text:
    [Sac. No. 4999.
    In Bank.
    June 30, 1938.]
    MARY A. RUTHERFORD, Respondent, v. THE RIDEOUT BANK et al., Defendants; BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, Appellant.

      Louis Ferrari, C. H. White, George F. Jones and Keyes & Erskine for Appellant.
    Elmer W. Armfield and Arthur B. Eddy for Respondent.
   THE COURT.

This case was taken over by this court on petition for hearing after decision by the District Court of Appeal for the Third Appellate District. The action is brought against Robert J. Finnie and the Bank of America National Trust and Savings Association as the successor of the Rideout Bank to recover damages for fraud. A judgment for damages in the sum of $12,880 was recovered in the lower court. From this judgment the defendant bank alone appeals.

The trial court found, in accordance with the allegations of the amended complaint, that, in December, 1920, at the time of the commission of the alleged fraud, and for some years prior thereto, the plaintiff, Mrs. Rutherford, owned two parcels of real property known as the Rutherford Ranch and the Home Place; that the former was subject to a deed of trust for $30,000, not held by the bank, and the latter subject to a mortgage held by the bank in the sum of $8,000; that the plaintiff's husband died in April, 1923, and that during the time of her husband’s incompetency (upon which the court made no specific finding) Mrs. Rutherford undertook the care and management of the ranch properties; that she was inexperienced and unfamiliar with such matters; that she was a depositor of the Rideout Bank and constantly and continuously consulted with the Rideout Bank in the management and care of her business and financial affairs; that she wholly and exclusively relied upon the bank and that the bank accepted her confidence and advised and counselled her during the periods alleged and that there existed during this time a confidential relation between the bank and the plaintiff upon which the plaintiff implicitly relied and acted in the transaction of her business and financial affairs. It was further found that, on December 27, 1920, the plaintiff executed a document known as the Finnie agreement and later, in compliance with it, executed and delivered to Finnie a grant deed of the Rutherford Ranch; that, prior to and at the time of the execution of the Finnie agreement, both the indebtedness secured by the trust deed on the Rutherford Ranch and that secured by the mortgage on the Home Place were overdue and unpaid; that the plaintiff was unable to pay either indebtedness ; that all these facts wore known to Finnie, the Rideout Bank and to Taylor, its manager; that, with fraudulent intent to induce the plaintiff to execute the Finnie agreement and deed, the Rideout Bank, through its manager, Taylor, falsely and fraudulently represented to plaintiff as a fact and by way of counsel that if she did not execute the Finnie agreement and deed selling the Rutherford Ranch to Finnic, the bank would foreclose the mortgage of the Home Place and the holders of the trust deed on the Rutherford Ranch could and would sell her out under the trust deed and she would lose everything, that it would be better for her to sell the Rutherford Ranch for $5 an acre, if necessary, and that it was for her best interests to make the sale to Finnie on the terms of the agreement and that the consideration named therein was a fair one; that, relying on this advice of Taylor’s, and believing the false representations and counsel, the plaintiff executed the agreement and deed and that if it had not been for the false representations and advice and the plaintiff’s implicit belief therein she would not have executed the agreement to sell nor the deed in pursuance thereof. The court further found that all the representations were false and known by Taylor and Finnie to be false and were made for the purpose and with the design of deceiving and defrauding the plaintiff and inducing her to make the sale to Finnie; that the plaintiff received the sum of $23 an acre for the Rutherford Ranch; that at the time the reasonable market value of the land was $30 an acre and that the ranch contained 1840 acres.

The plaintiff further alleged and the court found to be true that she continued to rely upon the Rideout Bank and to believe in the truth of the representations and the good faith of the advice until on or about September 15, 1927, at which time she was handed documents evidencing the fact that Finnie paid to Tajdor $2,500 as consideration for making the fraudulent representations and inducing the plaintiff to make the sale of the Rutherford Ranch to Finnie; that, prior thereto, the plaintiff had no reason or occasion to question the truth of Taylor’s representations nor the good faith of his advice and that prior to this date the plaintiff had no notice or knowledge of the fraud that had been practiced upon her.

The contentions of the bank are: First, that Taylor, in making the fraudulent representations inducing the sale, was acting beyond the scope of his authority, hence no liability attached to the bank; second, that if a cause of action existed against the bank it was barred by the statute of limitations (Code of Civ. Proc., sec. 338, subd. 4); and, third, that the court failed to find upon a material issue raised by the answer, whether the statute of limitations was a bar to the action, hence the judgment is not supported by the findings and must be reversed for a new trial unless this court will exercise the power of making findings given it by section 956a of the Code of Civil Procedure.

