Piedmont Aviation, Inc. v. Raleigh-Durham Airport Authority

215 S.E.2d 552 (1975)

PIEDMONT AVIATION, INC., et al.
v.
RALEIGH-DURHAM AIRPORT AUTHORITY, Respondent.

No. 21.

Supreme Court of North Carolina.

June 26, 1975.

Purrington, Hatch & Purrington by A. L. Purrington, Jr., and Edwin B. Hatch, Raleigh, for respondent-appellant.

Womble, Carlyle, Sandridge & Rice by E. Lawrence Davis and Jimmy H. Barnhill, Winston-Salem, Poyner, Geraghty, Hartsfield & Townsend by John J. Geraghty, Raleigh, for petitioners-appellees.

LAKE, Justice.

The Authority was created by Chapter 168 of the Public-Local Laws of 1939. By that Act, as amended by Ch. 755 of the Session Laws of 1959, the Authority is authorized to own and operate the Raleigh-Durham Airport, to contract for the operation of "airline scheduled" flights, nonscheduled flights and other airplane activities and to charge and collect "reasonable and adequate" fees and rents for the use of its property and for services rendered in the operation thereof.

G.S. § 63-1(a)(14) provides that such an authority is a "municipality" within the meaning of Ch. 63 of the General Statutes. G.S. § 63-53(5) authorizes a "municipality" to "determine the charges or rental for the use of any property [of the Authority] * * * and the charges for any services or accommodations [supplied by it]." G.S. § 63-53(5) further provides that such charges "shall be reasonable and uniform for the same class of service and established with due regard to the property and improvements used and the expense of operation to the municipality."

A municipality operating an airport acts in a proprietary capacity. Airport Authority v. Stewart, 278 N.C. 227, 179 S.E.2d 424; Rhodes v. Asheville, 230 N.C. 134, 52 S.E.2d 371, rehear. den., 230 N.C. 759, 53 S.E.2d 313. Upon the rehearing of Rhodes v. Asheville, supra, this Court said that the legislative declaration that such operation should be deemed a "governmental function [see G.S. 63-50] did not make it so, for that is a judicial and not a legislative question."

Thus, in determining the fee it will charge for the privilege of landing an aircraft upon its runway and the rent it will charge for the use of its properties, the Authority is acting as the proprietor of the property, not as a regulatory agency. The statement in Candler v. Asheville, 247 N.C. 398, 101 S.E.2d 470, to the effect that a municipality in establishing rates it will charge for water is exercising a governmental function was not necessary to the decision in that case, is not supported by the authorities cited therefor and may no longer be deemed authoritative. That statement overlooks the distinction to be drawn between municipal action fixing rates to be charged by a public utility to its customers and municipal action fixing rates which the municipality, itself, will charge for its service. The former function is a governmental function. See: Shirk v. City of Lancaster, 313 Pa. 158, 169 A. 557, 90 A.L.R. 688; City of Seymour v. Texas Electric Service Co., 5 Cir., 66 F.2d 814, cert. den., 290 U.S. 685, 54 S. Ct. 121, 78 L. Ed. 590. The latter is a proprietary function.

Thus, the managing board of the Authority, in determining landing fees and rentals which it will charge the users of its facilities, acts as does the board of directors of a private corporation owning and operating a like facility, subject only to limitations imposed upon it by statute or by contractual obligations assumed by it. Our attention has been directed to no statutory limitation imposed upon the Authority in the matter of fixing landing fees and rentals except the provision in Ch. 755 of the Session Laws of 1959 authorizing the Authority to charge "reasonable and adequate" fees and rents, and the provision of G.S. § 63-53(5) stating that the charges for the use of its properties "shall be reasonable and uniform for the same class of service and established with due regard to the property and improvements used and the expense of operation to the municipality." No provision in these statutes requires that the Authority conduct a hearing, receive evidence and make findings of fact or that it follow any other procedural course in determining the landing fees or rentals to be charged by it. Nothing in these statutes requires the Authority to give notice to present or prospective users of its properties that the Authority is contemplating a change in such fees and rental charges. The petitioners were notified of the increases more than three months before they were to become effective.

