The defendant was the owner of a business running omnibuses. On 6 February 1950 he was granted a licence by the competent authority permitting him to operate two omnibuses to be employed for hire or on excursions. The licence stated expressly that the employment of the buses on regular service between specified places was prohibited.
The plaintiffs, the German Federal Railways, alleged that the defendant had regularly conveyed persons between G and L with his buses. They argued that, since most of these persons would otherwise have used the Federal Railways, they had suffered damage as a result of this unlicensed regular traffic. The plaintiffs asked for an account of the number of journeys and passengers and claimed a sum representing part of their damage. The defendant denied that he carried on regular services and contended that the Act on the Carriage of Persons is not a law serving to protect the German Federal Railways. Moreover it violated the Constitution by restricting the commercial activities of transport undertakings.
The District Court rejected the claim, the Court of Appeal of Hamm allowed it. A second appeal was unsuccessful for the following
1. The Court of Appeal was correct in regarding as a protective law in the meaning of § 823 II BGB in favour of the plaintiffs the provisions of the Act concerning the Transport of Persons on Land which require a licence by the administrative authorities for the operation of regular traffic with land-based vehicles and provide penalties for such operations without a licence. The crucial question is whether the legislature, in providing regulations for public traffic, also wished to protect the special interest of the Federal Railways [reference]. This question must be answered in the affirmative without hesitation. The special position of the German Federal Railways within the legal framework of public passenger transport is shown by the fact that § 14 of the Act on Passenger Transport exempts them from licensing and that § 27 II only requires them to give notice of the intended establishment of a regular route. According to § 5 of the Decree for the Execution of the Act on Passenger Transport, the Federal Railways must be consulted if a dispute arises as to whether a traffic undertaking is subject to the provisions of the Act on Passenger Transport or to which type of traffic the traffic undertaking belongs. § 9 I 2 of the Decree requires the competent regional directorate of the Federal Railways to be heard if an application is submitted for a licence to operate a regular cross-country route. According to § 11 II of the Decree a licence for a regular service is not to be granted if a new enterprise constitutes inequitable competition for an existing traffic undertaking. Together these provisions show clearly that in the proceedings of consultation the Federal Railways are granted a right to intervene as the guardian of the public interests concerning traffic but that they may also plead any adverse effects upon their own interests. This is the reason why the Federal Railways are accorded the right to start proceedings in the administrative courts if their objections have been overruled [references]. The fact that according to §§ 17 and 24 of the Act on Passenger Transport the administrative authorities also control the price and the conditions of travel is a safeguard against a ruinous competition by undercutting at the expense of the Federal Railways. The importance of the Act on Passenger Transport consists precisely in the fact that it restricts competition between the various transport undertakings because the legislature allots to each branch of transport those tasks which it can fulfil best within the framework of traffic as a whole and of the economy. In so doing, the legislature has attached special significance to the interest of the Federal Railways on the assumption that the maintenance of their efficiency must be assured in the public interest.
2. The appellant is wrong in asserting that the provisions of the Act on Passenger Transport which pursue this goal contravene Art. 12 of the Constitution (GG). Article 12 I of the Constitution guarantees the right to choose an occupation freely but reserves the exercise of an occupation or trade for regulation or statute. It is generally recognized that the legislature is not prohibited in principle from regulating, in particular, the conditions for carrying on a profession or exercising a trade and from requiring a licence by the administrative authorities for commercial activities. It is equally recognized that in establishing the conditions for exercising a profession the legislature is not completely unfettered and that the essence of the fundamental right to carry on a trade must not be touched [reference]. Opinions are divided as to how the limits set for the legislature are to be drawn in detail and as to when, in particular, the essence of the right to carry on an occupation is being fettered. In this controversy the view of the Federal Administrative Court which grants the legislature a considerable measure of discretion is to be contrasted with the very restrictive view of the First Civil Division of the Federal Supreme Court expressed in its references to the Federal Constitutional Court, but these do not bind this Division [references].
The first opinion stresses that all fundamental rights contain their own intrinsic limits and is less concerned with the compelling reasons for these restrictions than with the problem of what remains of the fundamental right, once these restrictions have been recognized.
The restrictive opinion allows fundamental rights to be limited for reasons of urgent necessity only and requires the encroachment to be as small as possible in the light of the circumstances, guided by the desire to leave the fundamental right an extensive scope. Nevertheless, the First Division [references] acknowledges that the legislature may also enact laws in the interest of individual groups if this should be necessary in the public interest and does not arbitrarily detract from the interest deserving protection of other parties. In its decision the First Division also recognizes that the legislature enjoys a measure of discretion in the sphere of Art. 12 I of the Constitution and points out that the judicial control of the legislature is limited correspondingly.