As to the first question, the plaintiff and the bank agree upon the applicable principle of law but the plaintiff contends that at the time of making the fraudulent representations Taylor was acting within the scope of his authority as manager of the Gridley branch of the Rideout Bank while the bank argues that he was engaged in inducing the plaintiff to sell her property for an independent purpose of Finnie’s and his own, that he was not authorized to engage in such transactions and hence the bank cannot be held liable.

It cannot be gainsaid that Taylor made a fraudulent use of the authority conferred upon him by the bank. Acting in the line of his known powers, he falsely and fraudulently represented to the plaintiff that unless she made the sale to Finnic the bank would foreclose its mortgage on the property known as the Home Place. That it was within Taylor’s duties as manager of that branch of the bank to discuss with its debtors the action which the bank proposed to take with respect to sums owed it and encumbrances securing such sums is clear. And we are of the view that it was also within the line of his duties to discuss generally with debtors the condition of the business in which, as a creditor, the bank had an interest and the measures which the bank would approve as tending to protect its security. Especially is this so where the successive managers have, in their official capacities, undertaken to give advice in the management of business affairs in which the bank has an interest as creditor. The bank must therefore be liable for such advice when fraudulently given. The rule is clearly stated in the Restatement of the Law of Agency, sections 261 and 262.

Section 261: “A principal who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud.” The illustrations and the comment found under these two sections are convincing. Under section 261 it is said: “The principal is subject to liability under the rule stated in this section although he is entirely innocent, although he has received no benefit from the transaction, and, as stated in section 262, although the agent acts solely for his own purposes. Liability is based upon the fact that the agent’s position facilitates the consummation of the fraud, in that from the point of view of the third person the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business confided to him. ’ ’

The Restatement of the Law of Agency has been generally endorsed by this court in Speck v. Wylie, 1 Cal. (2d) 625 [36 Pac. (2d) 618, 95 A. L. R. 760], and the particular principles announced in sections 261 and 262 have been applied by this court in Bank of California v. Western Union Tel. Co., 52 Cal. 280 (followed in Pacific Postal Tel. Co. v. Bank of Palo Alto, 109 Fed. 369 [54 A. L. R. 711]), Otis Elev. Co. v. First Nat. Bank, 163 Cal. 31 [124 Pac. 704, 41 L. R. A. (N. S.) 529], and National Bank of San Mateo v. Whitney, 181 Cal. 202 [183 Pac. 789, 8 A. L. R. 298], See, also, Blair v. Guarantee Title Co., Inc., 103 Cal. App. 260 [284 Pac. 719], Ross v. Prudential Guar. Bldg. etc. Assn., 140 Cal. App. 148 [35 Pac. (2d) 176], Mitchell Street State Bank v. Schaefer, 169 Wis. 543 [173 N. W. 330], and National City Bank v. Carter, 14 Fed. (2d) 940. In the last cited case the federal court said: “Huntley was bribed so to conduct himself as vice president as to aid in defrauding the depositor. We think the bank cannot escape liability in a suit where the jury accepts this' theory of fact. ’ ’ This language applies with equal strength to the present situation. Taylor was bribed so to conduct himself as manager of the branch bank as to aid in defrauding a depositor and a debtor. Taylor’s position as manager conferred upon him potential power which he could and did use in a coercive manner in accomplishing a wrongful act under color of the office which he occupied. The result would be the same whether he kept the money for his personal use or turned it over to the bank, provided the plaintiff was damaged by the fraudulent act of the bank’s officer. It is true that the acts of the manager were not authorized by the bank and it was innocent of wrongdoing in a moral sense, but the situation is not different from the unfortunate losses which sometimes result from the dishonest acts of agents to which the principal, as such, was not a corrupt party. The appellant objects that such a rule imposes too great a burden on banking institutions. However, the conclusions we have reached herein impose no liability for advice honestly though mistakenly given. They merely make actionable dishonest or fraudulent acts committed ostensibly under sanction of the bank.

Miller v. Citizens Nat. Trust and Sav. Bank of Los Angeles, 1 Cal. App. (2d) 470 [36 Pac. (2d) 1088], is difficult to reconcile with the cases cited and the views expressed above and in so far as it is inconsistent therewith it is disapproved.

