#### STATE OF NORTH CAROLINA on the Relation of the NORTH CAROLINA UTILITIES COMMISSION v. ATLANTIC COAST LINE RAILROAD COMPANY.

(Filed 3 May, 1944.)

1. Utilities Commission § 3: Carriers §§ 4, 14—

Where the Utilities Commission, after due notice and hearing, establishes rates for intrastate shipments of pulpwood which it finds to be just and reasonable, and thereafter, upon petition of defendant and other *284common carriers for reconsideration, the' rates so established are ordered by the Commission to remain in full -force and effect, by virtue of the statute (G. S., 62-123) these rates must be deemed the only just and reasonable rates for this commodity, rendering it unlawful for defendant to charge a greater amount. G. S., 62-135.

2. Same—

After rates for certain intrastate shipments have been duly established by the Utilities Commission and defendant seeks to increase such rates by filing tariff schedules to that effect, whereupon the Commission, in a proceeding to which defendant was a party, by order of postponement, which was not objected to, deferred use of the new increased rates, pending investigation, and also directed that the rates previously fixed should not be changed by subsequent tariffs or schedules until this investigation and suspension proceeding had been disposed of, continuing the investigation from time to time at the request of defendant, such action of the Commission is binding on the defendant. G. S., 62-11. However, defendant should be given a reasonable time to comply with the order before penalties may be invoked.

3. Constitutional Law § 4c—

While the power of the Legislature to delegate authority to an administrative agency of the State to prescribe rules and regulations for the due and orderly performance of its public functions is unquestioned, this does not authorize the formulation of rules contrary to the statute.

4. Utilities Commission § 3—

The Utilities Commission’s rules of practice and procedure, promulgated under legislative authority (G. S., 62-12), require a defendant, if it desires the vacation or modification of a previous order, to file a written notice of intention to make changes resulting in increases, which would seem to implement the requirements of the statute (G. S., 62-126) that thirty days notice of an increase be given the Commission.

Appeal by defendant from Stevens, J., at March Term, 1944, of Wake.

Affirmed.

' The defendant Railroad Company excepted to ail order of tbe North Carolina Utilities Commission relative to the rates on pnlpwood shipped over defendant’s lines, to Plymouth, N. C., and appealed to the Superior Court. From judgment affirming the order of the Utilities Commission, the defendant appealed to the Supreme Court.

The material facts upon which the order appealed from was based may be stated in chronological sequence as follows:

On 11 April, 1938, the Utilities Commission authorized carriers by railroad operating in North Carolina to increase their rates on pulpwood, and 25 April, 1938, entered a supplemental or amended order limiting the increase to 5% over the previous, or “Roanoke Rapids Scale.” Thereafter application was made on behalf of the rail carriers, including this defendant, petitioning the Commission for reconsidera*285tion and requesting that an increase of 10% on the pulpwood rate be .authorized on intrastate shipments. After full hearing by the Commission the petition was denied, and it was ordered that the “order of April 11, 1938,. as amended, shall remain in full force and effect.” This last order was dated 12 June, 1939.

On 4 June, 1942, the defendant Atlantic Coast pine Railroad Company filed with the Utilities Commission tariffs containing new and higher rates on pulpwood. Thereupon the Commission ordered that an investigation be had concerning the lawfulness of the rates on pulpwood stated in the schedules, and ordered suspension of the rates and postponement of the effective date of the schedules pending investigation and decision thereon. It was further ordered “that the rates and charges and the regulations and practices thereby sought to be altered shall not be changed by any subsequent tariff or schedule, until this investigation .and suspension proceeding has been disposed of or until the period of .suspension or any extension thereof has expired, unless authorized by .special permission of the Commission.”

Thereafter the suspension was continued to 1 January, 1943, and the defendant not being ready to enter upon the investigation, 'and at the request of the defendant, the operation of the proposed tariff schedules was postponed “until such time as respondents herein are ready to pro-veed with the investigation.”

On 2 August, 1943, and 26 November, 1943, the defendant again filed with the Commission tariffs containing higher rates on pulpwood than those established by the order of 12 June, 1939, according to which the existing rates would expire and the new rates become effective 1 January, 1944.

