State Ex Rel. Evansville City Coach Lines v. Rawlings

DISSENTING OPINION

Emmert, J.

We issued a temporary writ of prohibition prohibiting the trial court from making any further orders or exercising any further jurisdiction in cause number B-9429 pending in said court entitled James Payne, as President and Representative of Local 813, United Electrical, Radio & Machine Workers of America v. Evansville City Coach Lines, Inc., a corporation, Hugh W. Abbett, Lawrence W. Cannon and Crawford Parker, as members of and constituting the Public Service Commission of Indiana, and the Public Service Commission of Indiana, and an alternative writ of mandamus requiring the expunging from the record of all orders made in said cause. From *567 the certified copy of the complaint in cause number B-9429, it appears that the action was prosecuted by James Payne as a class action in behalf of all the members of Local 813, United Electrical, Radio & Machine Workers of America, said members being bus riders and customers of the Evansville City Coach Lines, Inc.

The controversy arises out of a proposed new tariff for bus fares, which was filed with the Public Service Commission of Indiana, hereafter referred to as the commission, to become effective January 15, 1951. This was numbered P. S. C. I. B-4. The commission held a hearing after notice on this proposed increase in rates, and the increase was resisted by the plaintiffs. The commission, upon motion of the plaintiffs, suspended the increased fares for a period of sixty days from and after March 8, 1951. On April 3, 1951, the coach lines filed another tariff increasing the bus fares to be charged by the company, on which no notice was given by either the commission or the coach lines, and the complaint charges that the commission permitted said tariff to go into effect on April 13, 1951. The complaint charged that the plaintiffs were denied procedural due process of law in that no notice or hearing was had in violation of the Fourteenth Amendment of the United States Constitution and § 12 of Article 1 of the Constitution of Indiana, 1 and that said tariff is void. A restraining order without notice was issued by the trial court.

The tariff entitled P. S. C. I. B-5 is void for lack of notice and hearing thereon in violation of the due *568 process clause of the Fourteenth Amendment of the United States Constitution, and § 12 of Article 1 of the Constitution of Indiana, as well as being in violation of the statutory provisions controlling the Public Service Commission of Indiana.

A public utility may not have its rates reduced by the action of an administrative board in violation of the requirements of procedural due process of law under the Fourteenth Amendment. In Railroad Com. of Cal. v. Pacific Gas & Electric Co. (1938), 302 U. S. 388, 393 , 58 S. Ct. 334, 338 , 82 L. Ed. 319, 322 , Chief Justice Hughes stated the requirements of procedural due process as follows: “There must be due notice and an opportunity to be heard, the procedure must be consistent with the essentials of a fair trial, and the Commission must act upon evidence and not arbitrarily.” Later in the same year the same Chief Justice, in deciding the question of notice and hearing to be afforded by an administrative board stated: “The vast expansion of this field of administrative regulation in response to the pressure of social needs is made possible under our system by adherence to the basic principles that the legislature shall appropriately determine the standards of administrative action and that in administrative proceedings of a quasi-judicial character the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play. These demand a ‘fair and open hearing,’— essential alike to the legal validity of the administrative regulation and to the maintenance of public confidence in the value and soundness of this important governmental process. Such a hearing has been described as an ‘inexorable safeguard.’ ” Morgan v. United States (1938), 304 U. S. 1, 14, 15 , 58 S. Ct. 773, 775 . 82 L. Ed. 1129 . 1130. 1131.

*569 The commission must afford due process of law to the utility when it makes an emergency order affecting rates under § 54-712, Burns’ 1951 Replacement. “It is our opinion that orders affecting rates made by the commission in a proceedings under said § 54-712, Burns’ 1933, are not immune from the constitutional requirement of due process of law including the requirement of an adequate hearing to determine whether or not the utility is being compelled to operate under an unreasonable and confiscatory rate due to some emergency.” Pub. Ser. Com. v. Indianapolis Railways (1947), 225 Ind. 30 , 40, 72 N. E. 2d 434, 439 . A requirement of a hearing includes a requirement of notice, for “the essential element of due process of law is an opportunity to be heard, and a necessary condition of such opportunity is notice.” Jacob v. Roberts (1912), 223 U. S. 261, 265 , 32 S. Ct. 303, 305 , 56 L. Ed. 429, 431 .