The fraud was committed in December, 1920, and this action was begun in November, 1927. Subdivision 4 of section 338 of the Code of Civil Procedure requires action to be brought within three years of the discovery of the fraud. The appellant contends that the plaintiff has failed either by pleading or proof to show that the fraud was not discovered until within three years of the bringing of the action. The complaint expressly alleges and the court found that the plaintiff had no knowledge of the fraud and no reason to suspect that a fraud had been perpetrated upon her until September 15, 1927, when there came to her hands documents evidencing the corrupt bargain of Taylor and Finnie. The record sustains this finding. It is, however, the contention of the appellant that the fraud was open and patent, that, since the slightest inquiry would have disclosed the truth, nothing but the plaintiff’s inexcusable negligence kept her so long in ignorance of the fact that she had not received a fair price for her property, and finally, the additional fact which came to light in September, 1927, was not one of the facts constituting the fraud but merely Taylor’s motive for committing it.

The rule is clearly stated in Victor Oil Co. v. Drum, 184 Cal. 226, 241 [193 Pac. 243] : “The courts will not lightly seize upon some small circumstance to deny relief to a party plainly shown to have been defrauded against those who have defrauded him on the ground, forsooth, that he did not discover the fact that he had been cheated as soon as he might have done. It is only where the party defrauded should plainly have discovered the fraud except for his own inexcusable inattention that he will be charged with discovery in advance of actual knowledge on his part.” The appellant argues that the slightest inquiry would have disclosed the difference between the value of the ranch and the price offered by Pinnie, the fact that the holders of the trust deed were not on the point of foreclosing and that Taylor’s representations as to the bank’s similar intentions were false. It is true that the plaintiff could have discovered the inadequacy of the price by inquiry but this alone would not necessarily have been sufficient to warn her of the fraud in the light of her belief in the representation, by one in whom she had implicit trust and confidence, that it was for her best interest to make the sale, even if for only $5 an acre, because otherwise she would lose everything by foreclosures. It was not until September, 1927, that she discovered this advice to have been motivated by personal gain and so was brought to question Taylor’s good faith. At this point inquiry became a duty and plaintiff was chargeable with what she would discover if inquiry were made. (Henigan v. Yolo Fliers Club, 208 Cal. 697 [284 Pac. 906]; Victor Oil Co. v. Drum, supra.) The fraud was in essence a concealed fraud; that is it consisted in Pinnie’s procuring Taylor to represent to the plaintiff that it was his opinion as a banker and man of business that it was highly advisable for plaintiff, in the situation in which she found herself, burdened with overdue debts and with her properties encumbered as security therefor, to accept the offer made by Pinnie; that the bank of which he was the managing agent, would, unless she accepted, foreclose upon one of her properties and that the holders of the trust deed upon the other, with whom the bank had negotiated the loan, would foreclose upon it. Taylor’s knowledge to the contrary was concealed despite the confidential relationship found by the trial court to exist between the bank and Mrs. Rutherford. The finding of a confidential relationship is amply sustained by the evidence (Bank of America v. Sanchez, 3 Cal. App. (2d) 238 [38 Pac. (2d) 787]), and, in view of its existence, Mrs. Rutherford cannot be charged with lack of diligence in making independent investigation either at the time or afterward. (Barron Est. Co. v. Woodruff Co., 163 Cal. 561, 575-577 [126 Pac. 351, 42 L. R. A. (N. S.) 125]; Marston v. Simpson, 54 Cal. 189, 190.)

The appellant insists that the complaint was insufficient to sustain a finding upon the issue of the statute of limitations in that it did not “show the acts of fraud were committed under such circumstances that she would not be presumed to have any knowledge of them—as that they were done in secret or kept concealed” nor were the circumstances of the discovery fully stated, relying chiefly upon Consolidated R. & P. Co. v. Scarborough, 216 Cal. 698 [16 Pac. (2d) 268]. In that case the ruling was on demurrer and no leave to amend had been asked, hence it was not determined whether the defects could have been cured. Here the representations constituting the fraud were plainly alleged, disclosing that the fact of the bad faith of Taylor’s advice and information regarding the intention of the bank with respect to the mortgage must necessarily have been concealed from the plaintiff, and the plaintiff alleged her discovery of the fraud followed upon her receipt of the documents evidencing Finnie’s payment to Taylor. In the absence of a showing that the appellant was misled by failure to plead with greater particularity the circumstances surrounding the discovery of the fraud, the complaint must be held to be sufficient in the absence of a special demurrer addressed to that defect. (Victor Oil Co. v. Drum; Consolidated R. & P. Co. v. Scarborough, both supra.)

