Summary
In Hodge-Drive-It-Yourself Company v. Cincinnati, 123 Ohio St. 284 (175 N.E. 196, 77 A.L.R. 889), the plaintiff, which was in the same business as our plaintiff, attacked the validity of an ordinance which required lessors of driverless automobiles to obtain a license and to file either a policy of liability insurance or a surety bond conditioned upon his payment of judgments recovered by any injured by his rented cars.
Summary of this case from Covey Garage v. PortlandOpinion
No. 22323
Decided February 11, 1931.
Municipal corporations — Regulation of automobiles hired out or rented and driven by lessee — Lessor's use of streets for gain, and not as member of public — Police power not dependent upon automobiles being operated as common carriers — Separate classification of rented automobiles, driven by lessee, not unreasonable — Police power limited only by public need for regulation.
1. The business of leasing automobiles to be driven by the lessee upon the public streets of a municipality is a use by the lessor of the public streets for gain and not a use by such lessor as a member of the public in the ordinary way.
2. The police power of a municipality to regulate the use of automobiles kept for hire, to be driven by the lessee, is not dependent upon such automobiles being operated as common carriers.
3. A separate classification, for regulation purposes, of automobiles kept and used for the purpose of renting them, to be driven by the lessees upon the public streets, is not an unreasonable classification.
4. The police power of a municipality to regulate automobiles kept and used for the purpose of renting them to be driven by the lessee upon the public streets of the municipality is limited only by the extent of the public need for such regulation in the promotion of the peace, safety and morals of the municipality.
ERROR to the Court of Appeals of Hamilton county.
This action was instituted in the court of common pleas of Hamilton county, where the parties stood in the same relation as they appear in this court. It has for its purpose the restraining of the various officials of the city of Cincinnati from enforcing the provisions of an ordinance, hereinafter set forth, upon the ground that the ordinance is violative of the provisions of the Constitutions of the United States and the State of Ohio, specifically calling attention to the Fourteenth Amendment of the Constitution of the United States, and Section 1 of Article I, Section 16 of Article I, Section 19 of Article I, Section 1 of Article II, Section 26 of Article II, and Section 1 of Article IV, of the Constitution of the State of Ohio.
The pertinent sections of the ordinance are as follows:
Section 65-1b. The term "public vehicles" shall apply to all vehicles furnishing individual service as a business in the transportation of persons, which are hereby classified as (1) public vehicles which seek their business, or a part thereof, on the public streets, or quasi-public places, to wit: "taxicabs," and (2) public vehicles which use the public streets for the purpose of transporting passengers for hire, but which do not seek their business thereon, or in quasi-public places, to wit: "autosforhire," "driverless autosforhire" and "funeral cars."
Nothing herein shall apply to vehicles furnishing mass service, such as street railway cars, motor busses and omnibuses, which move over fixed routes, or on a fixed schedule, or between fixed termini.
Section 65-le. The term "driverless autosforhire" shall include any public vehicle which is rented or hired out to a person other than the owner, and operated by the person renting or hiring the same for his own use and not for the purpose of transporting persons for compensation.
Section 65-3. Application for vehicle license. Applications for licenses for public vehicles shall be made to the director upon blanks provided by the director, and shall set forth the name and address of the applicant, the trade name under which he does business, the class of vehicle for which the license is desired, the seating capacity, the design, color scheme and lettering and marks to be used on said vehicle, and any other information required by the director. If the application is granted, the applicant shall furnish the director, prior to the issuance of the license tag, with information covering the particular vehicle to be licensed, such information to include the make, the state license number, the length of time the vehicle has been in use, the motor power thereof, and the name and address of the person, firm, or corporation from which the vehicle was purchased, and any other information required by the director.
Section 65-7. Liability insurance required. No license to operate any public vehicle shall be issued or renewed by the city treasurer, and it shall be unlawful to operate any such public vehicle, or permit such to be operated, unless and until the applicant shall deposit with the city treasurer a policy or policies of liability insurance issued by a responsible insurance company, approved as to sufficiency by the city treasurer, and as to legality by the city solicitor, providing indemnity for or protection to the insured against loss in the amounts provided for in Sections 65-8, 65-9 and 65-10, and agreeing to pay within the limits of the amounts fixed in said sections to any judgment creditor who shall have filed his suit or filed notice of a claim for such loss with the city treasurer during the license year in which the injury occurred or six months thereafter any final judgment rendered against the insured by reason of the liability of the insured to pay damages to others for bodily injuries, including death, at any time resulting therefrom, and for damages to or destruction of property sustained during the term of said policy by any person other than employees of the insured, and resulting from negligent operation, maintenance or use of such licensed public vehicles.