Since the utility is entitled to procedural due process of law, which includes a hearing and due notice thereof, it logically follows as a necessary corollary of such rule that the users of such utility service, whose contract rights, which are property rights, are adversely affected by an increase of rates, are likewise entitled to procedural due process of law, which guarantees a hearing and notice thereof. If the utility is entitled to its day in a hearing before the commission, so are the users of its service.

An individual user of the service has the right to object to an order of the commission fixing rates, even if the rate fixed is a reduction. “Public utilities enjoy monopolies and they are privileged to exact rates established by agencies set up by law. Consumers of the products of such utilities have the undoubted right to assert that they are adversely affected by rates so promulgated. The fact that the orders of the Public *570 Service Commission embraced service rates was a sufficient basis for the appellees’ right to a judicial review. It is no answer to say that the order relating to rates may not be reviewed because it required a reduction. The appellees may have believed that the reduced rates were exhorbitant.” Terre Haute Gas Corporation v. Johnson (1942), 221 Ind. 499, 506 , 45 N. E. 2d 484, 487 . It does violence to our concept of “equal justice under law” to hold that the utility was entitled to due process of law, but that the user of its service was not entitled to due process of law. The commission does not represent the users of the service in Indiana any more than it represents the utilities. In re Northwestern Indiana Tel. Co. (1930), 201 Ind. 667 , 171 N. E. 65 . Section 54-112, Burns’ 1951 Replacement. The trier of the facts cannot be impartial and an opponent at the same time. Powell v. Alabama (1932), 287 U. S. 45 , 53 S. Ct. 55 , 77 L. Ed. 158 .

The Public Service Commission of Indiana is a special statutory board and its authorities and duties are prescribed by the various statutes. Chapter 101 of the 1941 Acts as amended, which created the Public Service Commission of Indiana, Ch. 169 of the 1929 Acts, § 54-429 et seq., Burns’ 1951 Replacement, which is a general act on review of decisions, orders and determinations of the commission, and Ch. 287 of the 1935 Acts as amended, § 47-1121 et seq., Burns’ 1940 Replacement, known as the Motor Vehicle Act, should be construed in pari materia, since they all deal with rights, powers and duties of the commission and parties who are affected by the action of the commission.

Chapter 101 of the 1941 Acts, which established the Public Service Commission of Indiana clearly provides that the commission is a quasi-judicial body. Section *571 54-112, Burns’ 1951 Replacement, provides that “The commission created by this act shall in all controversial proceedings heard by it be an impartial fact-finding body and shall make its orders in such cases upon the facts impartially found by it. The commission shall in no such proceedings, during the hearing, act in the role either of a proponent or opponent on any issue to be decided by it. All evidence given in any such proceeding shall be offered on behalf of the respective parties to, or appearing in, the proceeding and not in the name or behalf of the commission itself.” We have held that this section requires the “facts should be found specially and not generally.” Kosciusko County, etc. v. Public Service Comm. (1948), 225 Ind. 666, 674 , 77 N. E. 2d 572, 575 . See also Wabash Valley Coach Co. v. Arrow Coach Lines (1950), 228 Ind. 609 , 94 N. E. 2d 753 .

Section 47-1215, Burns’ 1940 Replacement, provides that, “The commission is hereby vested with power and authority to supervise and regulate every motor carrier subject to the provisions of this act, to fix just and reasonable rates, fares and charges. . . .” “When it [the commission] is given authority to do a certain thing, the duty is imposed on it by statute to do such thing, and it has no authority to delegate its power to any one else.” New York Central R. Co. v. Public Service Com. (1922), 191 Ind. 627, 635 , 134 N. E. 282, 285 . “That the grant of power to a public officer carries with it a mandate that such power shall be exercised for the public good and in the manner prescribed by law is too well settled to admit of argument as is also the principle that in such instances the words ‘power’ and ‘authority’ may be construed as ‘duty’ and ‘obligation.’” Hall v. State ex rel. Freeman (1944), 114 Ind. App. 328, 332, 333 , 52 N. E. 2d 370, 371, 372 . *572 See also Bowles v. Indianapolis Railways (1946), 64 Fed. Supp. 865; Bowles v. Indianapolis Railways (1946), 154 F. 2d 218 .

