
    Southern Ohio Public Service Co. v. Public Utilities Commission of Ohio.
    
      Public Utilities Commission — Motor transportation companies— Certificate of convenience and necessity upon affidavit— Individuals not operating as partners unless agency established — Production of books, records and documents before utilities commission — Not required in controversy between rival transportation agencies, when — Refusal to revoke certificates in absence of deception or fraud.
    
    1. Where certificates of convenience and necessity have been issued by the Public Utilities Commission to certain individuals operating motorbusses along a state highway, and it appears that such operators have, for the greater efficiency of the service as well as their common good, agreed upon a joint schedule, employed a common manager, shared certain expenses, purchased additional equipment from common funds, and agreed upon a division of profits, such an arrangement does not necessarily constitute a partnership unless the evidence also shows that such operators so taking the profits shared them not only as principals in a joint business, but that each had an express or implied authority to bind the other as principal and agent. (Harvey v. Childs and Potter, 28 Ohio St., 319, 22 Am. Rep., 387, approved and followed.)
    2. While the Public Utilities Commission has power to examine all books, contracts, records, documents, and papers of any public utility and by subpoena duces tecum to compel the production thereof, it is not required to exercise such power in a controversy between rival transportation agencies, where there is no lack of efficiency in the service nor any question of rates involved, nor the rights of the public concerned, and no fraud has intervened whereby the commission has been deceived. Under such circumstances, the refusal of the commission to order a production of the private accounts, books, papers, etc., of one transportation agency for the inspection of a competitor is neither unreasonable nor unlawful.
    3. Where it appears that the Public Utilities Commission was not deceived as to the persons to whom were issued certificates of necessity and convenience, and the persons receiving such certificates were lawfully entitled thereto under the facts actually existing, an order refusing to revoke such certificate upon complaint of a rival trans-r portation company, where the service is efficient and the rights of the public are not concerned, and no fraud has intervened, is neither unreasonable nor unlawful.
    (No. 19800
    Decided December 7, 1926.)
    Error to the Public Utilities Commission.
    This is a proceeding to reverse the. finding and orders of the Public Utilities Commission. The action originated by the Southern Ohio Public Service Company, operating an interurban electric line from the city of Columbus over state route No. 1, via Hebron and Newark, to Zanesville, Ohio, filing a complaint against O. B. Daniels, F. E. Davis, W. A. Watson, B. W. Slayman, and I. B. Baker, each of whom was the holder of a separate certificate of convenience and necessity for the operation of motorbusses for the transportation of passengers from the city of Columbus to Zanesville, over state route No. 1, in competition with the complainant, which certificates were being operated under the name of the “Bed Star Transportation Line.” The complaint, in substance, alleged that these parties had obtained certificates of convenience and necessity by representing themselves to have been engaged individually in motor transportation on and prior to and after April 28, 1923; whereas, in fact, they were at that time operating in such a way as to constitute them in effect a partnership. The complainant avers that none of the above-named individuals has ever at any time since the issuing of said certificates exercised the franchises or privileges incident thereto, as an individual, but that each of said parties renounced and surrendered said certificates by continuing, their operation under the name and style of the Red Star Transportation Line, wherefore the complainant asks that the “Public Utilities Commission enter an order revoking, canceling, forfeiting, and accepting the renunciation of each of said certificates of public convenience and necessity herein named, and that it find all of said certificate holders were jointly operating on April 28, 1923, prior thereto, and following said date, and were partners at said times, under the name and style of the Red Star Transportation Line, and that the commission find that said certificate holders did not operate over said route at any of said times as individuals, and that said commission grant such other and further relief as may be just in the premises. ’ ’
    The hearing on this cause was started before the commission on December 11, 1925, and was concluded March 2, 1926; there being various adjournments between said dates. Cross-examination of the respondents, time tables, checks, chattel mortgages, and other documentary evidence, composed the chief evidence offered by complainant. The greater portion of the testimony is the cross-examination by complainant of the respondents. While the record is very voluminous, a brief summary of the testimony follows upon the subject of the division of profits by respondents; that being the chief point relied upon by complainant to show a partnership.
    