The policy of insurance aforesaid and the bond given in lieu thereof, as hereinafter referred to, shall provide that in case the vehicle is operated, maintained or used with the consent or acquiescence of the owner, by one other than the owner, his agent or employee, and an injury results to person or property as indicated above, due to the negligent operation, maintenance or use of said vehicle, that the insurer or the obligors in the bond, as the case may be, shall pay to any judgment creditor of said person so maintaining, using or operating said vehicle any final judgment rendered against said person so maintaining, using or operating said vehicle, provided that said judgment creditor shall have filed his suit, or filed notice of claim for such loss in all respects as is provided for the judgment creditor of the insured in the foregoing paragraph.
The policy or policies of insurance, and the sureties hereinbefore required, shall be valid and effective for no less a period than that for which the license is issued.
Section 65-8. Extent of liability. The extent of the liability of the insurer shall be, as to any one licensed public vehicle, the sum of five thousand dollars ($5000.00) on account of injuries to, or death of, any one person in any one accident; and subject to such limit as respects injury to, or death of, one person, ten thousand dollars ($10,000.00) on account of any one accident resulting in injury to or death of more than one person, and one thousand dollars ($1000.00) on account of damage to property in any one accident.
Section 65-9. Limitation of liability for property damage. In the case of property damage the insurer shall have the option of limiting his total liability as follows:
For not more than two public vehicles ... $2000.00 For each vehicle in excess of two, not in excess of five....................................... $1000.00 For each vehicle in excess of five, not in excess of ten......................................... $750.00 For each vehicle in excess of ten, not in excess of twenty-five................................. $500.00 For each vehicle in excess of twenty-five, not in excess of fifty .............................. $300.00 For each vehicle in excess of fifty ...... $200.00
Section 65-10. Additional insurance. Any insurer limiting his total liability as to property damage in accordance herewith shall notify the city treasurer forthwith of any insurance payments made on behalf of applicant which would operate to reduce the outstanding total limited liability. The city treasurer shall thereupon require adequate additional insurance and in the event of the failure of applicant to furnish the same on ten days' notice, his license or licenses shall be suspended until the required additional insurance is provided. Failure of the insurer to notify the city treasurer shall operate to maintain the total liability of the insurer without allowance for payments made.
Section 65-11. Bond in lieu of insurance. In lieu of the policy or policies of insurance herein provided for applicant may furnish a bond executed by a surety company, authorized to do business in the state of Ohio, or by two personal sureties, approved as to sufficiency by the city treasurer and as to legality by the city solicitor, holding and binding the principal and sureties to the same liability, and subject to the same conditions as in the case of policies of insurance provided for hereunder. It shall further be permissible for the applicant to furnish insurance as to damages for personal injuries, including death, and an indemnity bond as to property damages, or vice versa.
Section 65-13. Metal tag. At the time the license is issued by the city treasurer to the owner of any public vehicle, the city treasurer shall also issue to such owner a metal tag showing the class of public vehicle, the license number and the year for which issued. The tags for each class of public vehicle shall be numbered consecutively each year, except that tags for taxicabs shall be numbered to correspond to the body number assigned by the director. No tag shall be displayed on any public vehicle except the one for which it was issued. The tag shall be affixed to the front of the vehicle so as to be plainly discernible at all times.
Section 65-42. Director's powers. The director is authorized and empowered to establish and adopt such rules and regulations governing the issuance of public vehicle licenses and the inspection of public vehicles and their appurtenances as are reasonable and necessary, and not inconsistent with the terms of this division.
Section 65-47. Violation penalties. Any person, firm, or corporation, or any owner, agent, employee, or driver of a public vehicle who violates any of the provisions of this division, for which no other fine and/or imprisonment is specified, shall be fined not less than five dollars ($5.00) nor more than one hundred dollars ($100.00).
For the habitual violation of the provisions of this division the city treasurer, upon recommendation of the director, shall revoke the license for the vehicle involved.
Section 65-48. Appeals. Whenever the director shall have refused to authorize a public vehicle license, or whenever the city treasurer has suspended or revoked a public vehicle license, the applicant, within ten (10) days after receiving notice of such denial, suspension or revocation, may appeal to the city manager. The city manager may either consider said appeal on the evidence produced before the director, or permit the introduction of new evidence, inspections, and tests. The decision of the city manager shall be final.
