33 Wn.2d 448, THE STATE OF WASHINGTON, on the Relation of Puget Sound Navigation Company et al., Appellants, v. THE DEPARTMENT OF TRANSPORTATION et al., Respondents
[No. 30568. En Bane.      Supreme Court      May 13, 1949.]
THE STATE OF WASHINGTON, on the Relation of Puget Sound
      Navigation Company et al., Appellants, v. THE
      DEPARTMENT OF TRANSPORTATION et al.,
                Respondents.«1»

Laws of 1943, chapter 258, § 1, p. 794, Rem. Supp. 1943, § 10433: "When complaint has been made to the Department of Public Service concerning the reasonableness of any rate, fare, toll, rental or charge for any service performed by any public service company, and the same has been investigated by the Department, and the Department has determined that the public service company has charged an excessive or exorbitant amount for such service, and the Department has determined that any party complainant is entitled to an award of damages, the Department shall order that the public service company pay to the complainant the excess amount found to have been charged, whether such excess amount was charged and collected before or after the filing of said complaint, with interest from the date of the collection of said excess amount."

Laws of 1943, chapter 258, § 3, p. 794, Rem. Supp. 1943, § 10433-2: "If the public service company does not comply

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with the order of the Department for the payment of the overcharge within the time limited in such order, suit may be instituted in any Superior Court where service may be had upon the said company to recover the amount of the overcharge with interest. . . . If the complainant shall prevail in such action, the Superior Court shall enter judgment for the amount of the overcharge with interest and shall allow complainant a reasonable attorney's fee, . . .

"The procedure provided in this section is exclusive, and neither the Supreme Court nor any Superior Court shall have jurisdiction save in the manner hereinbefore provided."

These sections of the statute have been considered by this court in connection with actions brought by patrons of common carriers, operating pursuant to the laws of this state.

It does not appear from the record that any complaint was presented to the department by patrons of appellant, by which recovery of overcharges was sought, nor are we advised that any action was instituted before the superior court for the recovery of any such alleged overcharges.

In the case of Hewitt Logging Co. v. Northern Pac. R. Co., 97 Wash. 597, 166 Pac. 1153, 3 A. L. R. 198, this court said:

"We find that the remedy afforded by the statute, while not in the strict sense of the term exclusive, is to the extent that it requires a submission of all controverted questions arising out of freight rates and freight charges mandatory, and that one aggrieved by an overcharge must first submit his petition to the public service commission within two years after his cause of action has accrued, as a condition precedent to the right to maintain an action, which is in form a common law action, modified only in so far as the statute touches the measure of recovery and the time within which the action may be brought."

In the case of Belcher v. Tacoma Eastern R. Co., 99 Wash. 34, 168 Pac. 782, it appeared that the defendant railroad company had invoked the aid of the Washington public service commission in canceling certain switching charges, which, apparently, were unjust and discriminatory. The company's petition had been granted by the commission, subject to the condition that the company "'within ninety

478 STATE EX REL. P. S. N. CO. v. DEPT. TR. [33 Wn. (2d)

days from the date of service of this order, refund to all claimants as their interests may appear'" certain sums collected or sought to be collected by way of switching charges. The plaintiff (appellant before this court), who had shipped logs over the railroad, without first filing a complaint with the public service commission asking for the recovery of alleged overcharges, brought suit before the superior court for the recovery of the excessive exaction. The superior court dismissed the action and, on an appeal by the plaintiff, this court affirmed the judgment, holding that the application of the respondent carrier to the public service commission, in view of certain statements made by the carrier in its petition, amounted to an agreement to refund all of the overcharges, but that, nevertheless, the action instituted by the plaintiff lacked merit because:

"The order entered by the commission in this case does not designate the individual shippers from whom the discriminatory exactions had been collected, nor does it ascertain or fix the amount due each. Section 91 of the act clearly contemplates that the commission must determine the amount of the overcharge in the first instance and its order constitutes the basis of the shipper's right of action in the superior court, in the event the public service company fails or refuses to comply with the order as entered by the commission. Under the holding in Hewitt Logging Co. v. Northern Pac. R. Co., supra, the appellant must first submit the claims to the public service commission and have the amount due determined by it and if, when this is done, the respondent refuses to comply with the order, institute an action in the superior court to enforce the collection of the amount found due."