It is conceded that the fixing of rates is a legislative matter. The legislature has said that the rates must be reasonable, and has delegated to a quasi-judicial commission the duty of making findings of facts as to what is reasonable'at the time the rate is fixed. The legislature may delegate such powers and duties to a proper agency of government, but it may not abdicate a legislative function, nor does the commission have either the power or right to delegate its duty to determine whether a rate' is reasonable. New York Central R. Co. v. Public Service Com. (1922), 191 Ind. 627 , 134 N. E. 282 , supra. To construe the act to permit a delegation by the commission to a motor vehicle common carrier of the legislative right to fix a reasonable rate would make the act unconstitutional. Such construction will not be given if the act can be construed as constitutional. Therefore, whenever a new rate is filed with the commission, the commission must determine whether or not it is reasonable, and it cannot delegate this duty to the carrier. Therefore, when a new rate is filed it does not become operative as-a matter of law by lapse of time. The change of a rate is a controversial matter in which the rate payers are interested. In re Northwestern Indiana Tel. Co. (1930), 201 Ind. 667 , 171 N. E. 65 , supra; Terre Haute Gas Company v. Johnson (1942), 221 Ind. 499 , 45 N. E. 2d 484 , 48 N. E. 2d 455 , supra. The action of the commission in the form of a finding that the rate is reasonable is required in order to conform to constitutional requirements.

Section 47-1215, Burns’ 1940 Replacement, further provides that “The commission shall have the power to hear all petitions, applications or motions filed with *573 the commission. Such hearings may be conducted by the commission, by any member of the commission or by any examiner authorized by the commission.” Section 47-1225 (g), Burns’ 1940 Replacement (1949 Supp.), provides that “Whenever there shall be filed with the commission any schedule stating a new individual or joint rate, fare, charge, or classification for the transportation of passengers or property by a common carrier or carriers by motor vehicle . . . the commissioner is hereby authorized and empowered upon complaint of any interested party or upon its own initiative at once and if it so orders, without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, fare, or charge, ... At any hearing involving a change in a rate, fare, charge, or classification or in a rule, regulation, or practice, the burden of proof shall be upon the carrier to show that the proposed changed rate, fare, charge, classification, rule, regulation, or practice is just and reasonable.” (Italics supplied.) Subsection (c) of § 47-1227, Burns’ 1940 Replacement (1949 Supp.), provides that “No change shall be made in any fare, charge or rule, regulation or practice for or in connection with the transportation of passengers except after 10 days’ notice of the proposed change. Such notice shall plainly state the change proposed to be made and the effective date thereof. The commission may, in its discretion and for good cause shown, allow changes upon notice in less time than herein specified and permit tariffs to be filed and become effective in particular instances on shorter notice than stated herein.” Admittedly the legislative intent is obscure in this subsection. If it should be construed that the notice requirement runs to the commission, it is superfluous and results in absurdity, since the pro *574 posed change itself is notice to the commission that it has been filed the same as a court takes notice of pleadings filed with it. If the common carrier is filing the proposed change, it needs no notice. If the commission on its own motion has instituted an investigation and hearing pursuant to which it orders changes, the common carrier would be entitled to notice. The only reasonable construction placed on the notice requirement is that the notice should be directed to parties adversely affected by an order of the commission, whether it be the utility or the users of the service, duly made after a hearing.

Section 47-1240, Burns’ 1940 Replacement, of the Motor Vehicle Act, requires the commission to publish notice whenever it orders a hearing. Section 8 of Ch. 101 of the 1941 Acts, which created the commission, as amended by Ch. 244 of the 1943 Acts, § 54-115 Burns’ 1951 Replacement, makes specific provision for notice of hearing on motor vehicle carrier matters. It states: “Whenever the public service commission of Indiana shall order a hearing in any proceeding instituted by or against the motor vehicle carrier, notice of such hearing shall be given by one [1] publication appearing not less than ten [10] days prior to the date fixed for such hearing in two [2] newspapers of general circulation published in the county where such motor vehicle carrier has its principal office or place of business. . . .” 2 The legislature indicated this published notice was jurisdictional, for the concluding part of such section provided for additional notice by mail, but provided, “That failure to mail such notices shall not be deemed to be jurisdictional, but may be ground for rehearing.” (Italics supplied.)

