Opinion
February 6, 1964 —
March 31 1964.
APPEAL from a judgment of the circuit court for Dane county: NORRIS E. MALONEY, Circuit Judge. Reversed.
For the appellant there were briefs by Honeck, Mantyh Arndt of Milwaukee, attorneys, and Axelrod, Goodman Steiner of Chicago, Illinois, of counsel, and oral argument by Stewart G. Honeck and David Axelrod.
For the respondent Public Service Commission the cause was argued by William E. Torkelson, chief counsel, with whom on the brief was George Thompson, attorney general.
For the impleaded respondent Armored Carrier Corporation there was a brief by Jasper, Winner, Perina Rouse of Madison, and oral argument by Claude J. Jasper.
For the impleaded respondents Wisconsin Motor Carriers Association and its members there was a brief and oral argument by John L. Bruemmer of Madison.
For the other impleaded respondents there was a brief by Kaumheimer, Reinhart, Boerner, Van Deuren Norris, attorneys, and Richard H. Norris III of counsel, all of Milwaukee, for the Marine National Exchange Bank of Milwaukee, and by Grootemaat, Cook Franke, attorneys, and Harry F. Franke and John J. Ottusch of counsel, all of Milwaukee, for the Marshall Ilsley Bank.
On March 6, 1957, the Public Service Commission of Wisconsin (hereinafter PSC) received an application for a "Contract Motor Carrier License" from Bankers Transport Corporation of Wisconsin, a Wisconsin corporation, on a printed form furnished by the PSC. The application sought authority "to transport, as a contract carrier, non-negotiable instruments, such as cash letters, microfilm, blank checks, and other non-negotiable papers as are used in the conduct of a banking business, pursuant to contract," a copy of which was attached to the application. The contract dated February 27, 1957, designated the First National Bank of Kenosha as "owner" and provided for deliveries to the First Wisconsin National Bank at Milwaukee and the First National Bank Trust Company at Racine. The contract contained provisions respecting insurance of the cash letter cargo for the benefit of the "owner." The contract contained the following provision:
"This liability shall commence from the time Bankers employees enter owner's premises and shall continue until such time as a receipt for delivery, signed by the consignee or their duly authorized representative, has been given to Bankers; or in the event of nondelivery, until return to owner. In the event of delivery being made by Bankers to owner for any purpose, Bankers shall be liable from the time its employees take possession of the property from the consignor and shall continue until such time as a receipt for delivery, signed by owner, or his duly authorized representative, has been given to Bankers." (Emphasis added.)
A hearing on this application was held at Kenosha before PSC Examiner Samuel Bryan, pursuant to due notice on April 2, 1957. No one appeared in opposition. At the opening of the hearing, counsel for Bankers Dispatch Corporation (hereinafter BDC) on behalf of the applicant, requested permission to enlarge the application and to file an additional application for additional service. His request was granted. Jerry Stergios, treasurer of Bankers Transport Corporation of Wisconsin, testified that BDC is an Illinois corporation which operates in interstate commerce in the transportation of the same commodities for which authority was being sought, that the corporation likewise operated in Illinois and Indiana in intrastate commerce as a common carrier transporting these same commodities. Stergios further testified that BDC owned three trucks which it proposed to use in its operation. These trucks are specially adapted or fitted for the purposes of transporting the commodities involved. The interior of the trucks has a safe for fireproof purposes that contains the checks they carry for collection from one bank to the other. BDC installs safes in these various banks. These are transfer boxes. They are installed at applicant's expense and are placed on the bank premises, either inside or outside. Applicant's employee brings in the cash letters at night coming from the Federal Reserve Bank and places them in the interior of the vault. At the same time, he picks up the package that is consigned to the correspondent bank.
Stergios described the details of the operation in these terms:
"We propose to transport cash letters or what are commonly known as a deposit of a bank going to another bank, checks for collections, checks in process for collection from one bank to another, and microfilm and blank checks . . . . Our proposed method of operation would be as follows: Our interstate truck which would carry the name Bankers Transport of Wisconsin on the truck would stop at the First National Bank of Kenosha about 8:00 o'clock p.m. where it would pick up the package that is consigned to the First Wisconsin National Bank of Milwaukee and also another package going to the First National Bank of Racine. He would close the container, go to a scene [Racine] where he would drop his package off in a safe in that bank and would then proceed to Milwaukee where he would deliver the parcel to the proof department of the First Wisconsin National Bank. About one or two in the morning he would pick up items from the Milwaukee bank and bring them back to the First National Bank in Kenosha which would be about 3:00 o'clock, a.m. In the event there was more than one bank in Racine, where pick up and delivery would be required, this would be accomplished on the same run . . . . We propose to start three routes, at least three from the city of Milwaukee, between Milwaukee on the one hand and on the other, numerous counties in the State of Wisconsin. A typical proposed operation which would be performed if this application is approved is as follows:
"Starting from Milwaukee, we would have one route that would be within the perimeter of the city that would start about 5:00 o'clock in the afternoon. Those checks would be in about 8:00 o'clock. That would include towns like West Allis, Waukesha and Wauwatosa, towns that are very near by, all in Milwaukee County. Those items would be in there at 8:00 o'clock at night. That would be one proposed route, Another proposed route would be from Milwaukee going all the way up to Fond du Lac and all points, of course, in between, and Oshkosh and Appleton and up to Green Bay. That would be another. Taking the operation between Milwaukee and Green Bay, the truck will leave Green Bay about 5:30 or 6:00 p.m. and come into Milwaukee about 8:15 or 8:30,. . . That route would be in that direction (Green Bay to Milwaukee). Another route would be from Manitowoc down to Sheboygan, and all points in between to Milwaukee. That would be a third route. There would be another route coming in from Madison to Janesville, Beloit and up to Milwaukee, starting about the same time — 5:30 or 6:00 in the evening and arriving in Milwaukee sometime around 9:30 in the evening. At the same time, there will be a movement back to the point of origin. Those movements would be in the early morning hours between 2:00 and 3:00 a.m., prior to banking hours in the morning. In the event more than three pieces of equipment are required, the company will obtain such equipment . . . . The main reason for installing sales is so that we can enter the bank after banking hours without the necessity of a bank employee being there." (Taken from summary of testimony.)
