Chesapeake & O. Ry. Co. v. Michigan Public Service Commission, Docket No. 19397

• Decision Date: 24 February 1975
• Docket Number: No. 2,Docket No. 19397,2
• Citation: 59 Mich.App. 88,228 N.W.2d 843
• Parties: CHESAPEAKE & OHIO RAILWAY COMPANY, Plaintiff-Appellee, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 843

228 N.W.2d 843

59 Mich.App. 88

CHESAPEAKE & OHIO RAILWAY COMPANY, Plaintiff-Appellee, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellant.

Docket No. 19397.

Court of Appeals of Michigan, Division No. 2.

Feb. 24, 1975.

Released for Publication May 12, 1975.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, sol. Gen., Thomas J. Emery, Asst. Atty. Gen., for defendant-appellant.

Foster, Lindemer, Swift & Collins, P.C., by Webb A. Smith, Lansing, for plaintiff-appellee.

Before HOLBROOK, P.J., and R. B. BURNS and BEBEAU, ^* JJ.

BEBEAU, Judge.

This is an appeal by both parties, the Chesapeake and Ohio Railway Company (railroad) and the Michigan Public Service Commission (commission) from a judgment issued by Ingham County Circuit Court. The commission appeals from an injunction permanently restraining it from enforcing rule 62 of its rules of practice and procedure (1954 ACR 460.72). The railroad appeals the trial court's ruling that the commission is empowered to conduct, on its own motion, investigations and issue orders concerning changes in railroad freight service.

This conflict began when the railroad removed its resident freight agent from its Harbor Beach, Michigan station. All the customer services which the resident agent had performed were transferred to a traveling agent whom customers could reach by phone. The railroad posted a notice describing After its motion for rehearing was denied, the railroad filed suit in Ingham County Circuit Court seeking a permanent injunction against the commission's enforcement of rule 62. In addition the railroad contended that the commission did not have the power to conduct investigations or issue orders relating to freight services on its own motion. On January 14, 1974, the court entered an order permanently enjoining the commission from enforcing enjoining court also ruled that, as a matter of law, the commission could legally investigate, on its own motion, changes in the railroad freight service and issue orders pursuant to its findings.

the change in service and contacted its customers individually to explain the new arrangement. The railroad did not give the commission the notice of this change of service, which is required by commission rule 62. Rule 62 requires a railroad planning to change its service at or from any agency station to notify the commission of its plans 45 days before the change in service is to take place. The commission indirectly learned of the Harbor Beach agency change when the railroad submitted a supplementary list of freight station services to the commission's Rates and Tariffs Section. Upon learning of the Harbor Beach agency, change, the commission commenced, on its own motion, an investigation and hearing. The railroad agreed that it had not complied with rule 62, but claimed that rule 62 was invalid. The commission issued an order approving the Harbor Beach agency change, but ordered the railroad to comply with rule 62 in the future.

The questions raised by the parties on appeal differ. We find two common issues raised on appeal: (1) whether the commission has the power to investigate freight service on its own motion and to issue orders pursuant to its investigation; and (2) whether the commission had authority to issue rule 62. We consider these issues successively.

The trial court held that the commission is empowered to investigate changes in freight service on its own motion and to issue orders consistent with its findings. The court based this holding on its interpretation of § 22(c) of the railroad act, 1909, P.A. 300, which states in relevant part:

'Whenever the commission shall believe that any rate or rates or charge or charges may be unreasonable or unjustly discriminatory, or that Any service is inadequate, and that any investigation relating thereto should be made, it may, upon its own motion, investigate the same. * * * on 10 days' notice to the common carrier of the time and place of such investigation, the commission may proceed to investigate Such rate or charge in the same manner and make like orders in respect thereto as if such investigation had been made upon complaint.' (Emphasis supplied.) M.C.L.A. § 462.22(c); M.S.A. § 22.41(c).

The court stated that the first sentence of § 22(c) clearly gives the commission the power to conduct an investigation 'upon its own motion' whenever it believes that 'any service is inadequate'. The court found the commission's power to issue orders in the last sentence of § 22(c). There, the statute provides that the commission shall conduct its investigation as if the 'investigation had been made upon complaint'. The court then looked to subsection (a) of § 22 which provides that when an investigation is made upon complaint, the commission is empowered to issue orders pursuant to its findings, M.C.L.A. § 462.22(a); M.S.A. § 22.41(a).