The appellant’s final contention is that the court failed to find upon the issue of whether the statute of limitations was a bar to the action. The court found to be true the allegation “that prior to the date last mentioned (September 15, 1927) the plaintiff had no knowledge of the herein alleged fraud and deceit, nor of any cause or notice to suspicion that fraud or deceit of any kind or character had been practiced upon her”. This finding that plaintiff had no actual knowledge of the fraud nor of any fact which would lead her to suspect that a fraud had been practiced upon her, coupled with the finding of a confidential relationship, can lead to only one conclusion, that the action was not barred. It is therefore sufficient. (Ready v. McDonald, 128 Cal. 663 [61 Pac. 272, 79 Am. St. Rep. 76]; Spadoni v. Maggenti, 121 Cal. App. 147, 156 [8 Pac. (2d) 874].)

Judgment affirmed.

Rehearing denied.


source: Caselaw Access Project

author: CURTIS, J.

license: Public Domain

text:
    [L. A. No. 16232.
    In Bank.
    June 30, 1938.]
    VICTOR MOREL, Petitioner, v. RAILROAD COMMISSION OF THE STATE OF CALIFORNIA, Respondent.

      Dario H. Nelson for Petitioner.
    P. N. McCloskey, Ray L. Chesebro, City Attorney (Los Angeles), Frederick von Schrader and Newton J. Kendall, Assistant City Attorneys, and John L. Bland, Deputy City Attorney, as Amici Curiae, on Behalf of Petitioner.
    Ira H. Rowell, Frank B. Austin and Herbert Cameron for Respondent.
   CURTIS, J.

By this proceeding the petitioner seeks to annul an order of the respondent, the Railroad Commission of the State of California, requiring the petitioner, Victor Morel, to cease and desist from conducting any and all operations for the transportation of property for compensation or hire, as a business, over the public highways in the city of Los Angeles by means of any motor vehicle, unless and until he shall first have secured from the Railroad Commission a proper permit authorizing him to operate the same.

The order which petitioner seeks to have annulled was made, and the proceedings leading up to the making of said order were held, in pursuance of the authority which it is claimed was conferred upon the respondent Railroad Commission by the City Carriers’ Act (Stats. 1935, chap. 312), as amended in 1937. (Stats. 1937, chap. 286.)

In defining the terms used in the act, section 1 (f) provides: “The term, ‘carrier’ when used in this act means every corporation or person . . . engaged in the transportation of property for compensation or hire as a business over any public highway in any city or city and county of this state by means of a motor vehicle or motor vehicles. ’ ’

Section 2 reads as follows: “No carrier shall engage in the business of the transportation of property for compensation by motor vehicle over any public highway in any city of this state, except in accordance with the provisions of this act, which the Legislature hereby declares to be enacted under the power of the State to regulate the use of public highways.”

Section 3 of the act provides for the issuance by the Railroad Commission of a permit authorizing such operations. Section 4 provides for adequate protection against liability imposed by law upon such carrier for the payment of damages for personal bodily injuries, including death resulting therefrom. Section 5 makes further provision as to the manner in which this protection may be secured. Section 7 makes it obligatory for each carrier to display upon the vehicle in use a distinctive license plate approved by the Railroad Commission. Section 8 provides for the payment of a fee of $3 upon the filing of an application for a permit and an annual registration fee of $1. By section 9, the Railroad Commission is authorized to establish or approve “just, reasonable and nondiscriminatory maximum or minimum or maximum and minimum rates to be charged by any carrier subject to this act”. The remaining provisions of the act relate to matters not involved in the proceeding before us. It will be noted that the provisions of this act apply equally to all carriers whether common carriers or private carriers transporting property for compensation upon the streets of a city.

Petitioner first contends that it is beyond the power of the legislature to confer jurisdiction upon the Railroad Commission to regulate, or in anywise to control, the business of a private carrier.