On 24 January, 1944, the Utilities Commission, finding as a fact that its notice to the defendant to restore the rates on pulpwood to the level provided in the order of 12 June, 1939, had not been complied with, declared that it regarded defendant’s action as constituting a refusal to ■obey an order of the Commission, and thereupon issued notice to the defendant to show cause why the Commission should not institute action to recover the penalty therefor prescribed by G. S., 62-142 .(C. S., 1106).

Pursuant to this notice hearing was had 3 February, 1944, and on 15 February, 1944, the Commission entered an order holding that the ■pulpwood rates contained in defendant’s tariff schedules, to the extent they exceeded the maximum level permitted under the outstanding order ■of 12 June, 1939, were unlawful, and that continued refusal to obey the previously established orders of the Commission rendered defendant liable to an action for the penalty prescribed by the statute. -The defendant was directed to correct its published rates for intrastate transportation of pulpwood, so as to bring the statement of such rates into *286harmony with the order of 12 June, 1939. The Commission upheld its. rule wherein it was prescribed that if vacation or modification of an existing order was sought for the purpose of permitting the' filing of rates, other than those in effect, it should be by petition, or written notice in triplicate setting out the reasons and conditions relied on as a basis for the changes proposed.

To this order the defendant excepted on the ground that the Utilities Commission was without authority to issue the order for the reason that, the tariff was filed in accordance with the statute, Gr. S., 62-125, and the Commission had not proceeded in accordance with this statute; that-the defendant had violated no valid order of the Commission, and the' Commission had no authority to order a correction of defendant’s tariff,, or to declare that refusal to do so rendered defendant liable under Gr. S.,. 62-142. Defendant also excepted to the application of the Commission’s, rule in so far as it prescribed action in addition or contrary to the statute. It was asserted that the enforcement of the order contemplated would deprive the defendant of its property without due process of law in violation of the Federal Constitution.

The defendant’s exceptions were overruled, and, upon appeal to the Superior Court, the ruling of the Utilities Commission was in all respects affirmed. The defendant appealed to the Supreme Court, assigning errors in the judgment.

Attorney-General McMullan, Assistant Attorney-General Patton, and I. M. Bailey for plaintiff, appellee.

Bichard B. G.wathmey and Murray Allen for defendant, appellant.

DeviN, J.

This appeal brings up for consideration the validity of' an order of the Utilities Commission, adverse to the defendant Railroad Company, with respect to rates for the transportation intrastate of pulpwood over the lines of the defendant.

The order of the Utilities Commission, which was affirmed by the-Superior Court, held that the action of the defendant, under the circumstances, in attempting to effectuate changes in tariff charges on pulpwood1 in excess of the maximum rate established by the previous orders of the Commission, at a time when investigation, as to previously filed tariffs of the same tenor was pending, and the refusal of the defendant, after-notice, to correct these rates to conform to the established rates on this commodity, constituted failure to obey a lawful order of the Commission entailing liability to an action for the statutory penalty.

The defendant excepted to the order and to the judgment of the Superior Court in affirmance, on the ground that the statute permitted a carrier at any time to file with the Commission a tariff containing dif*287ferent and increased rates, regardless of bow tbe previous rate bad been ■determined, and that tbe power of tbe Commission witb respect thereto was limited to suspending tbe operations of tbe new rates pending an investigation of tbeir lawfulness.

Tbe statute referred to, now codified as G. S., 62-125 (Acts 1939, ■cb. 365), contains tbe following provisions (omitting words not pertinent to our inquiry) : “Whenever there shall be filed witb tbe Utilities Commission any schedule stating an increase in any new individual or joint rate . . . for tbe transportation of property by a public carrier * . . tbe Commission is hereby authorized . . . upon its own initiative ... to enter upon a bearing concerning tbe lawfulness of such rate . . and pending such bearing . . . may suspend tbe operation of such schedule .. . . and defer tbe use of such rate . . . for a period of ninety days , . . but not for longer period in tbe aggregate than one hundred and eighty days.” Tbe succeeding section (G. S., 62-126), originally a part of tbe same act, follows: “No increase shall be made in any rate . . . tbe result of which will be an increase, which has been published and filed by any of tbe transportation companies' named in tbe preceding section, except upon not less than thirty days notice to tbe Commission and to tbe public.”