See, also, State ex rel. Tacoma Eastern R. Co. v. Public Service Comm., 102 Wash. 589, 173 Pac. 626; State ex rel. Tacoma Eastern R. Co. v. Public Service Comm., 112 Wash. 629, 192 Pac. 1079; Belcher v. Tacoma Eastern R. Co., 117 Wash. 512, 201 Pac. 750; Tacoma Eastern R. Co. v. Public Service Comm., 117 Wash. 609, 202 Pac. 1, and Tacoma Grain Co. v. Northern Pac. R. Co., 123 Wash. 664, 213 Pac. 22.

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 479

In Northern Pac. R. Co. v. Sauk River Lbr. Co., 82 F. (2d) 519, the circuit court of appeals for the ninth circuit, reversing a judgment of the district court for the western district of Washington, northern division, held that a determination by the department of public works, fixing the amount due a shipper for overcharges on the shipment of freight, was a condition precedent to the institution of an action by the shipper against the carrier.

In the case at bar, the order of respondent department, directing the payment of refunds by appellant, was entered in a proceeding instituted by the department, inter alia, for the purpose of establishing rates to be charged by appellant for the transportation of passengers, motor vehicles, and freight. The proceeding was not initiated because of complaints by patrons, in accordance with the provisions of Rem. Supp. 1943, § 10433, supra, but was instituted by the department upon its own motion, and on the relation of certain groups and organizations, who had filed complaints against then existing rates charged by appellant and against proposed increases in those rates.

In the case of Pacific Coast Elevator Co. v. Department of Public Works, 130 Wash. 620, 228 Pac. 1022, it appeared that the department, on its own motion, complained of charges by public warehouse operators for the handling and storage of grain and hay, alleging that the existing charges were, in many instances, excessive and discriminatory. After a hearing before the department, an order was entered, fixing rates to be charged in the future by the owners and operators of warehouses within a certain territory. In addition, the order contained the following:

"'The various operators will be expected to refund any amounts collected in relation to the 1922 crop in excess of the amounts prescribed in this order. All such payments, however, should be refunded through the department of public works in conformity with Chapter 110 of the Laws of 1921. Any such refunds shall be paid to the Department of Public Works to be disbursed by it in conformity with such statute.'"

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The plaintiff, one of the warehouse operators, caused the order to be reviewed by the superior court for Thurston county, and, from an adverse judgment rendered by that court, appealed to this court. From the opinion, it does not appear that it was contended that the department had no authority to order refunds paid, as an incident to a proceeding for the determination of rates. However, the appellant did contend that, in so far as the order related to past charges, it was retroactive and void. Concerning this question, the court said:

"But this provision [of a statute cited], we think, is applicable only to the special case where recovery is sought for an overcharge made in a specific transaction, and is not applicable to a proceeding brought primarily to establish a future rate. That there is an essential distinction between the two proceedings is at once apparent. This distinction was pointed out by the supreme court of the United States in Baer Bros. Merc. Co. v. Denver & R. G. R. Co., 233 U. S. 479, wherein the court said:

"'That the two subjects of Reparation and Rates may be dealt with in one order is undoubtedly true. Texas & Pac. Ry. v. Abilene, 204 U. S. 426, 446. Robinson v. Balt. & Ohio R. R., 222 U. S. 506, 509. But awarding reparation for the past and fixing rates for the future involve the determination of matters essentially different. One is in its nature private and the other public. One is made by the Commission in its quasi-judicial capacity to measure past injuries sustained by a private shipper; the other, in its quasi-legislative capacity, to prevent future injury to the public.'"

This court affirmed the judgment of the lower court, holding that the order of the department referred only to charges paid after the department, by filing its complaint, had acquired jurisdiction to determine the rates to be charged. The opinion concludes:

"The wrong sought to be corrected was then existent. The powers of the department in such matters are legislative rather than judicial, and its powers were as potent from the time it acquired jurisdiction as they were at any subsequent time. We hold, therefore, that the order was not in this respect in excess of power."