At the 1957 hearing, BDC also put into evidence a list of the correspondent banks of the First Wisconsin National Bank of Milwaukee, The list was prefaced with this notation:
"List of correspondent banks of the First Wisconsin National Bank of Milwaukee in Wisconsin Counties for which authority is sought."
Exhibit 5 at the 1957 hearing listed 54 banks located in 36 central and southeastern Wisconsin counties.
At the 1957 hearing, representatives of the First National Bank of Kenosha and the First Wisconsin National Bank of Milwaukee testified as to the importance of BDC's operation for both clearinghouse and correspondent banks.
A cash letter is a list of various checks that come into the bank, either through deposit or cashing, that are drawn on banks in other cities. The checks are listed and sent for collection and the letters they are listed on are known as "cash letters." For example, bank "A," a correspondent bank, during a business day cashes several checks drawn on bank "B, "a correspondent bank in another city. Bank A would compose a cash letter to be transmitted to the clearinghouse bank, in this instance First Wisconsin of Milwaukee. Bank A has an account in its name in the clearinghouse bank, As bank A sends checks drawn on bank B to the clearinghouse bank, A's balance in its account in the clearinghouse is increased. The clearinghouse then presents the checks for payment to K If a prompt credit is not given, A's balance could be affected. The clearing bank rightfully expects the correspondent bank to carry a compensating balance, that is, one which would at least cover the cost of the service performed for the correspondent bank. If the balance is not kept up to the proper level, a service charge might be imposed or the correspondent asked to increase its balance. That would tie up more funds.
Therefore, speed and efficiency of delivery of cash letters are essential. Moreover, from the point of view of the clearinghouse bank, prompt efficient delivery of bank A's checks to bank B for payment is critical. Until a check is presented at a bank on which it is drawn, no one has collected funds in hand and those checks are in the position of what in bank terminology is called "float," float being uncollected funds which are not investable even though the deposit dollars appear on the bank's books.
The bankers' representatives testified that the clearinghouse bank and the correspondent banks had found mail and rail shipment of cash letters and checks unsatisfactory. They testified that BDC service could best meet the need for prompt delivery of cash letters and checks from correspondent banks to a clearinghouse bank, and further prompt presentment for payment by the clearinghouse of the said checks drawn on other correspondent banks.
Examiner Bryan stated in closing the hearing that since the record included information as to operations not covered by the filed application and notice, it was understood that an application for additional authority would be filed together with a contract covering the additional operation contemplated.
On April 29, 1957, the PSC received and accepted for filing another application in the name of Bankers Dispatch Corporation upon the identical printed form used by Bankers Transport Corporation in its March, 1957, application. No reference was made in the body of the application to a contract.
In that portion of the application captioned "Description of Transportation Service," the following information was stated:
"Authority is sought to perform the following transportation services .
"To transport non-negotiable instruments, such as cash letters, microfilm, blank checks, and other non-negotiable papers as are used in the conduct of a banking business,
"Between points in Milwaukee county; and between points in Milwaukee county, on the one hand, and, on the other, points in Lafayette, Green, Rock, Walworth, Kenosha, Racine, Milwaukee, Waukesha, Jefferson, Dane, Iowa, Sauk, Columbia, Dodge, Washington, Ozaukee, Sheboygan, Fond du Lac, Green Lake, Marquette, Adams, Juneau, Waushara, Winnebago, Calumet, Manitowoc, Kewaunee, Brown, Door, Outagamie, Waupaca, Portage, Wood, Marathon, Shawano, Oconto counties.
"Applicant avers that to the best of his knowledge, information, and belief the foregoing services are required by the convenience and necessity of those for whom they will be available." (Emphasis added.)
At the foot of the printed form furnished by the PSC of Wisconsin and used by the applicant in the 1957 applications, there were printed "General Instructions."
The instruction as to manner of completing the form if seeking authority "serving general public" reads :
"To serve the public, but not over regular routes or between fixed termini, describe the territory to be covered by the operations and the commodities to be hauled." (Emphasis added.)
The general instructions for seeking authority to serve a specific shipper stated:
"Show: a. Name, address, and status (individual, partnership, or corporation) of each shipper, b. Points or area to be served, c. Commodities to be hauled and d. Attach copy of contract." (Emphasis added.)
