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Artim Transp. v. Illinois Commerce Com.

OPINION FILED FEBRUARY 18, 1981.

ARTIM TRANSPORTATION, INC., ET AL., PLAINTIFFS-APPELLANTS,

v.

ILLINOIS COMMERCE COMMISSION, DEFENDANT-APPELLEE. — ROGER E. KAHLER ET AL., PLAINTIFFS-APPELLANTS,

v.

ILLINOIS COMMERCE COMMISSION, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Sangamon County; the Hon. RICHARD L. CADAGIN, Judge, presiding.

MR. JUSTICE WEBBER DELIVERED THE OPINION OF THE COURT:

This is an appeal from an order of the circuit court of Sangamon County which affirmed an order of the Illinois Commerce Commission (Commission).

Before proceeding into the facts, issues and merits of the appeal, we think it necessary to pause to describe the status of the parties before the Commission, the circuit court and this court, since the caption of the cause here may generate some confusion. Roger Kahler, appellant here, filed his application with the Commission. In the course of the proceedings the Artim Transportation, Inc., and others were permitted to intervene. The decision of the Commission was adverse to Kahler, and he appealed to the circuit court of Sangamon County in an effort to reverse the Commission. Artim et al. also appealed to the circuit court pursuant to section 68 of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 72). However, their effort, even though designated as appellants, was to sustain the order of the Commission. On motion, the circuit court consolidated the two appeals in that court. Both Kahler and the intervenors have appealed to this court, Kahler in an effort to reverse the Commission's order, the intervenors in an effort to sustain it. Although both sets of parties are designated as appellants, by motion made and allowed in this court, Artim's brief was allowed to stand as that of an appellee. The standing of the parties, here, then, is that of appellant as to Kahler, appellee as to Artim et al., and the Commission.

On October 24, 1972, Roger Kahler filed an application with the Motor Carrier Division of the Commission for approval of his acquisition and control of the Fort Transfer Company by means of his purchase of all outstanding shares of its common stock. This was done pursuant to the provisions of section 18-309 of the Illinois Vehicle Code (Ill. Rev. Stat. 1973, ch. 95 1/2, par. 18-309) (Code), which reads in pertinent part as follows:

"(a) Any certificate or permit may be transferred under the conditions specified below pursuant to such rules and regulations as the Commission may prescribe after notice, application and hearing thereon.

(b) It is lawful, under the conditions specified below, but under no other conditions, * * *; for a person not a motor carrier of property, to acquire control of one or more motor carriers of property through ownership of their stock, * * *.

(c) Whenever a * * * acquisition of control is proposed under this Section, * * * the person seeking authority therefor shall present an application to the Commission, and thereupon, the Commission shall, after due notice, set the application down for a public hearing in order to determine whether the findings specified below may properly be made. If the Commission finds that (1) the proposed purchaser * * * is fit, willing and able, (2) that the proposed seller * * * has not abandoned, suspended, or discontinued operations, and (3) that the transaction proposed will be consistent with the public interest and the policy declared in this Chapter and that the conditions of this Section have been or will be fulfilled, it shall enter an order approving and authorizing such * * * acquisition of control, upon such terms and conditions as it finds to be just and reasonable. * * *

(d) It is unlawful for any person, except as provided in paragraphs (b) and (c) to accomplish or effectuate or to participate in accomplishing or effectuating the control or management in a common interest of any 2 or more carriers of property, * * * and one or more carriers other than motor carriers of property, however such result is attained, whether directly or indirectly, by use of common directors, officers, or stockholders, a holding or investment company or companies, a voting trust or trusts, or in any other manner whatsoever. It is unlawful to continue to maintain control or management accomplished or effectuated after the enactment of this Chapter and in violation of this paragraph. As used in this paragraph, the words `control or management' shall be construed to include the power to exercise control or management."

Unless otherwise specifically indicated, all references in this opinion will be to the 1973 version of the Code, since the hearings were conducted on May 30, 1973, and August 17, 1973, and the case was marked heard and taken by the Commission on the latter date. The order of the Commission was not entered until April 21, 1976, some 32 months later. The statute was amended in 1977, and again in 1980.

At the first hearing on May 30, 1973, George Fort, the majority stockholder and president of Fort Transfer Co., was the only witness. Evidence developed as follows: There were 60 shares of stock authorized and outstanding of which George Fort owned 44, his son Lloyd Fort one, and Roger Kahler 15. Lloyd was secretary of the corporation, and Kahler was vice-president, and also designated as manager. Kahler was hired by George Fort in 1967 to assist in running the business, and Fort sold him the 15 shares in the same year as an incentive. Fort claimed that he was still active in the business, although he was 78 years old and had not driven a truck for several years preceding the hearing. The exhibits showed that Fort Transfer Co. had broad authority to Transport commodities general. Several letters soliciting business were identified as having been written by Kahler, and Fort testified that this was done since he, Kahler, had a better education and could write a better letter.

As will be dealt with later, one of the principal issues in controversy is whether George Fort and Roger Kahler had an oral agreement in 1967 at the time of hiring, the substance of which was that Kahler would be permitted to purchase the business. In his testimony, Fort denied any such agreement and stated that he had decided to sell to Kahler only a year or so prior to the hearing, and only if he could obtain Commission approval.

On cross-examination, Fort testified that his company leased space from Ervin Kahler, Inc. (Kahler, Inc.). This corporation was partially owned by Ervin Kahler, who is Roger Kahler's father, but Fort denied that Roger had any connection with it. He also testified that Fort Transfer Co. used principally leased trucks and leased drivers in its business. It had only one full-time driver of its own. Under further cross-examination, Fort demonstrated little knowledge of the financial or operative aspects of the business. However, he again denied any sort of written or oral agreement with Roger Kahler for the sale of the business.

The hearing was then continued until August 17, 1973, at which time Roger Kahler was a principal witness. His testimony largely paralleled that of George Fort. He specifically denied having any agreement about the purchase of the business until shortly before seeking Commission approval. He stated that Fort Transfer Co. leased space and equipment from Kahler, Inc., in which Ervin Kahler, his father, was a minority stockholder. He denied any other connection between Fort Transfer Co. and Kahler, Inc. He stated that shortly after he started with Fort, farmers in the area were beginning to use bulk fertilizer and were calling upon Fort Transfer Co. to haul it. Since Fort Transfer Co. had the authority, it started leasing more equipment in order not to put its authority in jeopardy. It then began soliciting more business to avoid having idle leased equipment. He stated that Fort Transfer Co. leases from others than Kahler, Inc., and all leases with Kahler, Inc., have been filed with, and approved by, the Commission.

Ervin Kahler, father of Roger, and minority shareholder in Kahler, Inc., also testified at this hearing. He denied any connection between Kahler, Inc., and Fort Transfer Co., other than the leasing of terminal space and the leasing of trucks and drivers to the latter. On cross-examination he stated that of the gross revenue generated by Fort Transfer Co., on leased equipment and drivers, 90% is paid over to Kahler, Inc., and 10% retained by Fort. Out of the 90%, Kahler, Inc., pays all of the expense of operation. He further stated: "Because of their authority (i.e., Fort's) we operate under their authority, ...


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