The Railroad Commission was created and derives in part its power in pursuance of the provisions of section 22 and section 23 of article XII of the Constitution. The powers therein enumerated are further augmented by the authority granted to the legislature by section 23 to confer such additional power of the same kind or different from those conferred upon the Railroad Commission in the Constitution, and the authority of the legislature to confer such additional powers is expressly declared “to be plenary and unlimited by any provision of this Constitution”. These sections of the Constitution have been the subject of numerous decisions by this and the appellate courts of this state, in which the courts have attempted to define not only the powers which are directly conferred upon the commission by these sections of the Constitution, but the additional powers which by virtue of the authority given it by the Constitution, the legislature may empower the commission to exercise. One of the limitations placed upon the grant of authority to confer additional powers upon the commission, it has been held, is that such additional powers must be cognate and germane to the regulation of public utilities, and when the power thus conferred relates to the regulation of transportation companies, it must be cognate and germane to the regulation of railroads or other transportation companies that are in fact common carriers. (Pacific Telephone etc. Co. v. Eshleman, 166 Cal. 640 [137 Pac. 1119, 50 L. R. A. (N. S.) 652, Ann. Cas. 1915C, 822]; City of Pasadena v. Railroad Com., 183 Cal. 526 [192 Pac. 25, 10 A. L. R. 1425]; San Bernardino v. Railroad Com., 190 Cal. 562 [213 Pac. 980]; Frost v. Railroad Com., 197 Cal. 230, 241 [240 Pac. 26].) The question then arises whether the regulation of private carriers is cognate and germane to the regulation of common carriers. This. question received a direct answer by this court in its opinion in Frost v. Railroad Com., supra. In that case, we held, referring to the question just stated: “The question thus presented is whether the regulation of the business of a private carrier engaged in the business of transporting property for hire upon the public highways between fixed termini or over a regular route is cognate and germane to the regulation of the business of a common carrier who. is engaged in like transportation. We think this question must be answered in the affirmative. It is at once apparent that the private carrier is, or at least may be, in direct competition with the public carrier who is operating over the same route and whose business it is the duty of the commission to supervise and regulate. The primary purpose of such regulation is to secure the adequacy, regularity, and reliability of service, and the reasonableness of rates and charges therefor (Franchise Motor Freight Assn. v. Seavey, 196 Cal. 77 [235 Pac. 1000]). To accomplish this end, there must of necessity be some restriction upon competition. As was said by the Supreme Court of Washington: ‘The purpose of the transportation act ... is to permit the establishment of regular and dependable service whenever public necessity and convenience requires. No adequate service can. be given without proper equipment . . . An income must be earned, which will cover operating costs and depreciation, and give some return on the investment or the service cannot be long continued. In the case of Public Utilities Com. v. Garviloch, 54 Utah, 406 [181 Pac. 272], the supreme court of Utah said: ‘ ‘ The granting of a certificate of convenience and necessity by the commission to Chandler, therefore, was in the nature of a limited franchise, which authorized him to operate his automobile stage line over the route designated in the certificate for the time and under the conditions therein specified. The certificate, therefore, not only confers the authority to operate a stage line, but it necessarily also affords him protection against anyone who unlawfully interferes with the right thereby conferred. If such is not the legal effect of the certificate then the operation of utilities may easily become detrimental rather than beneficial to the public and thus result in a farce.” ’ (Davis v. Nickell, 126 Wash. 421 [218 Pac. 198].) ”

As far as our research has gone, this pronouncement is the last direct expression of this court upon the question of the power of the Railroad Commission to regulate the business of private carriers when their business is carried on in competition with that of common carriers. It may be questioned whether our decision in the Frost case in its discussion of the cognate and germane theory was not limited to private carriers operating between fixed termini or over a regular route, whose business brings them in competition with common carriers. It so happens that the private carrier, whose rights were involved in the Frost ease, was such a private carrier, and therefore the decision in that ease must be limited accordingly. But the principle announced in that ease was that legislation, the purpose of which was to regulate private carriers whose business was in competition with that of common carriers, was cognate and germane to that pertaining to the regulation of common carriers. While the court was dealing only with private carriers carrying on their business in a particular manner, it does not appear that the manner or mode in which their business was carried on was the determining factor of the decision so long as such business was in competition with that of common carriers. We can see but slight, if any, difference from a practical standpoint between competition brought about by private carriers operating between fixed termini or over a regular route and those who place no such limitations upon their operations, except that the competition of the latter class would probably be more ruinous than that of the former. If necessary, therefore, for us to extend the language in the Frost case so as to include all classes of private carriers whose business is in competition with common carriers, and hold that the regulation of all private carriers using the streets of a city for the transportation of property for hire in competition with common carriers is cognate and germane to regulations of common carriers engaged in like transportation, we have no hesitancy in so holding. We think the principle announced in the Frost ease as stated above is applicable to the business of all private carriers in competition with public carriers.