      O. B. Daniels: Testified that indebtedness incurred in operation was paid by tbe manager out of the receipts, and be (Daniels) was paid out of the proceeds.
    Fred E. Davis: Testified that tbe cars put on tbe line paid for themselves; that tbe money was collected, deposited in bank, and tbe cars paid for out of that fund, receipts from each car being kept separate; that money was deposited in tbe name of Columbus-Zanesville Bed Star Line, by Davis, secretary and treasurer; bad not made any distribution of profits since putting on the joint cars; that in 1924 be operated tbe cars as manager, deposited tbe receipts, paid expenses, and distributed tbe profits among all tbe certificate holders.
    B. M. Larick: Employed as manager about nine or ten months, collected tbe proceeds from all these cars and divided tbe gross proceeds equally among all of tbe certificate holders; tbe expenses of each certificate bolder, during that time were deducted from that gross. After expenses were paid, I got my part. Operating expenses were paid pro rata by the owners of tbe cars. Drivers 'were paid so much per day and were paid each day. Pay of the driver came out of tbe receipts of that particular car. Each owner paid bis own gasoline bill out of tbe receipts from bis car, and each furnished bis own tires. It made no difference bow much they took in, each got tbe same amount, based on tbe total receipts of tbe seven, operators. When I sold out, I was paid out of the “pool.” In buying ten new cars, the initial payment was made out of tbe pool.
    
      C. W. Gulp, manager: Testified as to how the funds were divided equally between the certificate holders; that the busses were owned jointly, but were listed individually by the certificate holders; that the new busses were purchased and paid for out of the joint receipts arising from the entire operation; that these busses,.though owned jointly, were listed separately on the individual certificates; and that all of the receipts were divided equally between the certificate holders, regardless of the earnings of any particular bus. Drivers turned in the receipts daily, and I deposited the money in bank, and any bill incurred on any one car was paid, by check, out of the receipts in the bank. The gross receipts were divided; the expenses taken out for each particular car. This was in 1923, from October to December 19th; then they purchased joint equipment and everything was taken out of the same pot. After they put the joint cars in operation, they divided the net profits, after the expenses were paid out of the gross receipts. All money was deposited in one fund. In keeping the accounts, they were kept according to car numbers and drivers, showing receipts and expenses on each car, according to number, and then the expenses were deducted from the receipts of each car and the net receipts divided equally among the different certificate holders. "When the new cars were purchased, they were purchased in all their names, but placed individually, and paid for out of the joint receipts. Some of the individuals had an extra car.
    I. B. Baker: Said that the business was in charge of Larick as manager, and he collected the receipts, deposited them in bank, and when we had a meeting day it was divided. The fund was divided equally, according to the operation. When Larick quit, he sold his interest to me to start with, but eventually we all paid for it. Culp succeeded Larick, and he paid expenses out of the gross receipts, made payments which were due on the cars. Operation under Davis as manager continued along practically the same lines. Each of the defendants, up to November, 1925, the time of the filing of this complaint, got an equal share in the net receipts. Insurance was paid out of the joint fund of gross receipts; taxes were paid the same way.
    At the conclusion of the evidence on the part of the complainant, and after it had rested, motion was made by the respondents to dismiss the complaint, on the following grounds:
    First, that the testimony did not sustain the points set out in the complaint; second, that the testimony did not show any ground of complaint upon which an application to revoke the certificate might be sustained; third, that the evidence showed that the respondents were not operating as a partnership, either on April 28, 1923, or thereafter; fourth, that the evidence clearly indicated and showed that at no time was any partnership arrangement entered into between these men; fifth, that the evidence showed that there was no action of any of the defendants in this matter upon which an order of revocation might be grounded.
    