G.S. Ch. 143, Art. 33, provides a procedure by which a person aggrieved by a final "administrative decision" may obtain a judicial review of such decision. This article was repealed and a substitute therefor provided by Ch. 1331 of the Session Laws of 1973, but the repeal is not effective until 1 July 1975, and the repealing act provides that it shall not affect any pending administrative hearing. Thus, if, by its terms, G.S. Ch. 143, Art. 33, applies to the present matter, the petitioners' right to proceed thereunder is not affected by the repeal.

The judicial review for which G.S. Ch. 143, Art. 33, provides is limited to the review of an "administrative decision" as that term is therein defined. G.S. § 143-306(2) defines "administrative decision," for the purposes of this article, to mean "any decision, order, or determination rendered by an administrative agency in a proceeding in which the legal rights, duties, or privileges of specific parties are required by law or constitutional right to be determined after an opportunity for agency hearing."

As Justice Rodman, speaking for this Court in Duke v. Shaw, Commissioner of Revenue, 247 N.C. 236, 100 S.E.2d 506, said, "Manifestly this statute [G.S. Ch. 143, Art. 33] contemplated a quasi-judicial hearing." See also, Hanft, 49 N.C.L.Rev. 635, where it is said: "The application of the Act * * is plainly to adjudications and not to the process of making general regulations. * * * It has been noted that the * * Act relates to administrative adjudication, not administrative legislation."

The decisions relied upon by the petitioners are distinguishable from the present matter. In Morgan v. United States, 298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288, the administrative decision in question was an order of the Secretary of Agriculture under the Packers and Stockyards Act fixing commission rates to be charged by market agencies for the buying and selling of cattle in the Kansas City stockyard. The Act specifically required the Secretary to make certain findings as a condition precedent to the entry of an order fixing such commission rates. Thus, the administrative action in question was not the fixing of a charge to be made by an administrative board for the use of its own property or services but was the fixing of the fee which another legal entity might charge his or its customers. Clearly, this was the exercise of a governmental power determining the legal rights of specific parties and the Act empowering the Secretary to do so required him to make findings which, in turn, necessitated the holding of a quasi-judicial hearing. See also, Morgan v. United States, 304 U.S. 1, 58 S. Ct. 773, 82 L. Ed. 1129 (second appeal in the same matter).

In Jarrell v. Board of Adjustment, 258 N.C. 476, 128 S.E.2d 879, this Court said the Act here in question sets the standard to be met in determining the adequacy of the judicial review of an action of a municipal zoning board of adjustment denying the right of the petitioner to continue a nonconforming use claimed by him as a legal right. Such action is clearly an exercise of the city's governmental power and a determination of the right of a property owner to make a certain use of his property. Likewise, in Refining Co. v. Board of Aldermen, 284 N.C. 458, 202 S.E.2d 129, the administrative action held reviewable, under this Act, was the denial to a landowner of a special use permit which the landowner claimed as a matter of legal right. In re Carter, 262 N.C. 360, 137 S.E.2d 350, involved judicial review of an administrative decision expelling a student from the University of North Carolina. All of these cases involved a hearing by an administrative agency to find facts upon which the agency determined the legal right of another person. An administrative determination of the charge to be made by the administrative agency itself for the use of the agency's own property is of an entirely different nature.

We, therefore, hold that the fixing by the Authority of the fees it will charge for the use of its property is not an "administrative decision" within the meaning of G.S. Ch. 143, Art. 33, and the procedure provided by that article for the obtaining of judicial review of "administrative decisions" is not applicable thereto. Consequently, it was error for the Superior Court to deny the motion of the Authority to dismiss this proceeding.

We do not have before us upon this appeal the merits of the contention of the petitioners that the proposed landing fees and rental charges are unreasonable or discriminatory and, therefore, in excess of the limitation imposed by G.S. § 63-53(5) upon the right of the Authority to fix charges for such use of its properties. Our decision herein does not deprive the petitioners of a judicial determination of these contentions by appropriate procedures. See G.S. § 143-307. According to their brief, there are now pending in the Federal and State trial courts actions instituted against them by the Authority for the recovery of the charges here in question. Nothing in our present decision relates to the right of the petitioners to assert, in those proceedings, the illegality of the fees and charges sought to be collected therein.

Reversed.