A contract form was enclosed with the April 29th application designating First Wisconsin National Bank of Milwaukee as "owner." The "schedule" portion of the enclosed contract indicated "Deliver to Banks designated by mutual agreement," and the identical reconstruction insurance form, using the terms "consignor" and "consignee" in the contract attached to the March application, was contained in the contract form submitted to the commission with the April application.
Accompanying the April application was a letter addressed to the commission by applicant's counsel, which stated:
"Pursuant to the statement made at the hearing which was held in connection with the above docketed application in Kenosha, Wisconsin on April 2, 1957, we enclose herewith the application of Bankers Dispatch Corporation for authority as set forth therein. Testimony with respect to the need for the service proposed by this application was adduced at the hearing on April 2, 1957."
On May 14, 1957, the commission made the following relevant findings of fact and conclusions of law;
"The Commission finds:
"The application requests authority to transport:
"Nonnegotiable instruments, such as cash letters, microfilm, blank checks, and other nonnegotiable papers as are used in the conduct of a banking business, between Kenosha, Milwaukee, and Racine for The First National Bank of Kenosha, Kenosha. [Emphasis added.]
"At the hearing the applicant announced its intention of filing an additional application for authority to serve the First Wisconsin National Bank of Milwaukee in a larger area and was permitted to offer testimony with respect thereto. Such application was filed on April 29, 1957 and requests authority to transport:
"Nonnegotiable instruments, such as cash letters, microfilm, blank checks, and other nonnegotiable papers as are used in the conduct of a banking business between points in Milwaukee County and between points in Milwaukee County on the one hand and on the other hand points in Lafayette, Green, Rock, Walworth, Kenosha, Racine, Milwaukee, Waukesha, Jefferson, Dane, Iowa, Sauk, Columbia, Dodge, Washington, Ozaukee, Sheboygan, Fond du Lac, Green Lake, Marquette, Adams, Juneau, Waushara, Winnebago, Calumet, Manitowoc, Kewaunee, Brown, Door, Outagamie, Waupaca, Portage, Wood, Marathon, Shawano, and Oconto Counties for the First Wisconsin National Bank of Milwaukee. [Emphasis added.]
". . .
"The proposed service is needed by the shipper banks because it is desirable to meet an earlier deadline than is possible by the use of first-class mail. Delays in mail handling or damaged items cause delay and inconvenience in handling credits through cash letters and other credit exchanges between banks, Business transactions between banks and their clients will be facilitated by the regular pickups and deliveries proposed, which will make the documents and other materials transported available to bank employees for handling at the beginning of the working day.
"The First Wisconsin National Bank of Milwaukee serves as a large clearing center for most of the banks in the state. Such banks send all or most of their checks drawn on banks other than themselves to the clearing center bank which collects them by presenting to the various drawee banks. Such banks maintain credit balances at the clearing center bank, their accounts being comparable to personal checking accounts, Prompt receipt and transmittal of cash letters and other credit documents are essential to the proper handling of such credit balances. The money represented by a check, even though the deposit dollars appear on the bank's books, is not investable until actual collection is made from the drawee bank. The volume of such transactions is very substantial.
"First-class mail and express are dependent largely upon train schedules which in many instances are such as to make pickups and deliveries necessary at times inconvenient for the bank's operation and to result in delays which inconvenience both the banks concerned and their customers. The proposed service will stabilize and make more efficient the credit interchange service between the banks concerned.
"The proposed operations of the applicant to serve the First National Bank of Kenosha and the First Wisconsin National Bank of Milwaukee as set forth above are in the public interest and required by the convenience and necessity the named shippers because there is a reasonable need evident for the service. [Emphasis added.]
". . .
"The Commission concludes.:
"That it is empowered under the provisions of section 194.34, Statutes, to issue an order granting the authority herein requested, and that such order should be entered."
Upon these findings, the commission ordered:
"1. That the applications herein be and hereby are granted. [Emphasis added.]
". . ."
On May 14, 1957, the PSC also issued Contract Motor Carrier License No. LC-36922 to Bankers Dispatch Corporation. The license provided:
". . . that this license . . . authorizes the above-named licensee to operate properly permitted motor vehicles upon the highways of the State of Wisconsin as a contract motor carrier in the transportation of:
"1. Nonnegotiable instruments such as cash letters, microfilm, blank checks and other nonnegotiable papers as are used in the conduct of a banking business between Kenosha, Milwaukee, and Racine for The First National Bank of Kenosha, Kenosha. [Emphasis added.]
"2. Nonnegotiable instruments such as cash letters, microfilm, blank checks, and other nonnegotiable papers as are used in the conduct of a banking business between points in Milwaukee County and between points in Milwaukee County on the one hand and on the other hand points in Lafayette, Green, Rock, Walworth, Kenosha, Racine, Milwaukee, Waukesha, Jefferson, Dane, Iowa, Sauk, Columbia, Dodge, Washington, Ozaukee, Sheboygan, Fond du Lac, Green Lake, Marquette, Adams, Juneau, Waushara, Winnebago, Calumet, Manitowoc, Kewaunee, Brown, Door, Outagamie, Waupaca, Portage, Wood, Marathon, Shawano, and Oconto Counties for the First Wisconsin National Bank of Milwaukee. [Emphasis added.]
". . .
BDC did not seek review of this order or the license granted thereunder.
