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Germenko v. Public Service Commission of

Decided: August 9, 1961.


Appeal from the Circuit Court of Baltimore City; Allen, J.

Brune, C. J., and Hammond, Prescott, Horney and Sybert, JJ. Sybert, J., delivered the opinion of the Court.


The Public Service Commission, after a public hearing, filed on January 7, 1960 an opinion and order No. 54244, granting permits to Scarborough Oil Co., Inc. and C. Curtis Morgan Transportation Co., Inc. (Morgan Transportation), appellees, to operate as contract carriers of flammable liquids, in bulk, in tank vehicles, on public streets or roads in Maryland. The granting of the permits was opposed by John J. Germenko and others, appellants, who are certified contract carriers of flammables. A petition was filed by the appellants in the Circuit Court of Baltimore City under §§ 90 and 91 of Art. 78, Code (1957), for a decree declaring the order granting the permits null and void and for an injunction. Following a hearing on the petition, to which answers were filed by Scarborough, Morgan Transportation and the Commission, the chancellor signed an order affirming the order of the Commission and dismissing the petition. The petitioners entered this appeal from the chancellor's order.

The Commission issued the permits in question pursuant to § 33 (c) of Chap. 545 of the Acts of 1959, codified as Code (1959 Supp.), Art. 78, § 33 (c), sometimes referred to as the "grandfather clause". This section reads:

"In the case of applications by contract carrier of flammables, no permit shall be issued unless the applicant was in bona fide operation as a contract carrier on June 1, 1954 and has continued such operations since that date; except, upon proof of public convenience and necessity."

The legislative history of this "grandfather clause" began in 1954, when by Chap. 58 of the Acts of that year § 19A was added to Art. 78 of the Code, thereby subjecting all carriers of flammable or combustible liquids to the jurisdiction of the

Commission, and requiring for the first time that such carriers obtain a permit from the Commission to carry on their operations, such permits being mandatory under the statute on and after September 1, 1954. The basis for the issuance of these permits was "public welfare and convenience." However, § 19A (d) enacted the original "grandfather clause," by which the Commission was also directed to issue permits to any carrier of flammables, applying within 90 days of the effective date of the statute, who had been in operation as such a carrier in Maryland on June 1, 1954, with no necessity to show justification under public welfare and convenience. Operation without a permit by any carrier of flammables on or after September 1, 1954, was declared a misdemeanor, punishable by fine.

Scarborough never applied under the provisions of the 1954 Act, while Morgan Transportation filed an application on February 2, 1955, well beyond the period stipulated for filing applications. However, while the record shows that on December 8, 1954, thirty-three applications were approved from among thirty-seven timely applications filed, no permits were actually issued to carriers until February 27, 1958, because of court proceedings involving appeals from the orders of the Commission in regard to the initial applications. In the meantime Scarborough and Morgan Transportation continued their carrier operations without permits. No formal action was ever taken by the Commission on Morgan Transportation's 1955 application.

The next legislative step was taken in 1955 when by Chap. 441 of the Acts of that year the Public Service Commission Law was revised. Among other things, the "grandfather clause" of the 1954 act was eliminated. As the chancellor pointed out, this probably was done in recognition of the fact that by then the rights under that clause had terminated. It then became necessary for a carrier to prove "public welfare and convenience" to obtain a permit. Morgan Transportation applied again on December 8, 1958, but its application was denied on the ground that, although it would have qualified under the "grandfather clause" of the 1954 act, its application was filed too late.

The last legislative act setting the stage for the present controversy occurred in 1959 when Chap. 545 was adopted, by its provisions making a distinction between contract and common carriers of flammables, and, among other things, enacting the so-called "grandfather clause", § 33 (c) of Art. 78, quoted above.

Both Scarborough and Morgan Transportation applied for permits under the provisions of the 1959 amendment, Morgan Transportation basing its application on the new "grandfather clause" while Scarborough applied on that ground as well as on that of "public convenience and necessity". Permits were subsequently issued to both carriers under the provisions of § 33 (c).

In challenging the correctness of the chancellor's dismissal of their petition for review and his affirmance of the Commission's order granting the permits, appellants contend: (1) that Chap. 545 of the Acts of 1959, codified in part as subsections (gg) and (hh) of § 2, and as § 33 (c) of Art. 78, Code (1959 Supp.), did not create new "grandfather" rights in regard to contract carriers of flammables; (2) that Scarborough and Morgan Transportation were not continuously engaged in "bona fide" carriage of flammables from September 1, 1954, as required by § 33 (c); (3) that Scarborough, as "the applicant", was not in operation as a contract carrier of flammables on June 1, 1954, and continuously thereafter, within the meaning of § 33 (c); and (4) that Morgan Transportation was a "private carrier" within the meaning of § 2 (hh) of Art. 78, and therefore was not required to have, or entitled to, a permit as a contract carrier of flammables. Appellants abandoned at oral argument the contention that Scarborough and Morgan Transportation were not continuously engaged in the transportation of flammables under individual written contracts or agreements of a term or duration of not less than 90 days, from June 1, 1954, as required by § 2 (gg) of Art. 78.


The appellants' first contention is that the only proper interpretation of the 1959 version of the "grandfather clause"

set out in § 33 (c) is that it was meant to apply only to already qualified permit holders who have been operating both as contract and common carriers under their original, single permits, and that its purpose was to allow the issuance to them of separate, additional permits for contract carriage of flammables. They maintain that an interpretation recognizing new and unrelated "grandfather" rights would in effect countenance the violation of prior existing laws and infringe upon the vested rights of the present certificate holders. Appellants' reasoning is based on their interpretation of the legislative history leading up to § 33 (c). They first point out that following the passage of the 1954 act, this Court ruled, in Baltimore Tank Lines v. P. S. C., 215 Md. 125, 137 A.2d 187 (1957), that the Commission did not have the power to regulate the rates of contract carriers. This rendered impracticable, they say, rate supervision over those who held an original permit and operated both as common and contract carriers. The 1959 amendment added § 32 (a-2), by which for the first time two classes of permits were created, one for common and one for contract carriers of flammables. Appellants point out that the "grandfather clause" of § 33 (c) was made applicable only to contract carriers, and that, as before, applicants for permits as common carriers could qualify only upon proof of "public convenience and necessity". The appellants argue, therefore, that the intent and purpose of § 33 (c) was only to allow issuance of a second permit as contract carriers to those who were in bona fide operation on June 1, 1954 as both common and contract carriers, and continued as such lawfully since that date under the single permits issued pursuant to the 1954 statute. It follows, if this argument is valid, that Scarborough and Morgan Transportation would receive no new rights under the 1959 "grandfather clause" since they would not fall within the class intended to be benefitted thereby.

This interpretation was rejected by the Commission and found unacceptable by the chancellor in light of the legislative history of the act. We believe their conclusions are correct.

The cardinal rule in the construction of statutes is to give effect to the intention of the legislature, and in determining that intention the Court ...

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