Provided, however, that when the director's refusal of a license shall be upon the grounds of public necessity and convenience, then the applicant, within ten days after receiving notice of such refusal, may appeal to the city council. The council may either consider said appeal on the evidence produced before the director or permit the introduction of new evidence, inspections, and tests. The decision of the city council shall be final.
By the pleadings an issue was made, both of law and fact.
The evidence in the case disclosed that the plaintiffs are each owners of a number of automobiles, and are engaged in the business of leasing such automobiles upon a mileage basis to persons, to be driven by the lessees upon the streets of the city of Cincinnati and upon the public highways; that many insurance companies never have carried the character of risk provided in the ordinance, and that certain insurance companies which at one time had carried the character of risk provided in the ordinance have discontinued carrying such risk; that certain insurance companies authorized to write insurance in the state of Ohio are now willing to write and are writing such insurance, and such companies offer an option of a flat rate of $232.50 per automobile, or a rate based upon the gross earnings of each automobile insured, slightly under 10 per cent. of such earnings; that certain of the plaintiffs are now carrying insurance in compliance with the ordinance; that the average gross earnings of an automobile in this character of service is approximately $1,800 per year, and that plaintiffs find it advisable to exchange each automobile for a new one after eight or nine months' service. The comparative trade-in value of the automobile does not appear from the record.
The cause was heard in the court of common pleas, which found for the plaintiffs and enjoined the city and its various officials from enforcing the provisions of the ordinance against the plaintiffs. The cause was appealed to the Court of Appeals, and, upon hearing, judgment was rendered for the defendants. The cause is here upon a petition in error.
Mr. Julius R. Samuels, for plaintiffs in error.
Mr. John D. Ellis, city solicitor, Mr. Jacob Haupman and Mr. Milton H. Schmidt, for defendants in error.
This case involves the validity of certain sections of an ordinance of the city of Cincinnati, regulating the operation of the business of leasing automobiles, to be driven by the lessee upon the public streets of that city.
It is contended that the business is purely private and not impressed with any public character which makes it subject to police regulation.
Concededly, the automobiles are rented on a mileage basis and for operation over the public streets; so that for every mile of travel for which a rental fee is exacted of the lessee a mile of public street has been used in earning such rental fee, and, while the use of the public streets by the lessee has been a use of such streets by a member of the public in the ordinary way, Such use by the lessor has been a use for his own gain, just as the use of the streets by street cars, busses and taxicabs is a use by them for their own gain.
While there is a marked difference between the relationship and liability of street cars, busses, and taxicabs to the public and the relationship and liability to the public of the lessor of an automobile to be driven by the lessee, there is no difference in the pecuniary character of their use of the street. The power to classify the users of public streets for gain, such as busses, taxicabs, jitneys, and the like, for the purpose of regulation, has been so uniformly upheld that it has ceased to be a question. State, ex rel. McBride, v. Deckebach, Auditor, 117 Ohio St. 227, 157 N.E. 758; Fifth Ave. Coach Co. v. City of New York, 194 N.Y. 19, 86 N.E. 824, 21 L.R.A. (N.S.), 744, 16 Ann. Cas., 695; Id., 221 U.S. 467, 31 S.Ct., 709, 55 L.Ed., 815; Packard v. Banton, Dist. Atty., 264 U.S. 140, 44 S.Ct., 257, 68 L.Ed., 596; Pacific Express Co. v. Seibert, (C. C. Mo.), 44 F., 310; Id., 142 U.S. 339, 12 S.Ct., 250, 35 L.Ed., 1035.
We do not find it necessary to determine whether the city of Cincinnati derives its power to enact the ordinance in question under the home-rule provision of the Constitution of Ohio, since, if the power be not there conferred, it has been specifically conferred by Section 3632 of the General Code of Ohio, which provides that municipalities shall have the power "to regulate the use of * * * automobiles * * * kept for hire * * *."
The power of the municipality, within its jurisdiction, in reference to regulating the business of leasing automobiles to be driven by the lessee, is as great as that of the state within its jurisdiction.
The plaintiffs are not common carriers. The lessees of plaintiffs are not the agents of the lessors, and the ordinance does not attempt either to make plaintiffs common carriers or to make them responsible for the tortious acts of their lessees, under the doctrine of respondeat superior. It does, by appropriate language, undertake to require that the financial responsibility of the lessees of such automobiles, to respond in damage for their own tortious acts in the operation of such automobiles, be guaranteed either by a liability insurance policy, or by a bond; and it imposes upon the lessor of such automobile the burden of securing such policy or bond, and makes the assumption of such burden a condition precedent to the issuing of a license to such lessor to transact such business within the city.