The license (LC-36922) was assigned in September of 1959 to the Wisconsin corporation which was the original applicant, namely, Bankers Transport Corporation of Wisconsin (becoming LC-39163).
Thereafter, Bankers Dispatch Corporation changed its name to "B.D.C. Corporation," and on June 26, 1962, after a brief hearing, the subject license was again assigned to the B.D.C. Corporation, the appellant herein (becoming LC-40991).
Because of "certain developments," unspecified in this record, a question arose as to whether BDC had authority under the 1957 license to transport cash letters and other items from outlying correspondent banks to the First Wisconsin National Bank of Milwaukee, when the correspondent bank was deemed the shipper of the delivery.
On May 17, 1962, as a result of a telephone conversation between appellant's counsel and a representative of the motor transport division of the PSC, a letter was dispatched to Bankers Dispatch Corporation (former name of appellant) stating, among other things, that the subject license was to transport for the First Wisconsin National Bank of Milwaukee and for the First National Bank of Kenosha.
On July 16, 1962, the PSC issued a notice of investigation and hearing stating that:
". . . the Commission will, on its own motion, promptly open a proceeding for the purpose of construing the meaning of contract motor carrier license LC-40991 now held by B.D.C., unless within ten (10) days hereafter B.D.C. advises the Commission in writing that it does not desire to so proceed."
A declaratory-relief proceeding was held on August 8, 1962. At this hearing, A. Wilford Larson, chief of the transportation department, PSC, since 1952, and a member of the PSC staff since 1933, testified that the phrase "for the named person" in a contract motor carrier license appears in some 8,000 contract motor carrier licenses issued since 1935; that the expression "for the named shipper" also appears in many PSC orders entered during the same period of time; that the PSC has uniformly interpreted the phrases "for the named person" and "for the named shipper" to be equivalent expressions; that although the tariff definition of "shipper" as used in classifications for common motor carriers is consignor of the shipment, for administrative purposes other than rate regulation, "shipper" is defined by the PSC as a person who has full control and direction of the transportation services required from a carrier; that he was familiar with the record in the 1957 hearing and that it was his belief that the BDC 1957 license permitted transportation of cash letters between correspondent banks and First Wisconsin, the clearinghouse bank, in both directions, albeit it was his belief that First Wisconsin must have control of the shipment and must pay the freight charges regardless of the point of origin of the shipment.
Another witness, Donald N. Baxter, vice-president of Marshall Ilsley Bank (an interpleaded respondent), testified as to the impact upon a clearinghouse bank of the construction of "for First Wisconsin National Bank of Milwaukee," and "for First National Bank of Kenosha" as equivalent to "for the named shipper." Legal counsel for the Marshall Ilsley Bank had offered an opinion that if a shipment of cash letters from the corresponding bank to the clearinghouse bank was paid for by the clearinghouse bank, and/or under the direction and control of such bank, the relationship would be construed as branch banking under Wisconsin banking statutes. Moreover, such a relationship would violate Regulation Q of the Federal Reserve System, which prohibits any bank that is a member of the system from paying interest on demand deposits in excess of $2.
Mr. Baxter further testified that in his opinion, if BDC's service was to be of any value to any bank, or to the banking industry in Wisconsin, the license must authorize service on behalf of the clearing bank and correspondent bank.
Counsel for BDC then attempted to enter into evidence testimony given in the June, 1962, hearing which involved the transfer of LC-36922 from Bankers Transport Corporation of Wisconsin, appellant's initial title, to "B.D.C. Corporation," appellant's present corporate name.
Counsel offered Exhibits 4, 5, and 6, the June hearing testimony of representatives of First Wisconsin National Bank of Milwaukee, the clearinghouse bank, and Kellogg Bank of Green Bay, a correspondent bank These men testified that since BDC's operation began in 1957, and continuing until December, 1961, both the clearinghouse bank and the correspondent bank had assumed control of, and paid freight charges on, shipments of cash letters from their bank to the other; that BDC effectively performed an essential service — guaranteeing appropriate timing of transfers funds, thus enabling the banks to manage the problem noninvestable "float." Other exhibits, 7 through 18, were offered which were simply cumulative of this testimony.
The testimony contained in Exhibits 4, 5, 6, and 7 through 18, was excluded from consideration by the commission rendering its order on the declaratory ruling in November 1962. The testimony contained in Exhibit 3, which included the portions of the record of the 1957 hearing outlined above, was also excluded as being "incompetent, irrelevant and immaterial" and having "no probative value insofar as this proceeding is concerned."
On November 9, 1962, the commission entered the lowing relevant findings of fact and conclusions of law:
"3. A formal amendment to the application was filed with the Public Service Commission on April 29, 1957 by Bankers Dispatch Corporation, an Illinois corporation, seeking authority to transport non-negotiable instruments such as cash letters, microfilm, blank checks, and other non-negotiable papers as are used in the conduct of a banking business between points in Milwaukee County and between points in Milwaukee County on the one hand and on the other hand points in Lafayette, Green, Rock, Walworth, Kenosha, Racine, Milwaukee, Waukesha, Jefferson, Dane, Iowa, Sauk, Columbia, Dodge, Washington, Ozaukee, Sheboygan, Fond du Lac, Green Lake, Marquette, Adams, Juneau, Waushara, Winnebago, Calumet, Manitowoc, Kewaunee, Brown, Door, Outagamie, Waupaca, Portage, Wood, Marathon, Shawano, and Oconto Counties. Attached was a contract between the Bankers Dispatch Corporation on the one hand and the First Wisconsin National Bank of Milwaukee on the other hand.