While our decision in the Frost case was reversed by the Supreme Court of the United States (Frost Trucking Co. v. Railroad Com., 271 U. S. 583 [46 Sup. Ct. 605, 70 L. Ed. 1101, 47 A. L. R. 457]), the reversal was not placed upon the ground that the regulation of private carriers was not cognate and germane to the regulation of common carriers, but upon the ground that the Act (the Auto Stage and Truck Transportation Act, as amended in 1919) as construed by the Supreme Court of this state, compelled private carriers not merely to submit themselves to regulation by the commission appropriate to private carriers, but forced them, in order to enjoy the use of the highways, to submit to the condition of becoming common carriers and to be regulated by the Railroad Commission as such common carriers. Accordingly the act was held to violate the due process clause of the fourteenth amendment to the Constitution of the United States. That portion of our opinion and decision in which we held that the regulation of the business of a private carrier engaged in business of transporting property for hire upon the public highways was cognate and germane to the regulation of the business of a common carrier who is engaged in like transportation was in no way disturbed or affected by the decision rendered by the Supreme Court of the United States upon the appeal to the last named court. In the face of the ruling in that case, we are unable to agree with the contention of petitioner that it is beyond the power of the legislature to confer jurisdiction upon the Railroad Commission to regulate in the manner set forth in the City Carriers’ Act the business of private carriers using the streets of the city for the transportation of property for hire when such business is in competition with that of common carriers engaged in like transportation.

Petitioner relies upon certain language used by this court in the cases of People v. Duntley, 217 Cal. 150, 162 [17 Pac. (2d) 715], and Lang v. Railroad Com., 2 Cal. (2d) 550, 556 [42 Pac. (2d) 639]. The language in People v. Duntley, supra, upon which petitioner relies is found on page 162 of the opinion and reads as follows: “If one (certificate of public convenience and necessity) be denied, the common carrier as such must go out of business entirely. If it be granted, the rates and charges and services are subject to regulation by the Railroad Commission. If it had been the intention of the people of the state to subject all carriers, whether public or private, to regulation by the Railroad Commission, the Constitution could have so provided, as was done by general statute in the state of Kansas. Not having done so, the refusal of a carrier in good faith to dedicate his property to public use and his insistence upon his right to operate as a contract carrier under the exactions imposed by law upon him in that capacity, would seem to be entitled to respect.” The emphasized portion of the above quotation is particularly relied upon by petitioner. The only question involved in the case of People v. Duntley, supra, was one of taxation, the right to subject the defendant's property to a tax in pursuance of article XIII, section 15, of the Constitution, and section 3664a of the Political Code, then in force. It was held that only property of a common carrier was subject to such a tax and that as the defendant was a private or contract carrier he was not liable for the payment of any tax under said sections of the Constitution and the Political Code. The Railroad Commission has no jurisdiction nor any duty to perform over matters ef taxation, and it is difficult to perceive how the language quoted above from the opinion of People v. Duntley, supra, can have any authoritative force in the decision of any issue involved in the present proceeding. We, therefore, do not regard said statement, taken from said decision, as a pronouncement of the law upon the power of the legislature to confer authority upon the Railroad Commission to regulate private carriers when their business is in direct competition with that of common carriers. This conclusion finds support in the following statement found on page 159 of the opinion in that case: “Unregulated truck transportation over the highways has developed a difficult and perplexing problem. The state of California has approached the problem of such regulation in a much more restricted fashion. Common carriers are required under the Auto Stage and Truck Transportation Act to obtain from the Railroad Commission a certificate of public convenience and necessity. Contract carriers are claimed to be without adequate regulation both as to rates of service, use of the highways, and interference with regulated common carriers. This is undoubtedly true, but- the problem suggested is a legislative and not a judicial one. We are here dealing not with a regulatory measure in its proper sense, but with a tax question arising under our constitution and statutes.”