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 481

Assuming that respondent department was not, by Rem. Supp. 1943, §§ 10433, 10433-2, supra, empowered to direct that, in the future, refunds be paid to certain persons, it does not necessarily follow that the department did not have authority to direct refunds as provided in the order which it entered.

In Northern Pac. R. Co. v. Baker, 3 F. Supp. 1, the court said:

"Where a power is given and no express provision is made as to the manner of its exercise, that which is lawful and necessary to the effective execution of the power is implied, State ex rel. R. R. Com. v. Great Northern R. Co., 68 Wash. 257-262, 123 P. 8, 11, . . ."

In State ex rel. R. Comm. v. Great Northern R. Co., 68 Wash. 257, 123 Pac. 8, this court said:

"The legislature, acting within its constitutional powers, has, by statute, created the railroad commission and entrusted to its jurisdiction the broad and complex field covered by the duties of common carriers in their relation to the public as such. A jurisdiction so vast is of necessity covered in general terms. The dominant purpose of the act is remedial. There is, therefore, conferred by necessary implication every power proper and necessary to the exercise of the powers and duties expressly given and imposed.

"'While in the abstract the power to prescribe rules and regulations for common carriers appertains to the legislative department, it is settled that within proper limits such power may be exercised through administrative officers and boards, and that in general such officers and boards have authority to do anything proper and necessary for the complete lawful exercise of the duties imposed upon them.

"'Wherever a power is given by statute, everything lawful and necessary to the effectual execution of the power is given by implication of law. [Citing cases.] . . .' State v. Atlantic Coast Line R. Co., 56 Fla. 617, 47 South. 969."

In the later case of State ex rel. Public Utility Dist. No. 1 of Okanogan County v. Department of Public Service, 21 Wn. (2d) 201, 150 P. (2d) 709, we said:

"It is well settled in this state, as elsewhere, that a public service commission, such as the department of public service in this state, is an administrative agency created by statute and as such has no inherent powers, but only such as have

482 STATE EX REL. P. S. N. CO. v. DEPT. TR. [33 Wn. (2d)

been expressly granted to it by the legislature or have, by implication, been conferred upon it as necessarily incident to the exercise of those powers expressly granted. [Citing cases and authorities.]"

In 51 C. J. 48, § 91, we read the following text:

"A public utility commission having power to regulate rates may, when it deems it justified, fix a temporary rate to be charged by a utility pending a valuation of the utility's property and the determination of a reasonable permanent rate."

See, also, 43 Am. Jur. 707, § 202.

[4] In the case at bar, respondent department allowed appellant to file temporary rates. The authority of the department to control such rates is not questioned, and the filing of this tariff was allowed for the benefit of appellant. Respondent department was by Rem. Supp. 1941, § 10424, supra, vested with power to suspend the temporary rates and prevent their becoming effective, so long as its order stood unamended and unreversed. However, the department, in the exercise of its discretion, allowed the temporary rates, which were higher than those previously in effect, to be charged. The power vested in the department to refuse to allow the new tariff filed by appellant to become effective, necessarily implies the power to allow the tariff to become immediately effective, pursuant to reasonable conditions or limitations.

The situation presented is comparable to that of an application for a certificate of public convenience and necessity filed with the department. When such a certificate is requested, the department may deny the application, grant it, or grant it subject to certain reasonable conditions. Rem. Rev. Stat., § 10361-1; 4 McQuillin, Municipal Corporations (2d ed.) 942, § 1768; 51 C. J. 52, § 95; 43 Am. Jur. 581, § 16.

[5] Respondent department, of course, was in duty bound to protect the traveling public from overcharges by any common carrier, and, at the same time, to see that the tariffs in force were sufficient to insure that public service corporations would receive fair and adequate returns for the services rendered. The rates which respondent allowed

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 483

appellant to charge temporarily, were subject to examination from the standpoint of fairness to both appellant and the public, and, during the experimental period, it was within the power of respondent department to allow appellant to charge according to its current tariff, upon the condition that refunds to patrons would be made if it should be determined that the temporary rates were unreasonably high. Appellant accepted the conditional allowance of its tariffs and acted thereon by collecting the temporary rates. Whether or not the department was correct in ordering that refunds to the patrons be made, presents a different question.