"4. [Here the commission set out the findings of fact, conclusions of law, and order which resulted from the 1957 hearing.]
"9. That in its administration of Chapter 194 (Motor Vehicle Transportation Act) starting in 1933, the Public Service Commission of Wisconsin has issued numerous contract motor carrier licenses which authorize a carrier to perform transportation of property by motor vehicle 'for a' named person or 'for a' named shipper. The words 'for a' named person have been given a uniform construction over this period by the Public Service Commission in its administration of the Motor Vehicle Transportation Act (Chapter 194) as meaning that the named person would have full direction and control of the transportation service which the carrier is being required to perform. The language 'for a' named shipper has also uniformly received the same construction over such period. The uniform construction for such period given the word 'shipper' is that a 'shipper' is a person who has full direction and control of the transportation service which the carrier is being required to perform.
"The Commission Concludes:
"1. That the time for rehearing or court review from the determination of the Commission on May 14, 1957 has long since elapsed. The merits of that determination cannot now be reconsidered by this Commission nor reviewed in any court. The only issue in this proceeding is the question of the proper construction of the language of the license as issued on May 14, 1957, which is now held as contract motor carrier license LC-40991 by B. D.C. Corporation, which LC-40991 is in language identical to the license issued on May 14, 1957.
"3. That exhibits 3 through 18 are incompetent, irrelevant and immaterial, and have no probative value insofar as this proceeding is concerned, and should therefore be denied admission into the record. [Emphasis added.]
"The Commission Therefore Declares and Rules:
"That the words 'for the First National Bank of Kenosha' and 'for the First Wisconsin National Bank of Milwaukee' as they appeared in contract motor carrier license LC-36922 as originally issued to Bankers Dispatch Corporation and as they appear in contract motor carrier license LC-40991, containing identical language issued to and now held by B.D.C. Corporation mean that the transportation service which the holder of such license is authorized to perform must be under the direction and control of the First Wisconsin National Bank of Milwaukee or the First National Bank of Kenosha in the sense that the transportation therein specified must be under the direction and control of either of said banks so as to make either the shipper where transportation of property under said license is intended to be or is performed.
"The Commission also
"Orders that exhibits 3 through 18 be and the same hereby are denied admission into the record."
BDC appealed this order to the circuit court for Dane county. The circuit court took judicial notice of all the exhibits excluded by the commission, and concluded that the commission's construction of the order was clearly reasonable. The court reasoned that the commission's finding that BDC's operations "are in the public interest and required by the convenience and necessity of the named shippers," was, in effect, a finding that BDC was a private contract carrier, and therefore the commission was without "authority whatsoever to issue a license to serve the well-defined class of the public generally as would have been necessary in order to authorize the carrier to serve any and all correspondents of First Wisconsin." Hence the expressions "for the First National Bank of Kenosha" and "for the First Wisconsin National Bank of Milwaukee" must be construed as restricting BDC's services to deliveries under the direction and control of the two above banks.
The trial court further reasoned,
"It is indeed regrettable that the Commission was not fully aware of the Branch Banking Law because it can be presumed that the Commission would have tried to be helpful it could have, but however this can provide no excuse for the slovenly manner in which petitioner conducted its business in accepting an Order and License which on its face was of a limited nature and then proceeding regardless thereof to make a large investment in what proved to be a lucrative business through operations unfettered by any concern for the law of Wisconsin." (Emphasis added.)
The trial court entered judgment affirming the June, 1962, order of the PSC.
BDC appeals from that judgment.
A single issue is raised on this appeal.
In a declaratory-relief proceeding before the Public Service Commission to determine the scope of a motor carrier license issued after a hearing, does the failure of the commission, under the circumstances of this case, to give consideration to the record of the original hearing and to the record of a subsequent hearing held in relation to the license. constitute an abuse of discretion requiring a remand of the proceedings to the commission with directions to take the hearing records into consideration in interpreting the subject license?
BDC asserts the right, under its present license, to carry items from First Wisconsin to the 54 correspondent banks listed in Exhibit 5, and to carry items from each of the latter to First Wisconsin. It is conceded that the license authorizes such carriage on a contract basis, in both directions, provided First Wisconsin is the shipper and pays the charges. The question is whether the certificate, properly construed, authorizes the carriage inbound if the charges are in fact paid by the correspondent bank sending the particular item.
The problem arises because it appears that it may be improper under banking regulations for the charges for carriage of items inbound to the First Wisconsin to be paid by it On the other hand, if payment of the charges for such carriage by the outlying banks prevents BDC from performing such service, the license is thus made into something of an absurdity, as a practical matter.
The commission took the position that the use of the word "for" in the license required the narrow construction. The commission's interpretation of the term is doubtless entitled to considerable weight in these matters. We conclude, however, that it was error for the commission to reach its interpretation without considering the entire record.