It is a matter of common knowledge that a consciousness of financial responsibility for negligence tends to promote care, and, conversely, that a consciousness of financial irresponsibility tends to promote indifference. The mode of operation of the business of plaintiffs is designed to make use of the public streets in a gainful occupation without incurring any financial obligation for the manner of use, such as is incurred by both common carriers and owners of automobiles using the streets in the ordinary way.
The evidence in this case discloses that the hazards of insuring leased automobiles, to be driven by the lessee, against liability for injury to persons and property, are such that many insurance companies engaged in the business of writing liability insurance upon automobiles are unwilling to write such insurance, and that the insurance companies that are willing to write such insurance exact a high premium rate. The fact that automobiles of this class are operated by persons who have no ownership in the operated automobiles — and that they operate under a contract which exempts the owner from the application of the doctrine of respondeat superior, which operation has been found by the experience of insurance companies and insurance men skilled in the occupation of determining degrees of hazard to be extra hazardous to the public — is quite sufficient to warrant a classification of this character of automobiles, separate from all others, and to warrant a reasonable regulation of the class. In re Cardinal, 170 Cal. 519, 150 P. 348, L.R.A., 1915F, 850; People v. Martin, 203 App. Div. 423, 197 N. Y. S., 28, affirmed, 235 N.Y. 550, 139 N.E. 730; City of Dallas v. Gill (Tex.Civ.App., 1917), 199 S.W. 1144; Hazleton v. City of Atlanta, 144 Ga. 775, 87 S.E. 1043; West v. City of Asbury Park, 89 N.J. Law, 402, 99 A. 190; Commonwealth v. Theberge, 231 Mass. 386, 121 N.E. 30; Huston v. City of Des Moines, 176 Iowa 455, 156 N.W. 883; State v. Seattle Taxicab Transfer Co., 90 Wn. 416, 156 P. 837; Melconian v. City of Grand Rapids, 218 Mich. 397, 188 N.W. 521; Lane v. Whitaker, (D.C.), 275 F., 476, 480; City of San Antonio v. Besteiro, (Tex.Civ.App., 1919), 209 S.W. 472; Welch v. Harnett, 127 Misc. Rep., 221, 215 N. Y. S., 540; Packard v. Banton, supra; also note collecting cases, 22 A. L. R., 230.
The police power, in furtherance of public safety, health, and welfare, is coextensive with the public need, and the reasonableness of its exercise must be measured largely by the same standard. The daily toll of life, limb, and property exacted by the operation of automobiles generally upon the public streets and highways proclaims the public need for police regulation of all automobile operation. Because, perchance, the ordinance in question might well have regulated other classes of automobile users, or because, perchance, such regulation might more effectually have been accomplished by state legislation, does not militate against the power to regulate a proper and reasonable class of automobile users, nor against the power of a municipality, expressly conferred, to enter upon an unoccupied field within its own jurisdiction. Truax v. Corrigan, 20 Ariz. 7, 176 P. 570; Id., 257 U.S. 312, 42 S.Ct., 124, 66 L.Ed., 254, 27 A. L. R., 375; People v. Martin, supra; Packard v. Banton, supra; Murphy v. City of Toledo, 108 Ohio St. 342, 140 N.E. 626.
The fact, if it be a fact, that the peculiar circumstances of the plaintiffs are such that because thereof they have not the ability to comply with the provisions of the ordinance as to bond, does not militate against the validity of the ordinance so long as they have the same opportunity to comply with the ordinance that other members of the class have and the ordinance has for its reasonable purpose the preservation of the public safety, health, and welfare. Auto Transit Co. v. City of Fort Worth, (Tex.Civ.App.), 182 S.W. 685; Puget Sound Traction, Light Power Co. v. Grassmeyer, 102 Wn. 482, 173 P. 504, L.R.A., 1918F, 469; Hadfield v. Lundin, Pros. Atty., 98 Wn. 657, 168 P. 516, L.R.A., 1918B, 909, Ann. Cas., 1918C, 942.
The judgment of the Court of Appeals is affirmed.
Judgment affirmed.
MARSHALL, C.J., MATTHIAS, DAY, ALLEN and KINKADE, JJ., concur.
JONES, J., not participating.