In the ease of Lang v. Railroad Com., supra, it is stated that: “They (private carriers) have never dedicated their property to public use. The Railroad Commission has no jurisdiction over them, either in the matter of fixing the rate that they will charge or for any other purpose.” That this statement was made in view of the law as it then existed when there was no statute in force which purported to give the commission any regulatory authority over private carriers is, we think, made apparent -by the following language found on page 565 of the opinion: “Until truck carriers are brought within the jurisdiction of the commission and the latter is given power to fix rates to be charged by them, we see no way that the commission can stabilize this business between them and the rail carriers.” We find nothing, therefore, in either of these two cited cases at variance with our conclusion that it is within the power of the legislature to confer authority upon the Railroad Commission under proper limitations and within legal bounds, to regulate the business of private carriers when they are in competition with common carriers. On the other hand, it must be apparent that such regulation is necessary in order to stabilize the transportation business to the end that both private and common carriers may be protected from unrestrained and ruinous competition.

No question is raised as to the fact that private carriers may be in competition with common carriers in business carried on wholly within the limits of a single municipality. It is not necessary, therefore for us to dwell to any extent upon this phase of the ease. The competition may not be as acute or as destructive as when the business is carried on outside of a city, but it is of sufficient extent and bears such a relation to the whole question of transportation as to disrupt, unless restrained, the entire plan of regulating transportation between the several types of carriers now using the public highways.

It is further contended that the City Carriers’ Act is unconstitutional and therefore void for the reason that it imposes upon a private carrier the status of a common carrier. It is well settled that a private carrier may not be converted into a common carrier by mere legislative fiat. This principle of law was approved in the Frost case, 197 Cal. 230, 236 [240 Pae. 26], and numerous other cases which might be cited to the same effect. But the City Carriers’ Act makes no such change in the character or status of private carriers. Under the act they are still private carriers; they may choose their own patrons, and refuse or accept business as suits their convenience, but are subject to regulation in a limited extent by the Railroad Commission. In order to use the streets of the city for the purpose of carrying on their business under said act, they must, in the first instance, secure a permit from the commission authorizing them to carry on such business. Before granting a permit, the commission must require of the carrier adequate protection by indemnity insurance, or otherwise, against liability for injuries to person or property. A small fee of $3 is charged for the permit and the commission is empowered to establish or approve reasonable, nondiscriminatory, maximum and minimum rates to be charged by such carriers. A statute embodying such requirements of a private carrier does not convert the carrier into a common carrier. (Stephenson v. Binford, 287 U. S. 251, 265 [53 Sup. Ct. 181, 77 L. Ed. 288, 87 A. L. R. 721].)

The cited case involved a statute of the state of Texas imposing regulations upon private carriers almost identical with those contained in the City Carriers’ Act. The same claim was made in that case as is made in the present proceeding that the statute imposed upon a private carrier the status of a common carrier. This contention was disposed of by the following statement found on pages 267 and 268 of the opinion: “The question decided in Frost Trucking Co. v. Railroad Commission, 271 U. S. 583 [46 Sup. Ct. 605, 70 L. Ed. 1101, 47 A. L. R. 457], differs entirely from that here presented. There (p. 592) the California Supreme Court had construed a provision of the state statute which required the private contract carrier to obtain not a permit, as here, but a certificate of public convenience and necessity, before doing business over the state highways, as a condition obliging him to dedicate his property to the business of public transportation and to subject himself to all the duties and burdens imposed by the act upon common carriers. This court, in accordance with the settled rule, accepted that construction as binding and, in that view, said (p. 592) : ‘ . the case presented is not that of a private carrier who, in order to have the privilege of using the highways, is required merely to secure a certificate of public convenience and become subject to regulations appropriate to that kind of a carrier; but it is that of a private carrier who, in order to enjoy the use of the highways, must submit to the condition of becoming a common carrier and of being regulated as such by the Railroad Commission. The certificate of public convenience, required by section 5 is exacted of a common carrier and is purely incidental to that status. The requirement does not apply to a private carrier qua private carrier, but to him only in his imposed statutory character of common carrier. Apart from that signification, so far as he is concerned, it does not exist.

“On the contrary, the Texas statute in respect of permits deals exclusively with the private contract carrier, and requires the issue of the permit not to him in the imposed character of a common carrier, but in his actual character as a private contract carrier. If the California statute requiring a certificate had been thus interpreted by the highest court of the state, the foregoing quotation clearly suggests that our decision might have been otherwise.”