It is unnecessary here to discuss in detail the many attempts to determine and to circumscribe the extent of the prohibition expressed by Art. 19 II of the Constitution. Even if a statutory restriction of occupational activities is only regarded as constitutional within narrow limits, it cannot be said that the Law on Passenger Transport has infringed illegally the essence of the fundamental right enshrined in Art. 12 I of the Constitution by having made the commercial operation of a regular traffic route of land-based vehicles subject to a licence for the reason, inter alia, in order to save the Federal Railways from inequitable competition by motorized traffic undertakings. In this connection it is important that despite an increase in motorized traffic the Federal Railways deal with the major portion of public transport. The pre-eminent interest of the community in the efficiency of the Federal Railways is expressed in the organization of the Federal Railways by the Act of 13 December 1951 concerning the Federal Railways. The act treats the discharge of the functions of the Federal Railways as a public service and requires that in the administration of the Federal Railways the interests of the German economy are safeguarded [references]. For this reason, the operation of the Federal Railways is subject to a number of restrictions which could not be justified from a purely commercial point of view. They cannot in their discretion discontinue routes which are unprofitable and, in particular, they are not free to determine the fares. (Fares must be established, must be equal, serve social needs, and must offer free passes.) Moreover the Federal Railways are burdened with extensive maintenance obligations towards their present and past employees which private traffic operators do not have to carry. The Federal Railways would no longer be able to fulfil their function in the service of the community if private commercial motor transport operators were allowed to exploit the economically profitable routes, which alone are of interest to them, with the result that the Federal Railways would be relegated increasingly to carrying out less profitable transport services. For this reason alone, the legislature must be interested in the maintenance of the efficient operation of traffic by rail, since the service of mass traffic by the railways is indispensable in present conditions and since any interruption in the ability of the railways to function would lead to a crisis. In this connection it is relevant that any shift of public passenger traffic from the railways to motor vehicle traffic is restricted if for no other reason than because the capacity of the German road system is strictly limited. The special character of public transport makes it appear unlikely that the regulating effect alone of offer and demand can achieve a satisfactory solution to the far-reaching problems of public transport which satisfies the needs of the community. This explains why § 99 of the Act against Restrictions of Competition of 27 July 1957 [reference] does not apply to the Federal Railways and other public traffic institutions.
The Federal Administrative Court has pointed out rightly that the safeguarding of orderly operations of public traffic is one of the protected legal interests essential for the existence of the community [reference]. It is a primary task of the legislature which is concerned with maintaining and extending an efficient transport system to regulate and to plan public transport by a process of adjustment and balancing [references]. This Division cannot discern in the discharge of this task by the legislature, which must necessarily include the regulation of the competition between rail and road traffic, an act of unconstitutional interference in the freedom of commerce, all the more since public transport had already been regulated by statute at the time when the Constitution was being enacted. Moreover, it does not appear that in enacting the Constitution the intention was to question the validity of this regulation on the ground that freedom of occupation was being restricted or to restrict the legislature and the administration to measures for controlling safety and the proper conduct of trade [references]. If the public interest in an efficient system of passenger transport must be the principal object of the legislation measure for regulating traffic, the legislature was justified for this reason in regarding the protection of the Federal Railways as especially important where route transport is concerned and in fashioning its traffic regulations accordingly [reference].
The enactment of the Act on Passenger Transport does not constitute a closure of the occupation for private transport enterprises but the control of their commercial activity dictated by the overriding interests of the community. This control does not interfere with the essence of the fundamental right enshrined in Art. 12 I; on the contrary, in the opinion of this Division the statutory provisions fall within the framework of the task set for the legislature by Art. 12 II inasmuch as, by requiring the consent of the administration, the legislature wishes to ensure that the Federal Railways are protected against inappropriate competition and that every traffic institution is allotted that task which it can best perform in the interest of the common good.
. . . even if the refusal of a transport licence on the sole ground of insufficient need is regarded as illegal, the need for a licence remains justified in the opinion of this Division inasmuch as, apart from other reasons, the just interest of the Federal Railways in averting inequitable competition must be taken into consideration. Consequently there are no objections from the point of view of Art. 12 of the Constitution against regarding the penal provision of § 40 I of the Act on Passenger Transport as a valid protective law in the meaning of § 823 II BGB in favour of the Federal Railways by penalizing unlicensed route transport (as the dominant practice holds [references]). The view taken by this Division is in keeping with its decision of 27 March 1956 [reference] where the comparable provision of the Act concerning Milk and Fats regulating that market were found to protect by an action in tort dairies, the economic activities of which had been interfered with in the absence of a licence [reference]. Finally, the First Civil Division in its judgment [reference] allowed a claim under § 823 II BGB by chemists against drug stores which had contravened the Act on Medicaments.
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