California Portland Cement Co. v. Public Utilities Commission , 49 Cal. 2d 171 ( 1957 )

GIBSON, C. J.

California Portland Cement Company seeks by this proceeding to obtain the annulment of orders of the Public Utilities Commission.

Portland maintains a mill for the production of cement at Colton and an iron ore mine at Basin, and it ships iron ore from Basin to Colton over a line of the Union Pacific Railroad Company. A steel mill at Kaiser (about 11 miles west of Colton) uses iron ore shipped from Dunn (about 9½ miles west of Basin) over the same line of Union Pacific either to Colton and thence over a line of Southern Pacific Company to Kaiser, or to San Bernardino (near Colton) and from there over a line of Atchison, Topeka and Santa Fe Railway Company to Kaiser. Colton is about 132 miles from Basin by rail, and the distance from Dunn to Kaiser is 133.5 miles via Colton and 130 miles via San Bernardino. Union Pacific’s rate on iron ore from Basin to Colton is $1.9824 per long ton, with a minimum of 100,000 pounds per car and 1,000 long tons per shipment, whereas the joint rate on iron ore from Dunn to Kaiser, with the same carload and shipment minimums, is $1.736 per long ton.

Portland filed with the commission a complaint which alleges that the rate from Basin to Colton is discriminatory and that it subjects Colton and Portland to undue prejudice and grants to Kaiser and to receivers of freight at Kaiser an undue preference. Portland asks for elimination of the discrimination and for reparation in the amount of the sums paid in excess of the rate charged from Dunn to Kaiser.

After a hearing, the complaint was dismissed by the commission which found and concluded that Portland had suffered no undue prejudice because there was no competition between Portland and the steel company at Kaiser and, further, that the rates had not been shown to be unduly discriminatory because, although the operating circumstances on the two routes were otherwise substantially similar, the differential was justified by the greater anticipated volume and regularity of the shipments to Kaiser compared with those to Colton.

Upon Portland’s application for a rehearing the commission affirmed its prior order of dismissal and denied a rehearing solely on the basis of the finding that since there was no competition between Portland and the steel company the maintenance of a lower rate to Kaiser than to Colton did not result in undue prejudice or discrimination to Portland or undue preference to the steel company. The opinion of the commission concluded: “However, upon reconsideration of the facts, the commission is of the opinion that they present a situation which should not be allowed to continue. Therefore, the defendant is directed within sixty days from the date hereof to review the rates involved, looking toward the filing of rates which will not reflect an unreasonable difference between the rates from Dunn to Kaiser as compared with those from Basin to Colton. The Commission staff is directed, within sixty days after the effective date hereof, to notify the Commission as to what action, if any, has been taken by defendant, to the end that the commission may take such steps as it may be advised. ’ ’

The statements of the commission, in denying a rehearing, that the facts “present a situation which should not be allowed to continue” and that the rates should be reviewed by Union Pacific so as to obtain “rates which will not reflect an unreasonable difference” in charges between the respective localities, necessarily imply that there was an unreasonable difference between the existing rates. Such statements, having been made in the opinion denying a rehearing in an adversary proceeding “after reconsideration of the facts,” obviously constituted findings of fact.

The term “unreasonable difference” as used in the commission’s order is identical with language in section 453 of the Public Utilities Code which provides, in part, “No public utility shall establish or maintain any unreasonable difference as to rates ... as between localities. ...” Section 21 of article XII of the California Constitution reads, in part, “No discrimination in charges . . . shall be made by any railroad . . . between places or persons . . . .” The unreasonable difference as to rates found by the commission and prohibited by section 453 is necessarily “discrimination” (i.e., an undue difference in treatment) prohibited by section 21 of article XII of the Constitution.

The implied finding of the commission, which is thus clearly to the effect that the rates violated both section 453 of the Public Utilities Code and section 21 of article XII of the Constitution, is supported by the evidence. The mileage and the operating conditions from Basin to Colton and from Dunn to Kaiser were substantially the same, except that there was a difference in anticipated volume and regularity of shipments. The weighing of whatever factors may have tended to show that the differential was reasonable as against the approximate equality of distances and conditions of transportation was a matter within the exclusive jurisdiction of the commission. (Cal. Const., art. XII, § 22; Pub. Util. Code, § 1757; cf. Southern Pac. Co. v. Public Utilities Com., 41 Cal.2d 354, 359-362, 367 [260 P.2d 7].)