To evaluate the claim of procedural error, we must first determine the legal distinctions between private and public contract carriers. Sec. 194.34 (1), Stats., provides in part:
"CONTRACT MOTOR CARRIERS; LICENSE; APPLICATION AND HEARING; DISCRIMINATION. (1) No person shall operate a motor vehicle upon the public highways as a contract motor carrier without first having obtained from the commission a license and a permit for the operation of such vehicle. The commission, upon the filing of an application for such license shall have power as the public interest may require, upon a finding of public convenience and necessity as to service to be performed for the public generally or any (well defined) class thereof, and of convenience and necessity as to other contract motor carrier services, to grant or deny the license prayed for . . ."(Emphasis added.)
This provision marks out clear distinctions between two classes of contract carriers. A private contract carrier, serving a determinate number of shippers, must demonstrate that his service is in the "public interest," and in the "convenience and necessity" of the shipper and receiver alone. A public contract carrier is a specialized hauler serving the general public "or any (well defined) class thereof," but not between fixed termini or over a regular route (the salient characteristics of a common motor carrier). The public contract carrier must, therefore, demonstrate as a condition of receiving a license that his service is in the public interest and serves the "public convenience and necessity," in addition to the convenience of a particular shipper and his receivers. Sec. 194.34 (1), Stats. 1961, was enacted by ch. 290, Laws of 1945. The present statutory language is a legislative overruling of United Parcel Service v. Public Service Comm. wherein this court held that sec. 194.34 (1) did not permit distinctions between public contract carriers and private contract carriers under statutory language authorizing the issuance of licenses "as the public interest may require, upon a finding of convenience and necessity."
"'194.02 LEGISLATIVE INTENT. It is hereby declared to be the purpose and policy of the legislature in enacting chapter 194 to confer upon the motor vehicle department and the public service commission the power, authority and duty to supervise and regulate the transportation of persons and property by motor vehicles upon or over the public highways of this state in all matters, whether specifically mentioned herein or not, so as to protect the safety and welfare of the traveling and shipping public in their use of the highways; to relieve the existing and all future undue burdens on the highways arising by reason of the use of the highways by motor vehicles; to carefully preserve, foster and regulate transportation to the end of developing and preserving each separate type of the transportation system by highway and rail adequate to meet public needs." See also sec. 194.18 (5), (9), Stats.
Further note Motor Transport Co. v. Public Service Comm. (1953), 263 Wis. 31, 38, 56 N.W.2d 548: "The foregoing statutory provisions [sec. 194.23] make it clear that the paramount goal sought to be attained by the regulation of motor carriers thereby authorized is that of providing adequate motor-transportation service to meet the public needs, and any other objective is secondary?
(1942), 240 Wis. 603, 4 N.W.2d 138.
Ch. 288, Laws of 1937.
The instant proceeding was conducted before the commission pursuant to sec. 227.06, Stats. It has been noted:
"A good deal of harm stems from a widespread misconception that a declaratory judgment or a declaratory order relates to abstract or remote questions and that other judgments and orders relate to concrete controversies. This idea is wholly erroneous. The only difference between declaratory orders or judgments and other orders and judgments is presence or absence of the element of coercion"
Davis, Administrative Law Treatise (1958), p. 268, sec. 4.10.
A declaratory order construing the scope of a prior license has the same impact as the original order issuing the license, upon a carrier's interests. Therefore, both the commission and this court must take care to see that the carrier has received a "fair hearing" in compliance with the spirit, as well as the letter, of the Administrative Procedure Act (ch. 227, Stats.).
The commission contends that in determining the scope of a prior order in the context of a subsequent declaratory proceeding in relation to that order, the commissioners need only look to the findings of fact, conclusions of law, and content of the prior order. The commission need not consider the evidentiary record underlying the prior determinations in resolving a concrete controversy as to the scope of the prior order. The commission relies upon Northwestern Wisconsin Electric Co. v. Public Service Comm. However, in that case the court, taking note of certain factors outside the content of the order and findings, construed the term "final judgment" used in the PSC order in a manner different from the commission's view and thus reversed the commission's construction of the meaning of a prior order.
(1946), 248 Wis. 479, 22 N.W.2d 472.
"Thus, it is evident that the term 'final judgment' can be taken in the sense which conforms with the general purpose of the order and the evident intent of the commission as we have found it. We are not disturbed because the commission construed the language of the order otherwise. In the first place, there was a change in the personnel of the commission; in the second place, the problem of construing the order is one for the court and subjective tests are no more applicable to orders of the commission than to private contracts of individuals."
Northwestern Wisconsin Electric Co. v. Public Service Comm., supra, p. 485.
The PSC argues that because, in 1957 it found "[t]he proposed operations of the applicant to serve the First National Bank of Kenosha and the First Wisconsin National Bank of Milwaukee as set forth above are in the public interest and required by the convenience and necessity of the named shippers because there is a reasonable need evident for the service" (the requirements for a private contract carrier) and further found that BDC had requested authority to transport certain items for the First National Bank of Kenosha. Kenosha, and certain items between points in Milwaukee county and points in 36 other counties for First Wisconsin National Bank of Milwaukee, on its face the 1957 order categorizes BDC as a private contract carrier, shipping only for the clearinghouse banks.