If respondent had lawful authority to impose conditions, pursuant to which refunds of charges found to be excessive should be made, the department was also vested with authority to make a final determination fixing reasonable rates, after due hearing and investigation, and to direct payment of refunds to patrons, if it were satisfied that the temporary rates charged had been excessive.

Matters concerning the method which should be followed by respondent in enforcing such an order in favor of particular patrons of appellant's transportation system, and how the order should be enforced, are questions which, in view of the determination which we reach in the case at bar, need not now be considered.

We hold that the respondent department is, pursuant to law, vested with authority, in proper cases, to direct the payment of refunds by an order entered after a hearing. As to whether refunds should have been directed to be paid, and, if so, in what amounts, we express no opinion.

In fixing fair and reasonable rates for the services rendered by appellant, respondent department was required to consider complicated questions which were difficult of solution. At the time the department was conducting the hearing which it had instituted, disputes between appellant and its employees, concerning wages and hours of labor, were being heard by the Federal arbitrator. It was known by all parties concerned that the result of this arbitration

484 STATE EX REL. P. S. N. CO. v. DEPT. TR. [33 Wn. (2d)

would be an important factor in connection with the determination of fair and reasonable rates to be charged by appellant.

It was, then, as a practical proposition, not only convenient but necessary when, at the close of the departmental hearing, the representatives of the department and those representing appellant agreed that the department would not fix and declare the rates which should be charged by appellant until the Federal labor arbitrator had announced his award. Until that definite announcement was released, estimates as to the wages which appellant would be required to pay would have been mere guesswork, or "nebulous," as was stated by Mr. Krieger, respondent's chief accountant. It was necessary that the arbitrator's award be first accomplished and released, and then considered by the department as a part of the record made before it, upon which the departmental order would be based.

[6] As above stated, the award, when it was released, presented certain matters concerning the future amount of appellant's payrolls, which questions certainly required study and consideration before just and fair rates could be fixed by respondent. In fixing rates at the termination of such a hearing as it was conducting, respondent could not take into consideration matters outside of its record, as a valid order must be based upon the record, and upon findings and conclusions lawfully made by the department from that record.

In State ex rel. Country Club of Seattle v. Department of Public Service, 198 Wash. 37, 86 P. (2d) 1104, this court, considering a question somewhat similar to that here presented, said:

"We come now to the most serious question raised on the appeal. The appellants contend that the findings, opinion, and order are, to a large extent, based upon (1) matters not shown by the evidence; and (2) occurrences which took place after the conclusion of the hearings. They call attention to the fact that our statutes provide for a complete transcript of all testimony (Rem. Rev. Stat., § 10423 [P. C. § 5608]), and that provision is made for review on this

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 485

record alone, both by the superior court (§ 10428 [P. C. § 5613]), and by this court (§ 10430 [P. C. § 5615]). . . ."

The opinion then refers to several authorities and continues:

"The point involved is, perhaps, as concisely stated in the case of Atchison, Topeka & Santa Fe R. Co. v. Commerce Commission, 335 Ill. 624, 167 N. E. 831, as in any other:

"'The commissioners cannot act on their own information. Their findings must be based on evidence presented in the case, with an opportunity to all parties to know of the evidence to be submitted or considered, to cross-examine witnesses, to inspect documents and to offer evidence in explanation or rebuttal, and nothing can be treated as evidence which is not introduced as such.'

"It is said in the cases cited that the regulatory body must base its findings on evidence before it, and that nothing can be treated as evidence which has not been introduced as such, and in one of the cases, that a violation of these principles constitutes 'a denial of due process,' and in another, is 'inconsistent with rational justice.'"

See, also, State ex rel. Pacific Tel. & Tel. Co. v. Department of Public Service, 19 Wn. (2d) 200, 142 P. (2d) 498.