The railroad argues that the railroad act does not give the commission the power to investigate freight service or to issue orders concerning freight service in the absence of a complaint. The railroad's argument is based on its contention that the commission's entire authority to regulate freight service is contained in § 13(a). That Section states:

'All railroads shall keep and maintain adequate and suitable freight depots, buildings, switches and sidetracks for the The railroad stresses the fact that § 13 does not provide for investigation by the commission on its own motion; only for investigation pursuant to complaint. It interprets § 22(c) as not applying to the regulation of freight service, but only to regulation of rates. According to this interpretation, the commission may investigate freight service on its own motion only as such service relates to the rates charged for it. The railroad bases its interpretation of § 22(c) on a comparison of the section's first and last sentences. The first sentence provides that the commission may conduct an investigation whenever it believes 'any rate * * * or charge * * * may be unreasonable, or That any service is inadequate'. (Emphasis supplied.) The last sentence provides that, after notice to the railroad, the commission may conduct the investigation and issue orders concerning 'such Rate or charge'. (Emphasis supplied.) The Legislature, the railroad notes, intentionally mentioned only rates and charges, not service, when empowering the commission to investigate and to make orders. By excluding 'service' from the enabling language of the last sentence, the railroad argues, the Legislature intended to empower the commission to investigate and issue orders on its own motion only when it believed a rate or charge to be unreasonable in light of the services rendered. It did not empower the commission to Sua sponte investigate only freight service.

receiving, handling, and delivering of freight transported or to be transported by such railroads. Upon the filing of complaint with the commission and hearing thereon as provided in § 22, the commission is authorized to make full inquiry in the matter of station facilities, * * * as it shall deem for the public interest and shall be just and reasonable.' M.C.L.A. § 462.13(a); M.S.A. § 22.32(a).

We agree with the trial court's interpretation of § 22(c) and with its holding on this issue. We will discuss separately our holding concerning the commission's power to investigate and our holding concerning the commission's power to issue orders.

POWER TO INVESTIGATE

Where statutory language is unclear, the primary rule of construction is to ascertain and give effect to the intention of the Legislature. Aikens v. Department of Conservation, 387 Mich. 495, 198 N.W.2d 304 (1972). In construing a statute, it's spirit and purpose should prevail over its strict letter. People v. McFarlin, 389 Mich. 557, 208 N.W.2d 504 (1973). We find that the Legislature intended the commission to investigate freight service on its own motion. Our interpretation of the legislative intent is based on two factors, the history of the Public Service Commission and our interpretation of relevant sections of that act, specifically §§ 4(a) and 44. The history of the Public Service Commission manifests a clear legislative intent that the commission should be able to conduct investigations without a prior complaint by a consumer. The commission was originally established to protect the consumer. The Legislature sought to remedy the imbalance between utilities and the consumer by creating an agency which would be a watchdog for and representative of the consumer.

The fact that the Legislature intended the Public Service Commission to act on its own, not simply to react to complaints of consumers, is further borne out by the history of the railroad act. In 1909, the Legislature created a Railroad Commission, one of whose functions was 'to insure adequate service'. The Legislature incorporated the Railroad Commission into the Public Utilities Commission by 1919 P.A. 419, § 3. Three years later, Chief Justice Fellows, interpreting the 1919 act, stated that 'the former Michigan railroad commission * * * was not limited in its action exclusively to cases brought before it on complaint, but could act on its own motion'. Taylor v. Michigan Public Utilities Commission, 217 Mich. 400, 405, 186 N.W. 485, 488 (1922). The Public Utilities Commission was abolished by the Legislature in 1939 and it The Public Service Commission was thus created to vigorously regulate all public utilities, certainly including the railroads. All of the duties and powers of the original Railroad Commission, including the power to act on its own motion, have been transferred to the Public Service Commission. M.C.L.A. § 460.4; M.S.A. § 22.13(4).

created the Public Service Commission. [59 Mich.App. 95] It did so because the Public Utilities Commission had not taken an active enough role in regulating utilities. 1939 P.A. 3; M.C.L.A. § 460.4; M.S.A. § 22.13(4).

A reading of relevant sectio...