Title: Skjonsby Truck Line, Inc. v. Elkin
Citation: 325 N.W.2d 271
Docket Number: 10224
State: north-dakota
Issuer: north-dakota Supreme Court
Date: October 22, 1982

325 N.W.2d 271 (1982) SKJONSBY TRUCK LINE, INC., Fargo, North Dakota, Plaintiff and Appellant, v. Richard ELKIN, Bruce Hagen, and Leo Reinbold, as members of the North Dakota Public Service Commission; Matador Service, Inc., Jim's Hotshop Service, Dan Dugan Transport Company, K &amp; K Trucking, Inc., Hi-Line Trucking, Inc., Getter Trucking, Inc., Suhr Transport, Lawrence Transportation, M &amp; O Construction and Black Hills Trucking, Inc., Respondents and Appellees. Civ. No. 10224. Supreme Court of North Dakota. October 22, 1982. *272 Van Osdel, Foss &amp; Miller, Fargo, for plaintiff and appellant; argued by Todd Foss, Fargo. Daniel Kuntz, Asst. Atty. Gen., Public Service Com'n, Bismarck, for respondent and appellee Public Service Com'n; argued by Daniel Kuntz, Asst. Atty. Gen., Bismarck. Hovland &amp; Gambucci, Minneapolis, Minn., for respondent and appellee Hi-Line Trucking; argued by Frederick E. Whisenand, Jr., Williston. McIntee &amp; Whisenand, Williston, for respondents and appellees Getter Trucking, Inc., Suhr Transport, Lawrence Transp., M &amp; O Const.; argued by Frederick E. Whisenand, Jr., Williston. Fleck, Mather, Strutz &amp; Mayer, Bismarck, for Kjelbertson Const. Co.; no appearance. ERICKSTAD, Chief Justice. This is an appeal by Skjonsby Truck Line, Incorporated (Skjonsby) from a judgment of the District Court of Burleigh County, dated April 2, 1982, affirming an order of the Public Service Commission (PSC), dated October 19, 1981. We reverse. Skjonsby possesses Special Certificate of Public Convenience and Necessity Number 641 which, in relevant part, authorizes Skjonsby to transport "heavy construction equipment and other bulky objects ..." and "contractors equipment ... and related contractors materials and supplies ...." The certificate was originally issued in 1948 to E. Verl Maxwell and Gordon Gifford d/b/a G &amp; M Transfer of Fargo. Skjonsby purchased the certificate in 1964; and in 1965 the PSC amended the certificate to include the provision authorizing transport of "contractors equipment ... and related contractors materials and supplies ...." On June 2, 1981, Skjonsby filed a tariff with the PSC wherein Item 30 provided rates for the transportation of commodities "directly related to the development, exploration and production of oil and gas wells." On June 15, 1981, the PSC issued an Order of Suspension and Investigation and Notice of Hearing to determine whether or not Skjonsby's certificate authorized Skjonsby to transport those commodities referred to under Item 30 of its tariff. Subsequent to the hearing the PSC issued, on October 19, 1981, Findings of Fact, Conclusions of Law and Order, whereby it reissued Skjonsby's certificate to include express language prohibiting Skjonsby from transporting "oil field drilling rigs." Skjonsby appealed that aspect of the PSC's order to the district court, which subsequently affirmed the order. On appeal to this Court from the district court's judgment Skjonsby has raised, among others, the following issue, our conclusion to which is dispositive of this appeal: In its notice of hearing the PSC stated that the following three issues would be considered: It is undisputed that on June 26, 1981, Skjonsby and the PSC agreed that issue three would be withdrawn from consideration in the proceedings initiated by the PSC. At the hearing on July 7, 1981, Mr. Robert W. Senger, the hearing examiner and director of the Motor Carrier Division of the PSC, stated: Subsequent to that statement Skjonsby's counsel, Mr. Richard P. Anderson, requested a clarification by the examiner: Subsequent to the hearing the PSC entered the following pertinent findings of fact upon which it based its determination that Skjonsby's certificate did not authorize it to transport oil drilling rigs: The foregoing findings of the PSC demonstrate that it based its determination upon such factors as the present ability of Skjonsby to provide the service of hauling oil drilling rigs, the present need for the service of transporting oil drilling rigs, and the effect on other carriers if Skjonsby received authorization to transport oil drilling rigs. Those factors are expressly enumerated by Section 49-18-14, N.D.C.C., as matters properly to be considered by the commission in determining whether the public convenience and necessity warrants the issuing of a certificate: If the commission finds that the transportation to be authorized by the certificate is not consistent with the public convenience and necessity the commission shall not grant such certificate." The PSC expressly agreed that it would not consider such factors when it stipulated that issue three regarding public convenience and necessity would be withdrawn and not considered. Because the PSC stipulated the withdrawal of the public necessity and convenience issue but based its determination almost exclusively upon factors relating to that issue, we agree with Skjonsby that it failed to receive adequate notice affording it a fair hearing. Notice of an administrative proceeding is adequate if it apprises the party of the nature of the proceedings so that there is no unfair surprise. Hentz Truck Line, Inc., Etc. v. Elkin, 294 N.W.2d 774 (N.D.1980). If Skjonsby had not been led to believe, by the stipulation, that the issue of public convenience and necessity was withdrawn, it would have been adequately forewarned of the need to present evidence regarding such factors as its ability to transport oil drilling rigs, the need for such service in this state, and the effect its transport of oil drilling rigs would have on existing carriers. Although those were the factors upon