ENTREMONT v. WHITSELL (1938)

This is an original proceeding instituted in this court for the purpose of annulling the order of the respondent Railroad Commission directing petitioner herein, Paul Entremont, to ‘forthwith proceed within forty days from the date hereof, to collect the amount of the undercharge, to-wit: $25.72 found to exist in the preceding opinion, and to report to the Commission under oath when this has been accomplished,’ and to ‘hereafter abstain from charging and collecting for the transportation as a highway carrier * * * rates less than the minimum lawful rates for such transportation by said respondent (Paul Entremont) established by order of this Commission’.

Paul Entremont is the owner of certain dump trucks operated by automotive power. On February 11, 1936, he as such owner entered into a written agreement with the Department of Public Works, Division of Highways (hereinafter referred to as the Department of Public Works, or the department) ‘for the rental of three * * * three and one half yard dump trucks for 500 hours each at $2.50 each per hour, including operation.’ The phrase ‘including operation’ was meant to be understood as specifying that Entremont should furnish drivers for the rented trucks, and another provision of the agreement expressly provided that he should do so. The argeement further provided that ‘the trucks are to be used principally under power shovels for hauling gravel, slide material, etc., and miscellaneous hauling jobs as required anywhere in District I’. The agreement also provided that ‘the operators (drivers of the trucks) furnished under this Service Agreement are to perform their duties to the satisfaction of the Department of Public Works and the vendor is to replace them at any time that they do not prove satisfactory, at his own expense. The operators are to work with the highway crews, similar to the practice now being followed by the Department of Public Works' operators.’ It is admitted that the trucks were used by the Department of Public Works exclusively in the repair of the state highway within said district.

Prior to entering into said agreement, the Railroad Commission, purporting to act under the authority given it by the Highway Carriers' Act, had established as the minimum rate for the transportation of commodities for which dump trucks with drivers were rented at the sum of $2.59 per hour. It will thus be seen that the contract price of $2.50 per hour, as fixed by the agreement between Entremont and the Department of Public Works, was nine cents below or less than the minimum rate fixed by the Railroad Commission for such service. Between specified dates the trucks were in use by said department, pursuant to said agreement, 251 hours, and at the rate fixed by the agreement, less a discount of one-half per cent, the total paid by the department for the use of said trucks during said period of time was $25.72 less than the minimum rate fixed by the commission for such service.

Upon its own motion, the Railroad Commission instituted an investigation into the charges which Entremont was making for the use of his dump trucks under said agreement with the Department of Public Works. In this proceeding the department intervened on behalf of Entremont. Two truck associations also asked and were granted leave to intervene in said proceedings. Their interest was common to that of Entremont and needs no separate consideration. The result of this investigation was the order of the Railroad Commission to annul which this proceeding was instituted by Entremont and the People of the State of California against the Railroad Commission and its members.

In support of the order under reivew, the respondents contend that the agreement between Entremont and the department is a contract for transportation of property and not a rental of Entremont's trucks. This contention is based in the main upon that provision of the agreement by which Entremont agreed to furnish drivers or operators for the trucks. They concede that if only the trucks were furnished to the department by Entremont the transaction would be a rental contract and not a contract for the transportation of property. They argue, however, that as Entremont's employees were driving the trucks while in use by the department, the trucks were in the possession of Entremeont, and the sand and gravel or other road materials which were hauled in the trucks were transported by Entremont and not by the department. The evidence is without conflict that after the trucks were delivered to the department they were under the exclusive control of the officers and employees of the department. The agreement expressly provides that the drivers of the trucks (operators) are to perform their duties to the satisfaction of the department, and in case of their failure they are to be replaced by others who will meet the requirements of the department. The drivers were to work with the regular highway crews and to perform duties similar to those performed by the regular crew and in accordance with the practice ot the department. They thus became the special employees of the department (Department of Water and Power v. Industrial Acc. Comm., 220 Cal. 638, 32 P.2d 354; Independence Indemnity Co. v. Industrial Acc. Comm., 203 Cal. 51, 262 P. 757), and, as the department had the exclusive control of the operators during the time they were thus employed, their possession of the trucks was that of the department. The department by means of the trucks operated by their agents was therefore transporting the road materials over the highway, and not Entremont, who had rented his property to the department. The department in the operation of Entremont's trucks was in no different position than when it was using trucks operated by its own highway crews. In either case, the act of transporting property over the highway was the act of the department. We conclude, therefore, that the agreement with Entremont was a rental of his equipment, and was not a contract for the transportation of property. In such a case the ‘hirer (or lessee) would be a highway carrier, but not the letter (or lessor).’ People v. Tedesco, 18 Cal.App.2d 667, 64 P.2d 966, 967. As Entremont under said agreement was s mere letter or lessor of the trucks and not a transporter of property over the highway, the commission would have no authority over the rates of rental charged by him for the use of his property.

While there are certain features of the agreement which are not to be found in an ordinary contract of rental, yet when the agreement is taken as a whole, and particularly where the word ‘rental’ is used on more than one occasion to denote the character of the service to be rendered by Entremont and the compensation to be paid him by the department, we think that the only reasonable construction to be given the agreement is that which we have already indicated. We might add that there is a total absence of any reference in the agreement to any undertaking on Entremont's part to transport property on the highway or elsewhere.

It is true that Entremont held a permit as a radial common carrier, but the mere possession of such a permit would not make him subject to the Highway Carriers' Act (Stats.1935, chap. 223, p. 878) unless he was performing some act or service embraced within the terms thereof. The mere leasing or letting of his trucks to the Department of Public Works or to any other body or person for transporting property on the highway was not such an act. ‘It would also be true that one, although in the business of transporting property by trucks on the highway, would not be a highway carrier, so far as the operation of particular trucks was concerned, if they were hired to and were being operated by another. It is what the owner does, not what his trucks are doing, that determines whether or not he is a highway carrier.’ People v. Tedesco, 18 Cal.App.2d 667, 669, 64 P.2d 966, 967.

This case has been extensively briefed by the parties and also by numerous amici curiae appearing for parties interested in its decision upon the question of the constitutionality of the Highway Carriers' Act. (Stats.1935 chap. 223, p. 878.) As we are of the view that the agreement between Entremont and the Department of Public Works was a lease and not a contract for transportation of property over the public highway and therefore the rates fixed by the commission for such transportation service do not in any manner control said rental charge, it becomes unnecessary, if not improper, for us to pass upon the constitutionality of said act. For that reason we express no opinion as to the constitutional question discussed in the briefs filed herein.

The order is annulled.

CURTIS, Justice.

We concur: WASTE, C. J.; SHENK, J.; LANGDON, J.; SEAWELL, J.