*575 The provisions of Ch. 101 of the 1941 Acts as amended by Ch. 46 of the 1945 Acts, § 54-111, Bums’ 1951 Replacement, concerning the Public Counselor, also provide for notice. “He [the public counselor] shall be entitled to, and when requested by the commission he shall appear on behalf of ratepayers, patrons and the public in all hearings before the commission. . . . Upon the institution of any proceeding before the commission in which the public counselor is authorized to appear, the commission shall immediately notify such public counselor thereof and transmit to him a copy of the petition or complaint filed therein. . . . The commission shall not proceed to hear any such petition, complaint or proceeding in which said public counselor is entitled to appear until he shall have had at least ten [10] days’ notice thereof, unless he shall have waived the same. In all proceedings before the commission and in any court in which he shall appear, the counselor shall have charge of the interests of the ratepayers and patrons of the utility and utilities involved and he shall give notice of such hearing to all municipalities, corporations, or organizations and persons parties to such proceedings, suit or action, other than such utility or utilities. In addition to such notice given by such public counselor, the commission shall give the notices otherwise required by law. . . .” 3 (Italics supplied.)

There is no indication in any of the statutes involved in this controversy that the commission is authorized to fix or change a rate, fare, charge or classification ex parte. When the statute authorized and empowered *576 the commission “to enter on a hearing concerning the lawfulness of such rate, fare, or charge,” the legislature made it the duty to do so, and §47-1225 (g), Burns’ 1940 Replacement (1949 Supp.), required that it be “upon reasonable notice.” Section 54-115, Burns’ 1951 Replacement, provides the requirements of reasonable notice.

Section 47-1249, Burns’ 1940 Replacement, should be construed in pari materia with the provisions of Ch. 169 of the 1929 Acts, which is the general act “concerning review of decisions, orders, determinations, requirements or directions” of the commission. Section 54-431, Burns’ 1951 Replacement, provides that the commission, after service of summons upon it, shall cause written notice to be mailed all parties who appeared before the commission during any part of the hearing or consideration of the matter complained of. The general rule is that when a statutory administrative board acts outside its authority granted by the statutes, such acts are absolutely void. New York Central R. Co. v. Public Service Com. (1922), 191 Ind. 627 , 134 N. E. 282 , supra. There is no statutory requirement that any of the users of the bus service should petition the commission for a rehearing before resorting to equity for relief. Here Tariff P. S. C. I. B-5 is void for want of jurisdiction by reason of lack of notice. “A party is not required to follow a legal route prescribed to overcome an order if void. When he desires to free himself of a void administrative order, which if executed, would deprive him of his property, he may resort to equity for instant relief.” State Bd. of Tax Comm. v. McDaniel (1928), 199 Ind. 708, 717, 718 , 160 N. E. 347, 350 . Section 54-429, Burns’ 1951 Replacement, makes no requirement for a rehearing, and § 54-430, Burns’ 1951 Replacement, clearly indicates that the action may be commenced *577 clearly indicates that the action may be commenced without a petition for a rehearing.

However, in this case the trial court issued a restraining order without notice. Section 54-435, Burns’ 1951 Replacement, provides that “No injunction shall issue in any such action suspending or staying any order of the commission except after notice to the commission and hearing.” Acts 1929, ch. 169, § 7, p. 530. This prohibits the issuance of restraining orders without notice. The temporary writ of prohibition should be amended to prohibit the judge from enforcing the restraining order without notice, since that was issued without jurisdiction because it was prohibited by statute, but the trial court does have jurisdiction to proceed to review the action of the commission and to issue both a temporary injunction and a permanent injunction. I would amend the temporary writ of prohibition, and as amended, make it permanent.

Note.—Reported in 99 N. E. 2d 597 .

“All courts shall be open; and every man, for injury done to him in his person, property, or reputation, shall have remedy by due course of law. . . .” Section 12, Article 1, Constitution of Indiana.

The further provisions on notice are not material to this decision.

The concluding proviso provides that “nothing in this section contained shall be construed to prevent any party interested in such proceeding, suit or action from appearing in person or from being represented by counsel therein.”