State Ex Rel. Utilities Commission v. Champion Papers, Inc.

130 S.E.2d 890 (1963) 259 N.C. 449

STATE of North Carolina ex rel. The UTILITIES COMMISSION
v.
CHAMPION PAPERS, INC.

No. 460.

Supreme Court of North Carolina.

May 22, 1963.

Heman R. Clark overruled all exceptions entered by the appellant and affirmed the Commission's order. Champion Papers, Inc., appealed.

Lake, Boyce & Lake, by I. Beverly Lake, Raleigh, for defendant-appellant.

Joyner & Howison, Maupin, Taylor & Ellis, Simms & Simms, Raleigh, for petitioners-appellees.

HIGGINS, Justice.

By 30 exceptive assignments, the appellant challenges as erroneous the order of the Superior Court affirming the Utilities Commission's findings of fact, its conclusions of law, and its order giving the petitioning railroads authority to increase their tariffs on North Carolina intrastate shipments of freight. The appeal presents these questions of law: (1) Did the Commission exceed its authority by reopening the proceedings after Champion Papers, Inc., had filed its notice of appeal? (2) Are the Commission's findings of fact supported by competent, material, and substantial evidence in view of the entire record? (3) Do the facts found support the conclusions and the order allowing, in part, the requested rate increase?

The appellant's objection to the Commission's action in reopening the proceeding for further hearing is without merit. Although the appellant had given notice of appeal, the Commission's time limit for transmitting the record to the Superior Court had not expired. G.S. § 62-26.4. The statute provides the Commission on motion of any party to the proceeding, or on its own motion, may set the exceptions for further hearing. Surely the authority to reopen carries with it the duty to make such changes in the original record as the Commission concludes the facts and the law warrant in order that the record may speak the truth. Any error in the record, whether discovered by a party or by the Commission itself, may be reconsidered and corrected after proper notice at any time before the record passes from the Commission to the Superior Court by appeal. Consequently the order of December 19, 1961, is not the final order. The original order as amended on August 19, 1962, became the final order. "Ordinarily, the procedure before the Commission is more or less informal, and is not as strict as in superior court, nor is it confined by technical rules; substance and not form is controlling." State of N. C. ex rel. Utilities Comm. v. Carolinas Committee etc. Area Development, Inc., 257 N.C. 560, 126 S.E.2d 325.

On the appeal to the Superior Court the Commission's findings of fact are conclusive and binding if they are supported by competent, material, and substantial evidence in view of the entire record. State of N. C. ex rel. Utilities Comm. v. Gulf-Atlantic Towing Corp., 251 N.C. 105, 110 S.E.2d 886; State ex rel. Utilities Comm. v. Atlantic Coast R. R. Co., 238 N.C. 701, 78 S.E.2d 780.

At the further hearing, Mr. Luckett and Mr. Hempel explained the foundation and operation of their formula for separating intrastate from interstate operations. The method of applying the formula to the facts disclosed by the exhibits satisfied the Commission that the formula as so applied fixed with reasonable reliability the fair value of the carriers' property used and useful in conducting their intrastate operations and justified the rate increase allowed.

The combined operations of the four leading railroads doing business in North Carolina—Atlantic Coast Line, Seaboard, Norfolk-Southern, and Southern—for the ten-year period beginning with 1950 showed a net operating income on total investment between the high of 4.64 per cent in 1955, and the low, 2.97 per cent in 1960. The average for the ten-year period, excluding tax deferrals, was 3.61 per cent. During the same period the cost of wages had increased 71.2 per cent. The cost of materials and supplies, including fuel, increased 40 per cent. In addition to the charts and studies showing investment, operating costs and expenses, bond debt, etc., the petitioners offered evidence that the rate per ton per mile is lower on intrastate than on interstate freight due to the shorter haul and the lower-rated products carried intrastate. The intrastate traffic carries a larger percentage of the lower-rated products, consisting principally of pulpwood, rock, sand, gravel, and fertilizer. These make up the bulk of the North Carolina intrastate shipments.

The formula devised by the railroads and employed in this proceeding appears to have been the outgrowth of this Court's opinions in State ex rel. Utilities Comm. v. State, 243 N.C. 12, 89 S.E.2d 727; and on rehearing, 243 N.C. 685, 91 S.E.2d 899. This formula in principle was applied in State ex rel. Utilities Comm. v. State, 250 N.C. 410, 109 S.E.2d 368, and seems to have been approved by this Court without discussion. According to the tables, the statewide income of the Southern (excluding tax deferrals) for 1960 produced a return of 4.69 per cent. The three other major roads showed a much smaller return. The evidence with respect to the Class Two roads, most of which operate entirely intrastate, is not more favorable to them than the tables show to be the case in the four major lines.

The protestants appear to have offered before the Commission their own formula for separating intrastate from interstate freight traffic, but the Commission concluded it was not reliable as applied in this proceeding. Likewise, the respondents offered evidence, in part, conflicting with that offered by the railroads with reference to the rate of return which petitioners would realize if the requested rates were authorized. However, the conflicts in the evidence presented questions to be resolved by the Commission. Its resolution is binding on the courts if the findings are supported by competent, material, and substantial evidence in view of the entire record.

In our opinion the record before us and before the Superior Court showed the presence before the Commission of evidence which measured up to the standard required as legal support for the Commission's findings. The conclusions followed. The two support the rate increase authorized. "It is the prerogative of that agency to decide that question. It is an agency composed of men of special knowledge, observation, and experience in their field, and it has at hand a staff trained for this type of work. And the law imposes on it, not us, the duty to fix rates." State ex rel. Utilities Comm. v. State and State ex rel. Utilities Comm. v. Southern Bell Telephone & Telegraph Co., 239 N.C. 333, 80 S.E.2d 133.

After careful review of the long record and the many exhibits dealing with highly technical information, we are forced to conclude that the one appellant which brought the record here for review has failed to show error of law in the proceedings. The judgment of the Superior Court is

Affirmed.