In State ex rel. York v. Board of County Commissioners, 28 Wn. (2d) 891, 184 P. (2d) 577; this court, reversing a judgment of the superior court dismissing an action in mandamus, and thereby upholding the granting of a franchise by the board of county commissioners, said:

"We do not question the good faith of the board, nor do we presume to pass upon the wisdom of its determination. We do, however, assert our opinion, from a fair consideration of the evidence, that the board acted from a misunderstanding of the law, also that it acted precipitantly, and to that extent arbitrarily, respecting a matter which affected substantial interests of numerous persons, including the public utility then serving the county. The application was not urgent and deserved mature deliberation. In these circumstances, there was in truth no determination that the requested franchise was for the public interest, as required by statute."

In Interstate Commerce Comm. v. Louisville & Nashville R. Co., 227 U. S. 88, 57 L. Ed. 431, 33 S. Ct. 185, the supreme

486 STATE EX REL. P. S. N. CO. v. DEPT. TR. [33 Wn. (2d)

court, referring to a hearing which resulted in the fixing of railroad rates by the commission, said:

"But the more liberal the practice in admitting testimony, the more imperative the obligation to preserve the essential rules of evidence by which rights are asserted or defended. In such cases the Commissioners cannot act upon their own information as could jurors in primitive days. All parties must be fully apprised of the evidence submitted or to be considered, and must be given opportunity to crossexamine witnesses, to inspect documents and to offer evidence in explanation or rebuttal. In no other way can a party maintain its rights or make its defense. In no other way can it test the sufficiency of the facts to support the finding; for otherwise, even though it appeared that the order was without evidence, the manifest deficiency could always be explained on the theory that the Commission had before it extraneous, unknown but presumptively sufficient information to support the finding. United States v. Baltimore & Ohio S. W. R. R., 226 U. S. 14."

In Ohio Bell Tel. Co. v. Public Utilities Comm. of Ohio, 301 U. S. 292, 81 L. Ed. 1093, 57 S. Ct. 724, the supreme court of the United States said:

"When price lists or trade journals or even government reports are put in evidence upon a trial, the party against whom they are offered may see the evidence or hear it and parry its effect. . . .

"Regulatory commissions have been invested with broad powers within the sphere of duty assigned to them by law. Even in quasi-judicial proceedings their informed and expert judgment exacts and receives a proper deference from courts when it has been reached with due submission to constitutional restraints. West Ohio Gas Co. v. Public Utilities Comm'n (No. 1), supra [294 U. S. 63], p. 70; West Ohio Gas Co. v. Public Utilities Comm'n (No. 2), 294 U. S. 79; Los Angeles Gas & Electric Corp. v. Railroad Commission, 289 U. S. 287, 304. Indeed, much that they do within the realm of administrative discretion is exempt from supervision if those restraints have been obeyed. All the more insistent is the need, when power has been bestowed so freely, that the 'inexorable safeguard' (St. Joseph Stock Yards Co. v. United States, 298 U. S. 38, 73) of a fair and open hearing be maintained in its integrity. Morgan v. United States, 298 U. S. 468, 480, 481; Interstate Commerce

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 487

Comm'n v. Louisville & N. R. Co., supra [227 U. S. 88]. The right to such a hearing is one of 'the rudiments of fair play' (Chicago, M. & St. P. Ry. Co. v. Polt, 232 U. S. 165, 168)assured to every litigant by the Fourteenth Amendment as a minimal requirement. West Ohio Gas Co. v. Public Utilities Comm'n (No. 1), (No. 2), supra; Brinkerhoff-Faris Co. v. Hill, 281 U. S. 673, 682. Cf. Norwegian Nitrogen Co. v. United States, supra [288 U. S. 294]. There can be no compromise on the footing of convenience or expediency, or because of a natural desire to be rid of harassing delay, when that minimal requirement has been neglected or ignored."

See, also, State ex rel. Wright v. Morrison, 80 Ohio App. 135, 75 N. E. (2d) 106.

In 12 Am. Jur. 303, § 608, the rule is stated as follows:

"There is no hearing when the party does not know what evidence is offered or considered and is not given an opportunity to test, explain, or refute."

See, also, 42 Am. Jur. 479-483, §§137, 138.