This language is applicable to the City Carriers’ Act, the terms of which, as we have seen, are substantially like those of the Texas statute under review by the Supreme Court of the United States. The contention of petitioner therefore, that the act imposes upon private carriers the status of common carriers cannot be sustained.

The court in Stephenson v. Binford, supra, reviews the provisions of the Texas statute, in which are the requirements respecting a permit to be issued to private carriers before they are permitted to use the public highways, the authority conferred upon the Railroad Commission to fix maximum and minimum rates, and the procuring of indemnity insurance, and holds that they are all reasonable regulations to be imposed upon a person using the highways for the transportation of property for compensation. Upon this question the court held as follows: (page 272) “The assailed provisions, in this view, are not ends in and of themselves, but means to the legitimate end of conserving the highways. The extent to which, as means, they conduce to that end, the degree of their efficiency, the closeness of their relation to the end sought to be attained, are matters addressed to the judgment of the legislature, and not to that of the courts. It is enough if it can be seen that in any degree, or under any reasonably conceivable circumstances, there is an actual relation between the means and the end.”

By reference to the preamble of the City Carriers’ Act, it will be noted that one of the purposes of the act is to “preserve for the public the full benefit and use of the public highways”. We quote from the preamble as follows: “The use of the public highways for the transportation of property for compensation is a business affected with a public interest and it is hereby declared that the purpose of this act is to preserve for the public the full benefit and use of public highways consistent with the needs of commerce without unnecessary congestion or wear and tear upon such highways.” It is apparent therefore that one of the express purposes of the City Carriers’ Act is the preservation of the highways and to that end it is declared necessary to regulate the use of the highways by those transporting property thereon for commercial purposes. The ease of Stephenson v. Binford, supra, is direct authority not only that the state has the power and authority to regulate the use of public highways for business purposes but that the regulation, like that imposed upon private carriers by the City Carriers’ Act, is lawful and reasonable. The same conclusion was reached by the Supreme Court of Washington as appears from the following statement from the case of Hadfield v. Lundin, 98 Wash. 657, 663 [168 Pac. 516, Ann. Cas. 1918C, 942, L. R. A. 1918B, 909]: “If any proposition may be said to be established by authority, the right of the state, in the exercise of its police power, to prohibit the use of the streets as a place of private business or as the chief instrumentality in conducting such business, must be held so established. Nor can it be questioned that the power to prohibit includes the power to regulate, even to the extent that regulation under given conditions may be tantamount to a prohibition. Where the power to prohibit exists, the reasonableness of any regulation is palpably a legislative question, pure and simple.”

The foregoing authorities not only establish the power of the legislature to regulate the use of highways for commercial purposes and that the regulation imposed by the City Carriers’ Act is reasonable and within the power of the legislature to enact, but we think they meet all other objections to the validity of said act made by petitioner and by the various amici curiae, except that raised by the petitioner and the city of Los Angeles, as an amicus curiae, in which it is contended that the matter of regulating the use of the streets of a city for commercial purposes is a municipal matter and is not subject to the control of the legislature.

Upon this question after reviewing the cases of Ex parte Daniels, 183 Cal. 636 [192 Pac. 442, 21 A. L. R. 1172], and In re Murphy, 190 Cal. 286 [212 Pac. 30], this court held: "The effect of these decisions is to declare that whenever the state of California sees fit to adopt a general scheme for the regulation and control of motor vehicles upon the public highways of the state, the entire control over whatever phases of the subject are covered by state legislation ceases in so far as municipal or local legislation is concerned. ’ ’ (Atlas Mixed Mortar Co. v. City of Burbank, 202 Cal. 660 [262 Pac. 334].)

It is true that these cases involve regulation of the use of city streets and the instant case relates to the regulation of a business transacted upon such streets, and it is contended for this reason that these cases are not authority in support of the right of the state to regulate business carried on on the streets of a city. But the transacting of business upon a street necessarily requires the use of the street for that purpose, and the use of the street for the purpose of transacting business thereon is as a rule a much more onerous and burdensome use than the mere traveling over said streets by an ordinary private conveyance. If the latter use is a matter of public concern, we think the former which imposes far greater burdens upon the streets is also a matter of public concern and therefore subject to regulation imposed by the state.

For the reasons herein stated, we are of the opinion that the order of the respondent Railroad Commission should be affirmed, and it is so ordered.

Shenk, J., Langdon, J., Waste, C. J., and Seawell, J., concurred.