which the PSC based its determination, the stipulation misled Skjonsby to believe that those factors would not be considered. An agency's interpretation of a certificate of authority issued by it is generally treated with deference by the courts and is not set aside unless it is unreasonable, arbitrary or capricious. Dart Transit Company v. United States, 567 F.2d 818 (8th Cir. 1977); Besl Corporation v. Public Utilities Commission, 45 Ohio St.2d 146, 341 N.E.2d 835 (1976); Link Trucking, Incorporated v. Public Service Commission of Utah, 526 P.2d 1184 (Utah 1974); Stony's Trucking Company v. Public Utilities Commission, 32 Ohio St.2d 139, 290 N.E.2d 565 (1972); Springer Corporation v. State Corporation Commission, 81 N.M. 133, 464 P.2d 552 (1969); Reaveley v. Public Service Commission, 20 Utah 2d 237, 436 P.2d 797 (1968). However, in this proceeding the PSC went beyond interpretation of the certificate and instead made a determination of whether or *275 not public convenience and necessity would justify an authorization for Skjonsby to transport oil drilling rigs. Because the PSC withdrew that issue, but based its decision on it, Skjonsby was not afforded a fair hearing. In civil actions the pleadings may be amended to include issues which, although not raised by the pleadings, were tried by express or implied consent of the parties. Rule 15, N.D.R.Civ.P. Although the North Dakota Rules of Civil Procedure generally are not applicable to administrative proceedings, Rule 1, N.D.R.Civ.P., see, also, Colgate-Palmolive Company v. Dorgan, 225 N.W.2d 278 (N.D.1974), the general rule that only issues which are raised and preserved in the lower court can be considered on appeal also applies to consideration of issues on appeal from administrative agency proceedings. See, Petition of Village Board of Wheatland, 77 N.D. 194, 42 N.W.2d 321 (1950). Unlike an issue in a civil action which simply has been omitted from the pleadings but tried by consent, the public convenience and necessity issue was expressly withdrawn from consideration in this case by stipulation of the parties; and Skjonsby objected during the hearing to the introduction of evidence relative to that issue.[1] Under the circumstances of this case we conclude that the public convenience and necessity issue was not tried with Skjonsby's express or limited consent, and we further conclude that Skjonsby preserved the question of inadequate notice on that issue for appeal purposes. In its written conclusions of law the PSC stated, in relevant part: The PSC is correct that it has authority to revoke or amend any certificate for good cause. However, pursuant to Section 49-18-16, N.D.C.C., the certificate holder must be given notice and opportunity to be heard before the commission can amend or revoke the certificate. Initially, Skjonsby may have been apprised of the public convenience and necessity issue by the PSC's notice, but when the PSC withdrew that issue it was improper for the commission to thereafter base its decision on it. Our standard of review on appeal from a district court decision involving an appeal from an administrative agency is prescribed by Section 28-32-19, N.D.C.C., of the Administrative Agencies Practice Act, which provides in relevant part: For the reasons previously stated in this opinion we conclude that Skjonsby was not afforded a fair hearing. Consequently, we must reverse the judgment of the district court which affirmed the PSC's order. Nothing in this opinion is intended to preclude the PSC from considering the issue of public convenience and necessity as it relates *276 to Skjonsby's authority to transport items under its certificate, provided that Skjonsby receives adequate notice of the contemplated proceedings and that the PSC otherwise complies with the requirements of the law regarding its regulation of motor carriers. In accordance with this opinion the judgment of the district court affirming the order of the PSC is hereby reversed. SAND, PAULSON, PEDERSON and EVERETT N. OLSON, District Judge, concur. OLSON, District Judge, sitting in place of VANDE WALLE, J., disqualified. PEDERSON, Justice, concurring specially. I agree with the opinion authored by the Chief Justice but think that a minor clarification would be helpful. Even though the North Dakota Rules of Civil Procedure generally are not applicable to the proceedings before the administrators, we have said that those rules are applicable on appeals from decisions of administrators. See Schroeder v. Burleigh Cty. Bd. of Com'rs, 252 N.W.2d 893, 895 (N.D.1977). [1] Skjonsby's counsel objected as follows: "MR. ANDERSON: Mr. Examiner, before Mr. Clark testifies, I was asked what Mr. Jacobs had to testify to. I would like to know what Mr. Clark has to testify to. The issues presented and the record of hearing are quite clear. It's an interpretive matter as to whether or not Skjonsby can haul oilfield commodities under his bulky articles or his contractors' authority. If Mr. Clark proposes to testify as to those two limited items only, I have no objection to his testimony. "MR. WHISENAND: We would offer to move that Mr. Clark of Getter Trucking, as a certified carrier operating in western North Dakota and throughout the State, does not view nor has ever recognized Skjonsby Truck Line, Inc., under its existing certificate as a competitive force or a viable competitor. "MR. ANDERSON: And I suggest that that's irrelevant to the two issues that are set forth in the Notice of Hearing for our consideration in this proceeding. This is a legal issue, and the questions are: Can he haul oilfield commodities under these two pieces of authority. Unless Mr. Clark proposes to present some expert testimony as to why Skjonsby can or cannot, I suggest his testimony is not relevant to these two issues."