It appears that in 1938 tbe Utilities Commission, after due notice .and bearing, bad established rates for intrastate shipments of pulpwood to Plymouth which it found to be just and reasonable, and that thereafter upon petition of this defendant and other carriers for reconsideration, tbe rate so established was ordered “to remain in full force and ■effect.” By virtue of tbe statute (G. S., 62-123) these rates so established must be deemed tbe only just and reasonable rates for this commodity over defendant’s lines, rendering it unlawful for tbe defendant to charge a greater amount. G. S., 62-135.

It further appears that after tbe rate bad been duly established tbe ■defendant sought in 1942 to increase these rates by filing tariff schedules to that effect, but tbe Commission by order of postponement deferred use of tbe new rates pending investigation. In this proceeding, to which defendant was a party, tbe Commission ordered that tbe rates previously fixed “shall not be changed by any subsequent tariff or schedule until this investigation and suspension proceeding has been disposed of.” To this order there was no exception. Then at the request of defendant tbe postponement was continued until tbe investigation into tbe lawfulness of the proposed rates could be bad. While tbe matter was still pending, tbe defendant again filed tariff schedules calling for increased rates on pulpwood.

We think the Commission’s order, duly entered without objection in a proceeding to which defendant was a party, was binding upon the *288defendant, and that it could not thereafter, without proceeding with the investigation it had by its action called for, begin all over again by filing subsequent tariffs of the same tenor with respect to the same commodity. Hence the order of the Commission that the defendant be required to correct its last published tariff so that the rates “sought to be altered shall not be changed by any subsequent tariff or schedule, until this investigation and suspension proceeding has been disposed of,” must be upheld. The Utilities Commission is by statute (G. S., 62-11) constituted a court of record with the powers of a court of general jurisdiction as to all matters properly before it. The defendant, however, should be given reasonable time within which to comply with this order before penalty may be invoked.

The defendant contends that the statute (G. S., 62-125), properly interpreted and applied to the facts of this case, should be held to justify its action, and to manifest the invalidity of the order appealed from. But we are unable to agree that on the record here presented this statute authorized the procedure claimed, nor do we concur in an interpretation that would sustain the attitude of the defendant in the face of the previous order of the Commission.

If it should be concluded that, after a rate has been duly established by the Commission, and after new and increased rates shown .by subsequent tariffs filed have been suspended pending investigation, the carrier could from time to time continue to file in the record the same or other tariffs carrying increased rates, despite the orders of the Commission to the contrary, while' investigation into the reasonableness of the rates was still pending and undisposed of, the public service required of the Utilities Commission in establishing and maintaining just and reasonable freight rates would be impaired.

We think the better view is that pending further investigation into the reasonableness of a rate which has been established by the Commission as the only just and reasonable rate for that commodity, the rate so fixed should not be superseded by a higher rate by the railroad, in violation of an order in the proceeding forbidding it, except after proper determination of the reasonableness of the increase desired.

In further support of the order appealed from it may be noted that according to the Commission’s rules of practice and procedure, which were formulated and promulgated under legislative authority (G. S., 62-12), it was the duty of the defendant, if it desired vacation or modification of a previous order, to file “written notice in triplicate of intention to make changes resulting in increases” (Rule 11 [9]). While the power of the Legislature to delegate authority to an administrative agency of the state to prescribe rules and regulations for the due and orderly performance of its public functions is unquestioned (State ex rel. *289 Utilities Com. v. Greyhound Corp., post, 293; Pue v. Hood, 222 N. C., 310, 22 S. E. (2d), 896; Annotation 79 Law Ed., 474 (509), U. S. Supreme Court Reports), this would not authorize the formulation of rules contrary to the provisions of the statute itself. Rules thus prescribed may not be held to control or override those set out in the statute or appearing therein by necessary implication, but under general authority to formulate rules and regulations, the state agency may undoubtedly prescribe by rule the 'procedure by which a right granted may be exercised. Hence it would seem that the requirement of the statute (G. S., 62-126), that thirty days’ notice of an increase in rates be given the Utilities Commission, properly may be implemented by rule of the Commission requiring that the notice be in writing in triplicate. With this rule the defendant did not comply.

Under the facts disclosed by the record the judgment below will be upheld in its affirmance of the order of the Utilities Commission not inconsistent with' this opinion.

Affirmed.