On appeal from Board of Public Utility Commissioners.
For reversal -- Chief Justice Vanderbilt, and Justices Heher, Burling and Ackerson. For affirmance -- Justice Wachenfeld. The opinion of the court was delivered by Burling, J.
This is a rate of fare case and involves an appeal by The Central Railroad Company of New Jersey and The New York & Long Branch Railroad Company (hereinafter referred to as the Railroads), each a New Jersey corporation, from a final decision on rehearing and order of the Board of Public Utility Commissioners, Department of Public Utilities, State of New Jersey (hereinafter referred to as the Board), filed on September 27, 1950, stemming from a written complaint termed "Petition for Reconsideration" lodged with the Board on July 5, 1949, by the Inter-Municipal Group for Better Rail Service and the Jersey Shore Protective Committee (hereinafter referred to as the Intervenors). The appeal, addressed to the Appellate Division of the Superior Court, has been certified to the Supreme Court upon our own motion, prior to hearing there.
The progress of the proceedings now presented to us for examination may be outlined as follows: As a result of proceedings before the Board in 1947, a schedule of fares then found by it to be reasonable for the future was inaugurated by the Railroads. The Railroads receiving less additional income from new fares under the 1947 schedule than anticipated, on June 4, 1948, filed with the Board certain proposed new tariffs to be effective July 5, 1948, publishing increased local and joint passenger commutation fares in intrastate traffic and changes and alterations in existing classification of such fares. The Board on its own motion [7 NJ Page 251] initiated a hearing to determine whether those proposed fares, changes and alterations as filed would be unjust, unreasonable or unjustly discriminatory. By order, under date of June 23, 1948, effective July 3, 1948, the Board suspended the aforementioned proposed increases, changes and alterations in local and joint intrastate passenger fares until October 3, 1948, and not having reached a decision on the evidence and testimony offered at public hearings pursuant to that order, on September 22, 1948, effective October 3, 1948, ordered a further suspension to January 3, 1949. The hearings were not completed when the year 1948 drew to a close, and it was stipulated by all interested parties that the latter order of suspension should continue in effect "beyond its legal limit and be concurrent with" a similar order issued by the Interstate Commerce Commission. Joint hearings by an examiner of that Commission and members of the Board which had been instituted on September 8, 1948, continued. The Board ultimately reached a conclusion and filed a decision on March 15, 1949, to the effect that the existing schedule of commutation fares (effective as a result of the proceedings in 1947) of the Railroads had become unjust and unreasonable, that the schedules of fares proposed and filed on June 4, 1948, by the Railroads were unjust and unreasonable and were disapproved, that an increased scale of rates which were over the rates in effect when the Railroad filed their proposed schedules in June, 1948, and set forth in the decision was just and reasonable and new schedules might be filed with the Board on five days' notice in conformity with that scale. Resultant increased fares were made effective March 27, 1949. Subsequently, on July 15, 1949, the Intervenors filed with the Board a "Petition for Reconsideration" addressed to both the Board and the Interstate Commerce Commission but relating primarily to the latter's findings and order, to which no answer was filed by the Railroads. This petition, however, stirred the Board to an exercise of its statutory authority to order a rehearing on its own initiative by means of a "Decision,"
dated March 6, 1950. The Board clearly indicated this action was taken on its own motion. The rates placed in operation March 27, 1949, were not disturbed.
Subsequently, hearings in the rehearing proceedings were had, namely, on March 30, 1950, May 17, 1950, and May 26, 1950.
During the course of the hearing on May 26, 1950, a witness for the Railroads was asked a series of 12 questions (hereinafter considered) relating to various items of expense and income. The Board at first ordered, June 14, 1950, that these questions, objected to on the ground of immateriality, be answered by the Railroads, but later, June 21, 1950, rescinded the prior order as premature because written briefs had not been received. On August 8, 1950, the Board in another decision stated:
"We think the questions are relevant and believe the respondent should have an opportunity to supply the answers if it elects to do so. We have concluded that we will not order it to respond to these questions."
The Railroads declined to answer the propounded interrogatories but indicated willingness to produce data maintained by them in the usual course of business from which the information sought could be elicited.
On September 27, 1950, the Board issued "Decision on Rehearing" concluding in the following language:
"The Board after reopening Docket No. 4000 for further consideration, and after such further consideration in duly held proceedings in this matter, finds that the fares approved for the respondents in the Decision of March 15, 1949, will not be just and reasonable for the future but, if revised to the bases set forth as approved in Appendix I hereto:
1. Should yield an increase in revenue of which respondents are in need and to which they are justly entitled.
2. Will be as low as respondents can be required to maintain from a cost standpoint and at the same time will be reasonably related to one another and fair to the commuting public.
3. Are necessary in order that respondents may be enabled, under honest and efficient management, to provide adequate and efficient
service, at the lowest cost consistent with the furnishing of such service, and
4. Will be just and reasonable for the future.
On further consideration, the findings in the Board's decision of March 15, 1949, in Docket No. 4000, are modified accordingly and the Board HEREBY ORDERS respondents to file schedules with the Board to become effective October 15, 1950, in conformity with the scale approved by this Board as just and reasonable, as set forth in Appendix I hereto."
It is this decision or order that is the subject of the instant appeal.
Forthwith, it is requisite that due consideration be given to the procedural course pursued by the Board. The record before us raises several procedural questions: Whether the method of obtaining rehearing was proper, where lies the burden of proof on rehearing and what is the scope of rehearing, and lastly what is the scope of review by this court.
The applicable portions of the New Jersey statutes are:
R.S. 48:2-19: "Investigations; valuation of property of public utility. The board may:
a. Investigate upon its own initiative or upon complaint in writing any matter concerning any public utility; * * *"
Fix rates. b. The board may after hearing, upon notice, by order in writing:
1. Fix just and reasonable individual rates, joint rates, tolls, charges or schedules thereof, as well as commutation, mileage and other special rates which shall be imposed, observed and followed thereafter by any public utility, whenever the board shall determine any existing rate, toll, charge or schedule thereof, commutation, mileage or other special rate to be unjust, unreasonable, insufficient or unjustly discriminatory or preferential. In every such proceeding the board shall complete and close the hearing and enter its final order within six months after the filing of the order of the board initiating such proceeding, when such proceeding is on the board's own motion; and within six months after issue is joined through the filing of an answer to a complaint, when such proceeding is initiated by complaint.
Increases in rates; hearings. d. When any public utility shall increase any existing individual rates, joint rates, tolls, charges or
schedules thereof, as well as commutation, mileage and other special rates, or change or alter any existing classification, the board, either upon written complaint or upon its own initiative, shall have power after hearing, upon notice, by order in writing to determine whether the increase, change or alteration is just and reasonable. The burden of proof to show that the increase, change or alteration is just and reasonable shall be upon the public utility making the same. The board, pending such hearing and determination, may order the suspension of the increase, change or alteration until the board shall have approved the same, not exceeding three months. If the hearing shall not have been concluded within such three months the board may during such hearing and determination ...