When the department ceased to hear evidence and argument, the hearing was kept open in order that the award of the Federal arbitrator concerning wages and working conditions for appellant's employees might be considered when filed. It was recognized by all concerned that this award was a very material element to be considered in determining fair, just, and reasonable rates to be charged by appellant for its services to the public.

As above stated, the arbitrator, in his award, called attention to the fact that the conclusion which he reached would result in a substantial increase in the amount of wages to be paid by appellant in operating its transportation system.

Had there been no understanding between the parties that the arbitrator's award could be considered, appellant, nevertheless, would have been entitled, under the due process principle, to introduce evidence regarding the increase in its operation costs which it would be required to pay pursuant to the award, and other pertinent matters.

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The quotations from the departmental record, above set forth, under the dates June 11 and 18, 1947, show, beyond question, that it was understood and agreed by all concerned, including director Revelle and the department's counsel, that Mr. Seering would be requested "to make available a copy of his report after he hands down his award." During the colloquy June 11th, Mr. O'Brien, counsel for the unions, said that it was his "agreement," in substance, that Mr. Seering's award should be handed down prior to the determination by the department, whereupon Mr. Lordan, counsel for the department, stated: "That is our understanding." Examiner Starin then said:

"The understanding is then that subsequent to the arbitrator's award, statement will be made by Captain Fox and such statements as the company may wish to enter and that those both will be presented to the Department and could be considered by, the Department as part of the record in this proceeding."

This latter statement by Mr. Starin appears to have been made in the presence of director Revelle.

At the close of the hearing, June 18th, there was a lengthy discussion, quoted above, during the course of which the following occurred:

"MR. LORDAN: We likewise have an understanding upon the record . . . that when the arbitration award is completed and made and filed with the Department, that there was to be a statement filed or an exhibit which was to show on behalf of both Captain Fox and Captain Peabody what the effect of that award was in dollars of operating expense upon the Puget Sound Navigation Company for the year or for any period, any stated period, after the award was made. Is that correct, Captain Peabody? MR. PEABODY: That is right. MR. LORDAN: So that there will have to be a reservation of both documents, and on behalf of the Department's staff, I will undertake to see that as far as that exhibit is concerned, or those exhibits which are not distributed to all parties of counsel, that the staff will undertake that responsibility and duty. . . . EXAMINER STARIN: With reference to Exhibit No. 44 and Exhibit No. 45, those should be supplied to the Department immediately and with reference to Exhibit No. 43, which is to be the

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 489

report of the Labor Arbitrator and also the statement by the company concerning that, and statement by Captain Fox concerning that, the Department will rule that that must be filed with the Department within a reasonable time to receive consideration.

From the colloquy, quoted above, held June 18th among the director, examiner Starin, and counsel for the various interested parties, including the department, it appears, beyond question, that it was contemplated that Mr. Seering's award would be presented and considered, together with statements by Captain Peabody, on behalf of appellant, and Captain Fox, on behalf of the unions.

[7] Respondent department gives no satisfactory explanation of its disregard of the record made before it, as shown by the release of its own final order on the same day that the Federal arbitrator filed his award. This action of the department clearly resulted in a denial to appellant of due process of law, as appellant was deprived of all opportunity to introduce before the department evidence, which it claims was available, concerning the effect of the increase in its operating expenses that would necessarily follow from the considerably greater amount of wages it would be required to pay.

In respondent's brief, it is stated "that the Department had undoubtedly received and reviewed the Arbitrator's Award some time prior to the date of its release to the public on July 3, 1947."

The record nowhere discloses that the department did receive and consider the award prior to July 3rd, but, even had it done so, appellant was entitled to introduce evidence before the department concerning the award and to show contentions as to its effect upon appellant's operating costs. Respondent does not suggest that appellant was advised regarding the arbitrator's award prior to its release, and, if the department did receive an advance copy of the award, it should have been openly considered by the department, its possible effects discussed, and evidence concerning the same introduced, if desired, prior to the rendition of any final departmental order.

