is not the acceptedtheory, the statute may well be interpreted as saying to this classof utilities: Adequate service-or competition without oppor-tunity to remedy inadequacies."'THOMAS P. HARDMAN.14 See, discussing many of the West Virginia cases, Hardman, A Problem inInterpretation (1936) 42 W. VA. L. Q. 110; Hardman, Interpretation of Doou-vnents-The Parol Evidence Rule and an Exception for Erroneous Description(1941) 47 W. VA. L. Q. 319.15 Hodge v. Garten, 116 W. Va. 564, 182 S. E. 582 (1935).36 245 U. S. 418, 38 S. Ct. 158, 62 L. Ed. 372 (1918).17 At p. 425.is Italics supplied.19 For an extended discussion of West Virginia cases in point and for thepresent writer's views as to the applicable theory, see The Changing Law ofCompetition in Public Service (1927) 33 W. VA. L. Q. 219, and same title-Another Word (1928) 34 W. VA. L. Q. 123. Cf. Arnold, same title-A Dissent(1928) 34 W. VA. L. Q. 183.6West Virginia Law Review, Vol. 48, Iss. 3 [1942], Art. 7https://researchrepository.wvu.edu/wvlr/vol48/iss3/7

Competition in Public Service--A New Interpretation

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Competition in Public Service--A New Interpretation

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