      This motion was sustained, the commission finding:
    ‘ ‘ That certificates of public convenience, and necessity having been heretofore granted to the defendants upon their affidavits, that they were actually operating in good faith on April 28, 1923; that there has been no testimony produced in this matter which would warrant the commission in not accepting those affidavits as true; that there is nothing in the case which would warrant the commission in revoking the certificates as having been gotten under false statements; that there has been nothing produced in this hearing which would warrant this commission in revoking the certificates, as it has been clearly shown that there has been continuous operation under the certificates since they were granted, and, having in mind the decision of the Supreme Court in the Small case, the commission would feel that it would have no right whatever to revoke these certificates, especially in view of the fact that there is not any positive testimony whatever, or any testimony upon which the commission could base a judgment, that there had been any trafficking in these certificates from the individual to any contemplated or proposed or thought of partnership.”
    Exceptions were duly noted on behalf of the complainant, an application for a rehearing was filed, which was denied, and this proceeding is prosecuted to reverse the finding and orders of the commission, upon the ground that the commission erred in sustaining the motion to dismiss and in denying a rehearing, and that these orders are therefore unlawful and unreasonable.
    
      Mr. Edward B. Meyer, Mr. James M. Butler and Mr. Claude J. Bartlett, for plaintiff in error.
    
      Mr. C. C. Crabbe, attorney general, and Mr. John W. Bricker, for defendant in error.
   Day, J.

This is a controversy between rival and competitive public utilities, engaged in the transportation for hire of passengers between the city of Columbus and the city of Zanesville in this state. No question of rates is involved, and there is no evidence in the case that the public is not being properly transported or that the service is not at all times efficient and conducted in a manner entirely in accord with the orders of the Public Utilities Commission.

Was the commission misled or deceived in the granting of these certificates to these individual respondents, upon affidavit that they were operating individually on April 28, 1923, pursuant to Section 614-87, General Code, when they were in fact a partnership, and hence violating the principle of Westhoven v. Public Utilities Comm., 112 Ohio St., 411, 147 N. E., 759?

There are two paramount grounds- of error which are necessary to be considered: First, did the commission err in finding that there was not sufficient proof of a partnership between the respondents on April 28, 1923, or thereafter, to justify the cancellation of the certificates of convenience and necessity theretofore issued to the respondents? Second, did the commission err in not ordering the production of books, papers, documents, etc., of the respondent?

Of these in their order: First. Was there sufficient proof of partnership?

This is a voluminous record, and the case of the complainant is largely built upon the cross-examination of the respondents. In order to prevail upon this issue of whether there was a partnership or not, we think the evidence must show, by the preponderance thereof, that the same came within the rule of Harvey v. Childs and Potter, 28 Ohio St., 319, 22 Am. Rep., 387, syllabus 2 thereof reciting:

“Participation in the profits of a business, though cogent evidence of a partnership, is not necessarily decisive of the question. The evidence must show that the persons taking the profits, shared them as principals in a joint business, in which each has an express or implied authority tc bind the other.”

It is said in the opinion at page 321:

“Participation in the profits of a business, however, cannot be regarded as a rule so universal ana unrelenting as to be unjustly applied to a case where a debt is incurred by one who cannot be said to be acting, in the particular transaction, as the agent or on behalf of the party sought to be charged. Therefore, on principle, the true test of a partnership, at last, is left to be that of the relation of the parties as principal and agent, to be proved by any competent evidence; for, when they sustained that relation, a joint liability may be said to have been incurred by the authority, or on behalf of each of the parties so related. The tendency of the more modern authorities, both English and American, is to this conclusion. ’ ’

Measured by this rule, we think the evidence in this record fails to show the necessary elements required to be present in order to prove a partnership. True, there was proof of operation under a joint schedule to the mutual benefit, a sharing in the expenses of the public waiting room, the salary and pay of a caller and manager, the purchasing of certain equipment for common funds, a division of receipts, subject to certain deductions, while each owner was to stand certain expenses incident to his own cars. But we find nothing in the record which shows that these respondents sustained the relation of principal and agent to each other, with power to bind each other in the scope of the common business, or that would create a liability of any of the respondents for the torts of any of the other respondents. From an examination of the record, therefore, we fail to find that the commission committed error in sustaining the motion to dismiss the complaint, in so far as the proof of partnership was concerned.