490 STATE EX REL. P. S. N. CO. v. DEPT. TR. [33 wn. (2d)

[8] The department included in its findings the following:

". . . after considering fully all of the evidence and all of the testimony we believe that $300,000.00 is a reasonable estimate of the effect of the decision handed down by the federal wage arbiter . . ."

It should not be assumed that respondent department had the benefit of considering an advance copy of the award, which was withheld from appellant. The departmental order contains nothing indicating the facts upon which the department based its "estimate." Mr. Seering, the arbitrator, was the person best qualified to appraise the effects of his award upon appellant's payrolls, and clearly stated his opinion, as above set forth.

The last-quoted portion of the department's findings cannot be accepted as a finding based upon the record before the department, which is now before this court for consideration.

In Manlowe Transfer & Distributing Co. v. Department of Public Service, 18 Wn. (2d) 754, 140 P. (2d) 287, 155 A. L. R. 928, this court quoted with approval from State ex rel. Model Water & Light Co. v. Department of Public Service, 199 Wash. 24, 90 P. (2d) 243, the following:

"'The findings of the department are to be given the same weight accorded to any impartial tribunal, and may not be overturned unless the clear weight of the evidence is against its conclusions, or unless it has mistaken the law applicable to the matter adjudicated, or, as sometimes expressed, unless the findings show evidence of arbitrariness and disregard of the material rights of the parties to the controversy.'"

We quote from the opinion in the Manlowe case:

"When it is remembered that, in many of these cases, the complaint is brought by the department, as it was in this case, and the department is, therefore, in effect, both the prosecutor and the finder of the facts, some substantial power of review as to facts must be left to the courts unless we are to abandon the fundamental safeguards of our jurisprudence."

May 1949] STATE EX REL. P. S. N. CO. v. DEPT. TR. 491

In the case at bar, we do not undertake to review the evidence contained in the record regarding technical matters important in fixing rates to be charged by appellant, as no evidence was introduced concerning a very essential and pertinent issue of facts bearing upon that question.

In view of the conclusion which we reach concerning the decision to be rendered, it is not necessary to discuss the extensive estimates, contained in the record and in the briefs of the respective parties, pertaining to appellant's operating revenues, operating costs, and net income for the year 1947, as the actual experience of appellant during that period may be introduced before the department, if desired. The same is true in connection with the refunds to patrons, ordered by the department.

Several other important questions inhere in the record, such as the ruling of respondent department in connection with appellant's Seattle-Victoria route, the department's removal of one ferry from the Seattle-Bremerton route, the matter of anticipated losses in the operation of appellant's bus lines, the maintenance of stand-by vessels, and the method followed by the department in determining appellant's rate base. We do not consider these questions, in view of the fact that the proceeding must be remanded to the department for further consideration.

Questions which have ceased to be active controversies may be eliminated, when the matter again is brought before the department.

[9] Upon the record before us, we hold that respondent department did not accord appellant a full and fair hearing before issuing the order before us for review.

The judgment of the superior court, affirming the "Findings of Fact, Opinion and Order" of the respondent director and of the department, is reversed, and the cause remanded to the superior court, with instructions to remand the proceeding to respondent department, directing that the department vacate its order of July 3, 1947, and reopen the proceeding for the taking of such additional competent evidence as may be necessary or pertinent to the questions to be determined.

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To clear the record, the order of the superior court, dated March 5, 1948, denying appellant's motion for an order vacating the findings of fact, conclusions of law, and judgment of February 18, 1948, and granting a rehearing, is vacated and set aside.

STEINERT, ROBINSON, SIMPSON, and HILL, JJ., concur.

SCHWELLENBACH, J. (dissenting) - The record shows that the award of the arbitrator was dated July 3, 1947. The statement of Captain Peabody, arguing that there would be additional operating costs in the amount of $933,936.88, resulting from the award, was dated July 21, 1947. On the same day, July 21, 1947, appellant filed in the superior court its petition for review of the proceedings before the department, alleging, among other things, that the failure to consider Captain Peabody's statement was a denial of due process.

It should be borne in mind that no additional testimony was to be introduced following the award of the arbitrator, but merely that Captain Peabody's statement (which was to be an argument) would be considered. The testimony was all in. At the hearing Mr. Lordan stated: