STATE of North Carolina ex rel. NORTH CAROLINA UTILITIES COMMISSION
v.
CAROLINA COACH COMPANY and Queen City Coach Company.
No. 451.
Supreme Court of North Carolina.
March 4, 1964.*692 Edward B. Hipp, Raleigh, for the Commission.
Allen, Steed & Pullen and Joyner & Howison, Raleigh, for respondents Carolina Coach Co. and Queen City Coach Co.
MOORE, Justice.
The judge below concluded that the Commission erred (1) in holding that the proceeding before it was tantamount to a hearing upon an application for a franchise and that the proposed through service should not be allowed in the absence of a showing by Carolina and Queen of "public convenience and necessity" or the essential elements thereof, such as public demand and positive need for the service, and (2) in that the findings of the Commission that the proposed service is "unduly competitive" and "not in the public interest" are not supported by competent, material and substantial evidence.
The granting of franchise authority for the operation of buses over the highways of North Carolina, for the transportation of persons and property for compensation, must be predicated upon public convenience and necessity. The burden of proof is upon the applicant for franchise authority to show public convenience and necessity. G.S. § 62-121.52 (recodified as *693 G.S. § 62-262 pursuant to the 1963 Public Utilities Act).
The rendering of the new service by Carolina and Queen under the Lease of Equipment Agreement does not involve any new or additional franchise. It is perfectly clear from all of the evidence, and appellant does not contend otherwise, that the contracting parties propose to maintain this service in connection with their already established franchises.
The Lease of Equipment Agreement and the proceeding before the Commission with respect thereto were respectively executed and instituted pursuant to Rule 14 of the rules and regulations of the Commission promulgated under authority of G.S. § 62-121.45 (now G.S. § 62-31), entitled "Interchange of Equipment," which is as follows:
"Common carriers may interchange equipment for the purpose of providing through service without change of passengers from one bus to another, but no such interchange agreement shall become effective unless the parties thereto shall file a true copy thereof with the Commission and give notice thereof to all common carriers operating to, from or through the interchange point at least twenty (20) days prior to the effective date of such agreement; provided, the Commission may upon its own motion, or upon protest, suspend or disapprove the agreement for reasons considered to be in the public interest."
The carriers have legal right to contract inter se, and the law encourages cooperation and agreements between them respecting their service to the public. G.S. § 62-121.64(a) (now G.S. § 62-146); State ex rel. Utilities Commission v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249. And Rule 14 authorizes carriers to interchange equipment "for the purpose of providing through service without change of passengers from one bus to another"the very purpose for which the Carolina-Queen agreement was made. Affirmative approval of the agreement by the Commission is not required by Rule 14. The only conditions precedent to putting the agreement into effect is that 20-days notice be given all carriers "operating to, from or through the interchange point," and that the agreement be filed with the Commission. There is no contention that Carolina and Queen failed to comply with these conditions. "* * * (T)he Commission may on its own motion, or upon protest, suspend or disapprove the agreement for reasons considered to be in the public interest." This places no burden on the parties to the interchange agreement. The presumption is that through service is in the public interest. In the absence of "reasons," based on evidence in the record, that the agreement is detrimental to the public interest, the agreement may not be suspended or disapproved.
The Commission's order is erroneous in that it places the burden on Carolina and Queen to show an affirmative public demand and need for the through service. The order declares, in effect, that where through service, without change of buses, is proposed by interchange of equipment between carriers, it is tantamount to an application for new franchise authority if the proposed service is competitive with another carrier, and to be permitted to institute such service the interchanging carriers must show public convenience and necessity. Rule 14 is not susceptible of such construction.
The sole issue before the Commission was whether the public interest would be adversely affected by the proposed service. Transportation of passengers by motor carriers for compensation is a business affected with a public interest. G.S. § 62-121.44 (now G.S. § 62-2). The Commission concluded that the proposed service could be "unduly competitive" and would tend "to create an unsavory situation between carriers." These findings if supported by competent, material and substantial evidence, are binding on appeal. State ex rel. Utilities *694 Commission v. Champion Papers, Inc., 259 N.C. 449, 130 S.E.2d 890; State ex rel. Utilities Commission v. Ryder Tank Line, Inc., 259 N.C. 363, 130 S.E.2d 663; State ex rel. Utilities Commission v. Southern Ry. Co., 256 N.C. 359, 124 S.E.2d 510. The Utilities Commission, and not the courts, is authorized to regulate utilities. State ex rel. Utilities Commission v. Champion Papers, Inc., supra.
There is no public policy condemning competition as such in the field of public utilities; the public policy only condemns unfair or destructive competition. G.S. § 62-121.44. "The public is best served in many circumstances where destructive competition has been removed and the utility is a regulated monopoly. `Whether there shall be competition in any given field and to what extent is largely a matter of policy committed to the sound judgment and discretion of the commission. The commission must maintain a reasonable balance to see that the public is adequately served and at the same time see that the public and the public utilities involved are not prejudiced by the effects which flow from excessive competition brought about by excessive services. 73 C.J.S. Public Utilities § 42, p. 1099; * * *.'" State ex rel. Utilities Commission v. Carolina Coach Co., supra. The judgment and discretion of the Commission in this regard must, however, be based on facts.
