State ex rel. Utilities Commission v. Nello L. Teer Co.

146 S.E.2d 511, 266 N.C. 366, 1966 N.C. LEXIS 1355

• Court: Supreme Court of North Carolina
• Decided: February 4, 1966
• Status: Published

Opinion

Laicb, J.

This proceeding was instituted before the Utilities Commission by the filing of a complaint by Teer. Consequently, the statute imposes upon Teer the burden of proving the facts essential to its right to relief from the rate relationship of which it complains. G.S. 62-75. Since the cost data and other circumstances concerning justification for the differential in rates of which Teer complains are more readily available to the participating railroads than they are to a complaining shipper, it may well be thought that in such proceedings as these, just as in proceedings instituted by the' Utilities Commission, the burden should be placed upon the carriers to prove the reasonableness of the rate relationship. However, the Legislature has clearly provided to the contrary.

In its brief Teer says:

“Appellant does not contend that the Uniform Mileage Commodity Scale on aggregates which provides for the application of single-line rates to single-line hauls and the application of joint-line rates to joint-line hauls, and which has been in effect since 1921 for application over all railroads in the State of North Carolina, is per se unreasonable or discriminatory. Appellant emphatically insists, however, that it is unreasonable and discriminatory to label a joint-line haul as a single-line haul and apply a single-line rate to such a haul while at the same time describing a similar haul as a joint-line haul and applying a joint-line rate to it. * * * Again it should be kept in mind that we are not discussing the reasonableness of the joint-line or single-line rates per se.”

It is further provided by the statute that rates established by the Commission shall be deemed just and reasonable. G.S. 62-132. Again, the statute with reference to appeals from the Commission provides: “Upon any appeal, the rates fixed, or any rule, regulation, finding, determination, or order made by the Commission under the provisions of this chapter shall be prima facie just and reasonable.” G.S. 62-94 (e). In the consideration of such appeal the court is required to review the whole record, or such portions thereof, as may be cited and “due account shall be taken of the rule of prejudicial error.” G.S. 62-94(c).

G.S. 62-140 provides:

“(a) ,;.No public utility shall, as to rates or services, make or grant any unreasonable preference or advantage to any person or subject any person to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to rates or services either as between localities or as between classes of service. The Commission may determine any questions of fact arising under this section.

“(b) The Commission shall make reasonable and just rules and regulations:

“(1) To prevent discrimination in the rates or services of public utilities. * * *”

The first paragraph of this statute is similar to Section 3 of the Interstate Commerce Act. It does not require an equality of rates where the shipments are from different points of origin to the same destination even though the distances be equal or approximately so. As Higgins, J. said, in Utilities Commission v. Motor Carriers Asso., 253 N.C. 432, 440, 117 S.E. 2d 271:

“ [R] ate-making involves more than, mileage. * * * There are factors involved in rate-making which justify lower per-mile rates from some points than from others. * * * The law does not contemplate that all rates shall be equal for like distances. Room is left for a rate structure which takes all factors of rate-making into account.”

While that case involved motor carriers, the rule as to railroad rates is the same in those respects.

It is not necessary for us to determine upon this appeal, and we do not pass upon, the question of the authority of the Utilities Commission, by an appropriate order, to remove the existing rate differential between shipments from Oaks to points northeast to Plymouth and shipments from Rocky Mount to the same destination. It may well be that the authority of the Commission under G.S. 62-32 to fix and regulate “reasonable rates and charges” of public utilities is sufficient to permit it to eliminate rate differentials between localities which are not unreasonable so as to constitute a discrimination forbidden by G.S. 62-140. Nor do we find it necessary to decide whether the application of the “single-line” rate to shipments moving between other points on the Atlantic and East Carolina and the Norfolk-Southern is lawful. The question for decision on this appeal is whether the complainant has carried the burden, imposed upon it by the statute, of proving an “unreasonable difference” between the rates charged on shipments of aggregates from Oaks to points on the Norfolk-Southern and those charged Teer so as to make it the duty of the Commission to remove the differential.

Since we reach the conclusion that the complainant has not proved such “unreasonable difference,” we do not reach the question of what the Commission might have required the Coast Line to do, if such difference had been proved. The complainant is served by the Coast Line in conjunction with the Norfolk-Southern. It does not question the reasonableness of the rate charged to it per se. This rate is the “joint-line” rate, computed according to the scale approved by the Commission and in effect throughout the State, with few exceptions. The Coast Line had-no participation in the estaba lishment of the more favorable rate from Oaks and has no power to change that rate. It may well be doubted that any violation of G.S. 62-140 (a) is established by the showing of even an “unreasonable difference” between rates upon shipments from different points of origin to a common destination when no carrier, or group of carriers, has a controlling power over both of the rates. See: Texas & Pacific Ry. Co. v. United States, 289 U.S. 627, 53 S. Ct. 768, decided under the original Section 3 of the Interstate Commerce Act. Compare, however, New York v. United States, 331 U.S. 284, 67 S. Ct. 1207, decided after Section 3 was amended. If such rate differential be a violation of G.S. 62-140(a), there would also arise the serious question as to whether the Commission, acting under paragraph (b) of that statute, could require a reduction of the rate from Rocky Mount in order to equalize the two rates, or would be limited to an order increasing the rate from Oaks. Since these questions are not necessary for the determination of this appeal, we do not now express any opinion as to either of them.