Second. This brings us to a discussion of the second alleged ground of error, which is that the commission erred in refusing to direct the respondents to produce their books of account, papers, records, etc.

The right to production before the commission of books, papers, etc., is provided for by statute (Section 614-7, General Code), which reads:

“The commission shall have power, either through its members or by inspectors or employes duly authorized by it, to examine all books, contracts, records, documents and papers of any public utility, and by subpoena duces tecum to compel the production thereof, or of duly verified copies of the same or any of them, and to compel the attendance of such witnesses as the commission may require to give evidence at such examination.”

It will thus be seen that the commission has ample power to protect the public in any matter involving service, rates, or anything in which the public has an interest, by compelling the production of such books, accounts, documents, etc., as the commission sees fit. But in controversies between competing and rival utility agencies, an order to compel production by one utility agency of its purely private books, documents, etc., for the inspection of a competitor, might under certain circumstances be productive of more harm to the service, hence to the public, than otherwise; and, where very broad opportunity for cross-examination of all respondents has been given, as in this instance, and there is no showing of a lack of efficiency of service, or a question of rates, or something in which the rights of the public are involved, the denial by the commission of an application for such an order against one competitor in favor of a rival is not necessarily unreasonable or unlawful.

The ultimate facts going to throw light upon the relation of the parties were thoroughly developed in the testimony. The question of the amounts of receipts and expenditures, as such, would be a matter of no consequence except in so far as it might throw light upon the paramount question, to wit, was there a partnership? The commission, in the exercise of its discretion, felt that it would not be necessary to subject these private books of account, papers, etc., to the scrutiny of rival and competitive interests in a controversy in which the public were not concerned, in so far as the efficiency of the service rendered upon the public highways of the state was concerned. Under these circumstances, we see no error in the conclusion of the Public Utilities Commission.

Does the entire record show that there was deception practiced upon the Public Utilities Commission by these respondents in securing these certificates, by reason of which the same should be canceled, on the principle of the case of Westhoven v. Public Utilities Comm., 112 Ohio St., 411, 147 N. E., 759? In that case the facts developed that a number of persons in partnership had been operating a motorbus line at the time the FreemanCollister Act went into effect, April 28, 1923, and that one of the partners, Carl J. ‘Westhoven, by misrepresentation and fraud secured for himself a certificate of convenience and necessity, under an affidavit that he, as the River Road Bus Line, was operating on April 28, 1923, against which action of the commission the other partners filed complaint, upon the hearing of which the commission, finding that such representations were in fact false and untrue, found that the certificate issued thereon had been secured by misrepresentation and fraud, and the order of the commission was that such certificate should be revoked. This action of the commission was affirmed by this court.

The record in this case makes no showing of such a condition as existed in the Westhoven case. The operation of the Red Star Transportation Line on April 28, 1923, was not unknown to the Public Utilities Commission, as shown by the number of cases before it involving the same, some of which have been before this court for review. Again, the record shows no attempt on its part to comply with the statutes of this state relative to partnerships; and, further, there is affirmative testimony in the record, by a witness called on behalf of the complainant, to wit, the witness Francis Firestone, who sold certain equipment to the respondents, that he knew on April 28, 1923, the respondents were individual operators.

The commission based its holding on the underlying principle of the case of Small v. Public Utilities Comm., 113 Ohio St., 650, 150 N. E., 37, wherein it is announced that where “there is no cessation or interruption of service, and the service is at all times efficient, it is error on the part of the Public Utilities Commission to order a revocation of such certificate on the ground of abandonment.”

That case recognizes the doctrine that it is the service to the public that is the paramount thing to be considered after a certificate has been issued.

Upon the entire record we fail to find that the Public Utilities Commission was deceived or misled, either in the issuance of these certificates to the respondents, or by their operations under them thereafter. The service being at all times efficient, and no question of rates being involved, and no fraud intervening, our conclusion is that the order of the Public Utilities Commission appearing herein is neither unlawful nor unreasonable, and it follows that the same should be and hereby is affirmed.

Order affirmed.

Marshall, C. J., Jones, Matthias, Allen, Kinkade and Robinson, JJ., concur.  