We note that under the label of "finding of fact" the commission concluded that the proposed operations were "in the public interest and required by the convenience and necessity of the named shippers because there is a reasonable need evident for the service," Because the commission found the service to be in the "convenience and necessity" of the shippers and receivers only, and did not find the service to be in the public "convenience and necessity," arguably, the commission concluded that BDC was a private contract carrier.
This "finding," however, is a conclusion of law, In the context of administration of sec. 194.34, Stats., findings of fact refer to those determinations relating to the nature of the service for which authority is sought, the consumer demand for such service, the volume of traffic in the market into which entry is sought, the impact of entry of a new carrier upon costs, and efficiency of transportation, and the impact of new entry upon the market position of established carriers.
To these findings the commission must apply standards derived either from express provisions of ch. 194, Stats., or from the purpose of the statute as a whole. The application of such standards to the "facts" as described above will suit in a determination as to whether such service is in the "public interest," and whether such carrier ought to be deemed as a common carrier, public contract carrier, or private contract carrier. The application of legislative standards to given "facts" is a determination of law.
Motor Transport Co. v. Public Service Comm., supra.
It does not follow, however, that this court will independently redetermine every conclusion reached by the commission under sec. 194.34, Stats. As we recently held:
"If it is true that a determination by the commission that there has been misconduct under the standard prescribed by the statute is a conclusion of law, it does not follow that every such determination is open to an independent redetermination by this court. If several rules, or several applications of a rule are equally consistent with the purpose of the statute, the court will accept the agency's formulation and application of the standard.
"However, this court has the power in the first instance to determine whether the standard or policy choice used by the agency is consistent with the purpose of the statute. If upon consideration, we determine that a particular rule is consistent with legislative purpose, we must reject alternative rules regardless of whether they are 'reasonable' or grounded in administrative expertise."
Milwaukee Transformer Co. v. Industrial Comm. (1964), 22 Wis.2d 502, 510, 126 N.W.2d 6; Tecumseh Products Co. v. Wisconsin E.R. Board, ante, p. 118, 126 N.W.2d 520.
Therefore, if a rule formulated by the PSC is consistent with the basic purpose of the statute, or if the application of a prior rule in a given case is also consistent with the basic statutory purpose, this court will sustain the commission's determination, even though an alternative rule or application may be equally consistent with the statutory purpose.
However, assuming that there is no conflict between the findings, conclusions of law, and the order, we conclude that the commission must look to the record if a party contends that the content of the record renders the content of the order ambiguous. The general rule that an order, clear on its face, may not be interpreted in the light of extrinsic evidence is a rule appropriate for judicial proceedings. However, the distinctive feature of an administrative agency such as the PSC is its presumed ability to render judgment upon detailed, complex, technical factual matters. A court must rely upon documents, regular on their face, in subsequent proceedings in order to limit deliberations and release the court for consideration of a multitude of varying problems of the general law. An agency has the more-limited responsibility of administering a specific statute in light of its "factual" expertise. Because a declaratory proceeding has the same magnitude of effect upon an affected carrier's interest as the original hearing, the PSC must give full consideration to all factual data surrounding the nature of the service, regardless of whether such data was received prior to the original order. Judgment predicated upon expert evaluation of technical facts is the power the legislature conferred upon the commission. The commission may not decline to exercise this power at its own discretion.
"This court recognizes that the Public Service Commission possesses wide experience and much technical knowledge in the field of regulation of motor-carrier transportation of property." (Emphasis added.) Motor Transport Co. v. Public Service Comm., supra, p. 43.
The issue present in this appeal was squarely presented to the United States supreme court in Securities Comm. v. Chenery Corp. As an exercise of its power to administer the Public Utility Holding Company Act, the commission issued an order requiring managers who purchased their corporation's stock during a reorganization, to divest themselves of these holdings on the rationale that such insider trading violated settled judicial doctrines of "fair dealing."
(1943), 318 U.S. 80, 63 Sup. Ct. 454, 87 L.Ed. 626.
The court remanded the matter to the commission for reconsideration in light of "its experience and peculiar competence."
"Whether and to what extent directors or officers should be prohibited from buying or selling stock of the corporation during its reorganization, presents problems of policy for the judgment of Congress or of the body to which it has delegated power to deal with the matter." ( 318 U.S. at p. 92.)
"For the courts cannot exercise their duty of review unless they are advised of the considerations underlying the action under review . . . 'The administrative process will best be vindicated by clarity in its exercise.' Phelps Dodge Corp. v. Labor Board, 313 U.S. 177, 197, What was said in that case is equally applicable here: 'We do not intend to enter the province that belongs to the Board, nor do we do so. All we ask of the Board is to give clear indication that it has exercised the discretion with which Congress has empowered it." ( 318 U.S. at p. 94.)
On remand, the commission's order compelling the divestiture was reinstated supported by a rationale grounded on the economic realities of the impact of the reorganization upon stock values. The court sustained the order. Securities Comm. v. Chenery Corp. (1947), 332 U.S. 194, 67 Sup. Ct. 1575, 91 L.Ed. 1995.