The Commission found: “The differential of 10 cents a ton in the single-line rates under the joint-line rates applicable from Rocky Mount is not unduly preferential of Superior Stone Company at Oaks, nor is it unduly prejudicial to Complainant.” There is in the record “competent, material. and substantial evidence” to support this finding. ■

The justification for the higher rate normally charged where the shipment' moves over the lines of two railroads, as contrasted with a shipment moving over the line of 'but one, is that in the “joint-line” movement, there is an additional switching movement which adds to the expense of rendering the service."Where the “joint-line” haul is handled under such circumstances that there is no such additional expense, there is no such justification. for the higher rate. Certainly, in such case the charging of the “single-line” rate is not unreasonable.

This Court has said: “There must be substantial differences in service or conditions to justify ;difference in rates. There must be no unreasonable discrimination between those receiving the same kind and degree of service.” Utilities Commission v. Mead Corp., 238 N.C. 451, 462, 78 S.E. 2d 290; Utilities Commission v. Municipal Corporations, 243 N.C. 193, 203, 90 S.E. 2d 519. In the Municipal Corporations case, the Court quoted with approval Brown v. Pa. Public Utilities Comm., 152 Pa. Super. 58, 31 Atl. 2d 435, where is said, "The charging of different rates for service rendered under varying conditions and circumstances is not unlawful.” It also quoted with approval Ford v. Rio Grande Valley Gas Co., 141 Tex. Rep. 525, 174 S.W. 2d 479, saying, “Any matter which presents a substantial difference as a ground for distinction between customers, such as quantity used, time of use, or manner of service, is a material * * * factor.” Thus, a substantial difference between the costs of rendering the two services justifies some difference in the rates, nothing else appearing.

The record shows that a car of aggregates moving from Oaks to one of the destination points in question is handled exactly as it would be if the track of the Norfolk-Southern extended to Oaks so as to make this, in fact, a shipment over a single line. The yard engine pulls the loaded car from the quarry at Oaks to the track scales in the New Bern yard, where the car is weighed, and from there pulls it to the interchange track, where it is picked up by the line-haul train of the Norfolk-Southern and carried to its destination without further switching. It must then, of course, be switched and “spotted” for unloading.

In the absence of any evidence to the contrary, the Commission was entitled to infer from competent evidence in the record that a switch engine pulled the loaded cars from the Teer quarry at Rocky Mount to track scales for weighing and thence to a track in the Coast Line yard, where the Coast Line-haul train picked it up and hauled it to Plymouth. That is, the procedure at Rocky Mount was the same as the procedure at Oaks-New Bern. At Plymouth, it would be necessary to set the car on an interchange track for pickup by the Norfolk-Southern. Assuming the simplest operation at Plymouth and a yard jointly operated by the Coast Line and the Norfolk-Southern, there would have to be at least one switching operation involving this car at Plymouth before it could pass on to the ultimate destination. At the ultimate destination, it would again have to be switched so as to "spot” the car for unloading just as would have to be done with a car coming from Oaks.

Thus, the record shows that in the haul from Rocky Mount to the ultimate destination there is, necessarily, at least one more switching movement than is involved in the shipment from Oaks to the same destination. There is also evidence in the record by a Coast Line witness that the differential of 10 cents per ton between “joint-line” and “single-line” rates is not sufficient to cover this additional cost. That being true, it is not unreasonable to charge a lower rate on the shipment from Oaks than on the shipment from Rocky Mount, nothing else appearing.

It is also shown by competent, substantial evidence in the record that at Oaks there is active competition between the railroad and barges for the hauling of this commodity to the destinations in question. There is no such competition at Rocky Mount, or at any other point in the State where this material is produced. To eliminate the existing rate differential, by charging the same rate from Oaks as is now charged from Rocky Mount, would not improve Teer’s competitive position if the only effect were to divert this commodity to water transportation. The record contains competent, substantial evidence to show that this would be the result of such action. Competition with carriers by water at one point of origin and absence of such competition at the other is a material difference in circumstances which must be considered in passing upon the reasonableness of a differential in railroad rates.

In East Tenn., V & G Ry. Co. v. Interstate Commerce Comm., 181 U.S. 1, 18, 21 S. Ct. 516, speaking of Section 3 of the Interstate Commerce Act, which is similar to G.S. 62-140, the Court said:

“The prohibition of the third section, when that section is considered in its proper relation, is directed against unjust discrimination or undue preference arising from the voluntary and wrongful act of the carriers complained of as having given undue preference, and does not relate to acts the result of conditions wholly beyond the control of such carriers. * * * The commission found that if the defendant carriers had not adjusted their rates to meet the competitive condition at Nashville, the only consequence would have been to deflect the traffic at the reduced rates over other lines.”

Again, in Barringer & Co. v. United States, 319 U.S. 1, 7, 63 S. Ct. 967, with reference to Section 3, the Court said:

“It has long been established by our decisions that differences in competitive conditions may justify a relatively lower line-haul charge over one line than another, and that it is for the Commission, not the courts, to say whether those differences are sufficient to show that a difference in rates established to meet those conditions is not an unjust discrimination or otherwise unlawful.”

There is, therefore, ample, competent evidence in the record to support the finding by the Commission that the rate differential between Oaks and Rocky Mount is not an “unreasonable difference.” Consequently, the Commission is not compelled by the statute to order it abolished.

The plaintiff having failed to sustain the burden of proving a discrimination forbidden by G.S. 62-140, and there being in the record ample, competent evidence to support the ultimate finding of the Commission and its order, we do not deem it necessary to discuss in detail the appellant’s assignments of error contending that the Commission admitted other evidence which was incompetent and took judicial notice of facts not set forth with the particularity required by G.S. 62-65 (b). We have examined each of these assignments. If the Commission erred in these respects, such error was not prejudicial to the appellant so as to require a reversal of the order. There was, therefore, no error in the overruling by the superior court of the appellant’s exceptions to the order of the Commission and its judgment is

Affirmed.