There is obviously an inconsistency between the implied finding that the difference in rates is unreasonable and the finding that the differential was not unduly discriminatory. In the original order of the commission the finding that there was no undue discrimination was rested in part upon a finding that the differential was justified by differences in anticipated volume and regularity of shipments, but this justification was omitted by the commission from its second order. The only other ground given by the commission for its finding that there was no undue discrimination consisted of the statement, made in both orders, that there could be no undue discrimination where there was lack of competition. This statement, however, amounts to an erroneous conclusion of law because it is contrary to section 453 of the Public Utilities Code, which prohibits unreasonable differences in rates as between localities and makes no exception for situations in which no competition is involved. Any unreasonable difference is thus prohibited by section 453 and necessarily constitutes undue discrimination.

We are, of course, concerned here with the statutory and constitutional prohibitions against any “unreasonable difference” or “discrimination” with respect to localities and places, and we are not confronted with the determination of the proper construction to be given to the language in section 453 of the code which prohibits a utility from granting any “preference or advantage” to any corporation or person and from subjecting any corporation or person to any “prejudice or disadvantage.” Whether or not the language relating to corporations and persons may be construed as referring to competitive relations, clearly such is not the case with the language pertaining to localities. Similarly, federal decisions under the Interstate Commerce Act^* which require a competitive relation as a basis for finding undue “preference or advantage” or undue “prejudice or disadvantage” are inapplicable here.

Findings of fact of the commission, including those of reasonableness and discrimination, are as a general rule final and not subject to review. (Pub. Util. Code, § 1757.) Here, however, the commission, as we have seen, has made inconsistent findings with respect to the principal issue involved and, in placing its finding that the differential was not unduly discriminatory upon the ground that there was no competition between Portland and the steel company, has followed an erroneous view of the law. The orders based on these findings must therefore be annulled.

The commission contends in effect that it is not bound by law to determine in this adversary proceeding the amount of a possible discrimination and to order its removal, but that it may proceed with the matter in an administrative investigation without participation by Portland as a litigant. Portland, however, has a right to file a complaint with respect to such matters, and the commission is required to hold a hearing, make an order which resolves the issues presented to it and fix the rates which it determines to be reasonable and just. (Pub. Util. Code, §§ 1702, 1705, 728.) In our opinion the statutory provisions, considered as a whole, give Portland the right to participate in the entire proceedings.

Section 734 of the Public Utilities Code provides that the commission may order a public utility to make “due reparation” to a complainant when the commission, after investigation, has found that the utility has charged an “unreasonable, excessive, or discriminatory” rate. Unreasonable or excessive rates are not involved here because Portland concedes that neither of the rates charged is in itself excessive or unreasonable and that both are within the zone of reasonableness within which a carrier may generally establish its own freight rates. (Cf. Southern Pac. Co. v. Railroad Com., 13 Cal.2d 89, 110-119 [87 P.2d 1055]; Pacific Tel & Tel. Co. v. Public Utilities Com., 34 Cal.2d 822, 829 [215 P.2d 441].) With respect to the question of whether the rates charged are discriminatory the commission, as we have seen, has made conflicting findings, and, in view of the conflict, there is no decision that an unreasonable difference existed. Moreover, there are no findings as to the time during which such a difference, if any, existed or as to the amount, if any, of the discrimination. Under the circumstances it would be premature for us to consider any of the remaining questions raised by the parties.

The orders of the commission are annulled.

Shenk, J., Carter, J., Traynor, J., and Spence, J., concurred.

* Section 3, paragraph (1) of the Interstate Commerce Act (49 U.S.C.A., ch. 1) reads, insofar as here relevant: “Undue preference or prejudice prohibited. It shall be unlawful for any common carrier subject to the provisions of this chapter to make or give any undue or unreasonable preference or advantage to any particular person . . . or locality . . . in any respect whatsoever, or to subject any particular person . . . or locality . . . to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.”