We do not find any evidence in the record tending to show that the services proposed by Carolina and Queen will result in unfair and destructive competition. Competition will be involved to be sure, and the competitive position of Carolina and Queen will be improved in some respects. The operation between Fayetteville and Winston-Salem is not competitive with Greyhound. The other routes are competitive with Greyhound without the proposed service. The only change the interchange agreement makes is that passengers will not be required to change busesthe service will otherwise be the same. There is evidence that the proposed through service will be an advantage and convenience to the public in travel between Winston-Salem and other places between Winston-Salem and interchange points, on the one hand, and such places as Concord, Kannapolis, Sanford, Siler City, Chapel Hill, Durham and Burlington, on the other. The proposed service, point to point, between Charlotte and Winston-Salem cannot be said to give Carolina and Queen an unfair advantage of Greyhound, for the Greyhound route via Lexington will still be the fastest service between those points since Greyhound operates on three-fourths of the route with closed doors. The proposed Carolina-Queen operation between Raleigh and Winston-Salem will be about ten miles shorter than Greyhound's competing service. But the Carolina-Queen routes are through one of the heaviest populated areas of the State, including Durham, Chapel Hill, Burlington and High Point, which their buses must serve. On the other hand the Greyhound route, which is via Asheboro, is through a relatively sparsely populated area, conducive of fast schedules. In point to point service between Greensboro and Winston-Salem, the proposed service cannot compete with Greyhound which has the shorter and faster routeGreyhound does not serve High Point. Heretofore many passengers, destined for Winston-Salem and originating on Carolina's routes between Raleigh and Greensboro, have changed to Greyhound at Greensboro rather than change to Queen at Greensboro and back to Carolina at High Pointthey also used Greyhound on return trip. The proposed service in this phase will be a decided convenience to the passengers and will be new competition for Greyhound for traffic originating with Carolina and Queen. However, there is nothing in the record to show that it will impair the quality of Greyhound's service or endanger Greyhound's financial position.
It is true, as contended by the Commission, that an order made by it is prima facie just and reasonable. G.S. § 62-26.10 (now G.S. § 62-94); State ex rel. Utilities *695 Commission v. Carolina Coach Co., supra; State ex rel. Utilities Commission v. Southern Ry. Co., supra. But this does not preclude a carrier from showing on appeal that the order is not supported by competent, material and substantial evidence. State ex rel. Utilities Commission v. Atlantic Coast Line R. Co., 238 N.C. 701, 78 S.E.2d 780.
In its brief the Commission seeks to bridge the gap caused by lack of supporting evidence by saying: "The results were amply within the Commission's expert knowledge as the agency established to regulate bus transportation." The superior capabilities of the members of the Commission and their expertness in dealing with utilities problems are fully recognized by us. But the Commission's knowledge, however expert, cannot be considered by us on appeal unless the facts embraced within that knowledge are in the record. Questions on appeal from the Commission must be determined upon the record certified by it. State ex rel. Utilities Commission v. Mead Corp., 238 N.C. 451, 78 S.E.2d 290.
It is further argued that the courts do not ordinarily review or reverse the exercise of discretionary power by an administrative agency such as the Utilities Commission except on showing of capricious, unreasonable or arbitrary action or disregard of law. In re Department of Archives and History, 246 N.C. 392, 98 S.E.2d 487; State ex rel. Utilities Commission v. Ray, 236 N.C. 692, 73 S.E.2d 870. To this we add that the weighing of the evidence and the exercise of judgment thereon within the scope of its authority are matters for the Commission. State ex rel. Utilities Commission v. Fredrickson Motor Express, 232 N.C. 180, 59 S.E.2d 582. Even so, the Commission has no discretionary power, where its function is to weigh the evidence and make judgment thereon, if there is no evidence to weigh.
It appears likely that the Commission was motivated to seek review in this proceeding because of the judge's order remanding the cause to the Commission "for such action as may be necessary and appropriate to allow the lease of equipment agreement * * * to go into full force and effect." Apparently the Commission felt that the court was usurping a function which lies solely within the authority of the Commission. The Commission is jealous, and rightly so, of the authority and jurisdiction vested solely in it by the Legislature. Every court and judicial body should jealously guard and firmly maintain its particular authority and jurisdiction. We understand, but do not entirely agree with, the Commission's interpretation of the judgment. The court below correctly reversed the order of the Commission. This reversal leaves Carolina and Queen free to put the agreement into effect, since there was no lawful disapproval thereof. It requires no affirmative approval. Whether the Commission will now or sometime in the future, based on operating experience, institute another hearing with respect to the agreement is a matter for its decision.
Finally, it is suggested that, where an order of the Commission is based on erroneous interpretation of law, the cause should be remanded to the Commission for further hearing and not be terminated by the court. This is true where the Commission has the duty to make a positive determination, such as the fixing of rates, and because of some error of law the determination is in suspense and the utility is entitled to have the determination made. State ex rel. Utilities Commission v. Public Service Co., 257 N.C. 233, 125 S.E.2d 457; State ex rel. Utilities Commission v. Piedmont Natural Gas Co., 254 N.C. 734, 120 S.E.2d 77; State ex rel. Utilities Commission v. Carolina Coach Co., 254 N.C. 668, 119 S.E. 2d 621; State ex rel. Utilities Commission v. North Carolina Motor Carriers Asso., 253 N.C. 432, 117 S.E.2d 271; State ex rel. Utilities Commission v. Southern Bell Telephone & Telegraph Co., 239 N.C. 333, 80 S.E.2d 133. This is not the case here.
This cause is remanded to superior court for judgment in accordance with this opinion, *696 i. e., reversing the order of the Commission and omitting any requirement of affirmative action on the part of the Commission.
Modified and affirmed.