Moreover, a recent United States supreme court case addresses itself to problems under the Federal Motor Carrier Act, which are directly relevant to the case at bar. In Burlington Truck Lines, Inc., v. United States, a small carrier, Nebraska Short Line Carriers, Inc., serving eastern and central Nebraska, interchanged traffic with larger trunk-line carriers with whom through-route joint-rate interline arrangements had been established. Short Line Carriers, Inc., resisted organizational attempts by the Teamsters Union, and maintained an open shop. The Teamsters, however, were the bargaining representative for the trunk-line carriers who transported Short Line's shipments to ultimate receivers. The union threatened the trunk-line carriers with a secondary boycott pursuant to "hot cargo" provisions in their collective agreement. Many trunk-line carriers refused to carry Short Line's shipments. Some through carriers, Burlington Truck Lines specifically, ignored union demands, continued to carry Short Line's shipments and were not subjected to boycott. Short Lines petitioned the Interstate Commerce Commission seeking authority to expand their routes so as to be able to ship directly to their ultimate receivers or alternatively, to obtain from the ICC a cease-and-desist order directing the trunk lines to handle their shipments regardless of potential labor trouble.
(1962), 371 U.S. 156, 83 Sup. Ct. 239, 9 L.Ed.2d 207.
Finding that service to Short Line's receivers was impaired, and finding that the existing carriers failed in their public duties by conforming to union demands, which would not be likely to end in reprisal, the commission granted the application for expansion of existing services. Burlington, as an affected existing carrier, appealed.
The United States supreme court set aside the board order and remanded the matter for further proceedings, holding:
"There are no findings and no analysis here to justify the choice made [between a cease and desist order, and an order expanding service] no indication of the basis on which the commission exercised its expert discretion. . . . Expert discretion is the lifeblood of the administrative process, but 'unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government can become a monster which rules with no practical limits on its discretion.' New York v. United States, 342 U.S. 882, 884 (dissenting opinion). . . . The commission must exercise its discretion . . . within the bounds expressed by the standard of 'public convenience and necessity.' . . . And for the courts to determine whether the agency has done so, it must 'disclose the basis of its order' . . . Here the commission made no findings specifically directed to the choice between two vastly different remedies with vastly different consequences to the carriers and the public. Nor did it articulate any rational connection between the facts found and the choice made."
371 U.S. at p. 167. See also Schaffer Transportation Co. v. United States (1957), 355 U.S. 83, 78 Sup. Ct. 173, 2 L.Ed.2d 117, wherein the court remanded ICC denial of license for reconsideration in light of conflict between findings of fact and conclusions of law when no basis of decision was articulated.
All members of the court agree that the commission must consider the evidentiary record in resolving ambiguity in the relationship between the content of the 1957 order and the findings of fact and the conclusions of law therein.
A majority of members of this court believes that upon remand, and upon consideration of the evidentiary record of the 1957 hearing, and those portions of the June, 1962, hearing which relate to practice under the license, the commission may come to one of two possible conclusions. (1) BDC is a private contract carrier shipping only for the clearinghouse banks, or (2) BDC is a private contract carrier shipping for both the clearinghouse banks and the correspondent banks.
A majority of the members of this court notes that BDC's Exhibit 5 (offered at the 1957 hearing), contained a list of the names and addresses of 54 correspondent banks of the First Wisconsin National Bank of Milwaukee which BDC sought to service under the then pending application filed with the PSC. The majority concludes that if carrier charges for the instruments to be transported by BDC from these 54 banks to First Wisconsin National Bank of Milwaukee are paid by these banks as consignors, and not by the consignee, First Wisconsin National Bank of Milwaukee, BDC would not thereby be converted from a private contract carrier into a public contract carrier; that merely because a private contract carrier is to transport for 54 specified contracting consignor parties instead of a few, should not convert the status of such a carrier into that of a public contract carrier.
Thus a majority of the court determines that there is no legal impediment to the commission so construing the license as to allow the 54 correspondent banks to pay the transportation charges on in-bound items carried from these banks First Wisconsin. For reasons stated above this would not convert BDC from a private contract carrier to a public tract carrier.
The writer of this opinion cannot agree with this conclusion. The evidentiary record shows that BDC's services are beneficial to both correspondent banks and clearinghouse banks. Moreover, the record reveals that BDC made application to extend its service to 54 banks. Arguably, this section of the banking industry represents a well-defined class of the public within the meaning of sec. 194.34 (1), Stats. Although the ultimate meaning of "well-defined class" of the public is a legal conclusion, the commission has the power in the first instance to give this phrase meaning and the court must accept the commission's view if it is reasonably consistent with the statutory objectives of ch. 194, Stats. Moreover, the determination of the meaning of this phrase involves evaluations of technical factual matters relating to transportation economics. The license involves some 56 banks. The manner in which such banks pass on transportation costs to the customers could well affect the economic position of large numbers of people outside of the banking interests. Surely, the manner in which transportation costs are distributed by the affected banks is a matter within the "technical knowledge" of the commission. The writer is convinced that the commission could reasonably find that in light of the number of banks involved in BDC service, and in light of the probable impact of the cost of this service upon the banks' customers, the 1957 license conferred public contract carrier status on the appellant. The commission could conclude that the term "public" was inadvertently omitted from the finding of "convenience and necessity" with as much ease on this record as it could conclude that the finding of transporting for the First Wisconsin National Bank of Milwaukee, and for the First National Bank of Kenosha, meant shipping for all the banks involved, as the majority would permit.
Motor Transport Co. v. Public Service Comm., supra.
By the Court. — Judgment reversed, and cause remanded for further proceedings not inconsistent with this opinion.