State ex rel. Railway Express Agency, Inc. v. Washington Public Service Commission

Citations: 57 Wash. 2d 32; 354 P.2d 711; 1960 Wash. LEXIS 445Docket: Nos. 35257, 35258

Court: Washington Supreme Court; August 11, 1960; Washington; State Supreme Court

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The validity of order M. Y. No. 69970, issued by the Washington Public Service Commission on December 3, 1958, is contested in this case. The order permits United Parcel to operate as a common carrier across most of western Washington and part of eastern Washington, specifically for the intercity transport of packages weighing no more than 50 pounds and measuring up to 108 inches in length and girth combined. It also approves United Parcel's rate structure, which includes a $2 weekly service charge for shippers who want daily truck stops at their locations. 

Several existing common carriers, including Railway Express Agency, Inc. and Western Greyhound Lines, protested the order, alleging rate discrimination, unfair competition, and unlawful common carriage. The commission's decision followed fifteen days of hearings, during which 116 exhibits were presented, leading to findings that United Parcel's plan addressed a public need, that its rates were fair and non-discriminatory, and that the new service would not disrupt existing carriers or traffic.

The order was subsequently reviewed by the Thurston County Superior Court, which reversed the commission’s decision and issued its own findings and conclusions. United Parcel and the commission have appealed this ruling, while the respondents, the protesting carriers, maintain that the $2 weekly service charge violates RCW 81.28.190. Under United Parcel's plan, the operational area is divided into eight sub-areas with centers established in major cities. Shippers can either deliver packages to these centers for a fee or pay the weekly charge for daily pick-ups, which is expected to be the more convenient option for many shippers, especially those located far from the centers. The respondents argue that the mandatory weekly charge, regardless of the number of parcels shipped, breaches the statutory requirements.

No common carrier is permitted to provide undue preference or advantage to any person, locality, or type of traffic, nor to impose unreasonable prejudice or disadvantage. The commission found that the applicant's proposed rates, including a $2.00 weekly service charge, are just, reasonable, compensatory, and non-discriminatory. In contrast, the trial court noted that while the charge may not burden shippers with high shipment volumes, it would be excessively burdensome for small-volume shippers, particularly those far from receiving stations, thus favoring larger shippers and disadvantaging smaller ones. The core issue is whether a fixed fee for regular pickups discriminates against small-volume shippers. The commission emphasized the term "compensatory," suggesting that the reasonableness of a fee should be assessed from both the shipper's and carrier's perspectives. Citing Stone v. Farmers’ Loan and Trust Co., it was noted that regulatory power cannot equate to confiscation and carriers must be compensated for their services. The relationship between a compensatory rate and reasonableness is crucial in public utility rate-making, exemplified by a New York court case regarding a gas rate schedule that included both usage and service charges.

The court upheld the uniform monthly service charge imposed by the gas company, reasoning that the company incurs constant costs for connecting and maintaining gas service, regardless of gas usage. These costs necessitate a service charge to fairly distribute expenses among users. The court noted that similar service charges have been validated in thirty-eight states' courts and public utility agencies, reinforcing the charge's legality.

In comparison, the commission found that United Parcel's proposed $2 weekly charge for daily pickup service is compensatory and reasonable, aligning with the logic applied in public utility cases. The respondents argued against the service charge by citing a precedent from the Interstate Commerce Commission, where a larger rate for small-volume shippers was deemed unlawful because it effectively favored larger shippers without justifiable differences in service or operating costs. The key takeaway from that case was that transportation costs per unit are constant, irrespective of the volume shipped, thus making it inappropriate for a carrier to base charges on a shipper’s total annual volume.

Respondents argue that the Interstate Commerce Commission (I.C.C.) principle applies to United Parcel’s proposed $2 weekly service charge, suggesting that it creates a disparity in costs between small and large volume shippers. They contend that a small shipper paying $1 per package for two packages is unfairly charged compared to a large shipper paying only one cent per package for two hundred parcels. The court disagrees, clarifying that United Parcel’s charge is a fixed fee, not a per-unit transportation charge, and is intended to cover the convenience of daily pickups. While small-volume shippers may find this less economically advantageous, the charge is deemed compensatory for United Parcel, contrasting with the non-compensatory freight rates rejected by the I.C.C.

The trial court found that United Parcel's restriction to packages not exceeding 50 pounds or 108 inches gives it an undue competitive advantage, constituting unfair competition against petitioners, who are required to serve all customers impartially. This conclusion, while labeled a finding of fact, is interpreted as a legal conclusion regarding the commission's approval of United Parcel's service charge and limitations. Respondents assert a statutory right to protection from unfair advantages granted by the commission under RCW 81.80.020 and RCW 81.80.220. However, the relevant statute's prohibition against unfair practices pertains only to those that would impair public transportation services. The commission found that United Parcel's operations would not undermine existing service or cause highway congestion, a conclusion supported by substantial evidence, and the trial court's findings do not conflict with this determination.

United Parcel's proposed plan complies with public policy as outlined in RCW 81.80.020 and does not violate RCW 81.80.220, which permits the commission to reject proposals that would unfairly advantage one carrier over another. While the statute appears to grant rights to competing carriers, it primarily confers authority to the commission to regulate proposals that could create unfair advantages. The respondents' claim that United Parcel's plan limits it to profitable trips or high-class commodities is refuted by the plan's $2 weekly service charge, which allows for daily pickups regardless of shipment volume. The commission's opinion clarifies that small packages are not considered high-class commodities and emphasizes its expertise in defining such terms. The commission justifies allowing United Parcel to require prepayment, eliminate cash-on-delivery shipments, and use a specific bill of lading format as necessary for public service, addressing concerns raised by competing carriers. Despite objections, the respondents have not disputed the commission's finding that United Parcel meets an existing public need.

The plan of operation proposed by United Parcel and approved by the commission does not infringe upon any statutory rights of the respondents regarding unfair competitive advantages. The trial judge's suggestion that United Parcel is not a common carrier and therefore not entitled to the commission's permit is addressed. The court reiterates the definition of a common carrier from Cushing v. White (1918), stating that a common carrier is one that transports goods or individuals for hire while making services available to the public. United Parcel's focus on small parcel transportation does not disqualify it as a common carrier, as its services are accessible to the broader shipping public, regardless of higher usage by large-volume shippers. Consequently, the trial court's judgment is reversed, and the commission's order, M. V. No. 69970, is reinstated. The concurrence of Chief Justice Weaver and Justices Hill, Donworth, and Rosellini is noted. Additionally, it is highlighted that several populous cities within United Parcel's service area are significantly distanced from the nearest operating centers, with examples given: Bellingham is 26 miles away, Vancouver is 40 miles away, and Walla Walla is 46 miles away from their respective centers.