Bennett v. Mountain States Tel. & Tel. Co.

• Decision Date: 20 February 1950
• Docket Number: No. 16187,16187
• Citation: 121 Colo. 325,215 P.2d 714
• Parties: BENNETT et. al. v. MOUNTAIN STATES TELEPHONE & TELEGRAPH CO.
• Court: Colorado Supreme Court

Page 714

215 P.2d 714

121 Colo. 325

BENNETT et. al. v. MOUNTAIN STATES TELEPHONE & TELEGRAPH CO.

No. 16187.

Supreme Court of Colorado, en Banc.

Feb. 20, 1950.

Bennett & Heinicke, Colorado Springs, for plaintiffs in error.

Brock, Akolt & Campbell, John R. Turnquist, Denver, for defendant in error.

JACKSON, Justice.

This case arose when the Telephone Company, on November 12, 1947, put into effect a new general rate schedule for the city of Colorado Springs applicable to business and residence telephones and to extensions. This schedule replaced one that had been 'substantially unaltered since prior to 1909.' Plaintiffs in error, who were plaintiffs in the trial court, as subscribers to the telephone service in Colorado Springs, sought an injunction against the company 'from charging or collecting rates for local telephone service in excess of the rates in effect prior to November 12, 1947,' as to either themselves or 'any other subscribers to such service.' They also sought a refund of 'the excess which may have been collected from plaintiffs or other subscribers,' which excess on an annual basis they alleged to be more than $211,480. They further asked that the suit be treated as 'a class action on behalf of plaintiffs and all telephone subscribers similarly situated within the city of Colorado Springs.'

The trial court dismissed the complaint upon motion of the defendant company, and this dismissal is set forth as the sole specification of error.

The gist of plaintiffs' contention is that the city council should have approved the rate increase by ordinance and not by resolution, on the theory that such action was an attempted regulation of utility rates. The argument is that the city of Colorado Springs is a 'home rule city', Article XX, Section 6, Colorado Consitution, and has full and exclusive powers to regulate telephone rates within its limits; that this power may be exercised only by an ordinance or by initiative or referendum, and that where a municipal act is by its charter or other organic law stipulated to be done by ordinance that act may not be done by resolution. It therefore is argued that the rate increase is ineffective. Reliance is placed upon section 65, article XII, Colorado Springs Charter, which reads: 'All power to regulate the rates, fares and charges for service by public utility corporations is hereby reserved to the people, to be exercised by them by ordinance of the council or in the manner herein provided for initiating or referring an ordinance. Any right of regulation shall further include the right to require uniform, convenient and adequate service to the public and reasonable extensions of such service and of such public utility works.'

The resolution which the city council actually adopted reads as follows:

'Whereas, the Mountain States Telephone and Telegraph Company has submitted to this Council a schedule of rates to be charged and collected for telephone service within the corporate limits of the City of Colorado Springs, and

'Whereas, this Council has examined said rates and has been fully informed as to the necessity for the filing of said schedule and the making of such charges and has found that said rates are fair, reasonable and equitable as for as appears from the limited basis of experience upon which said rates are based.

'Now, therefore, be it resolved that it shall be lawfull for The Mountain States Telephone and Telegraph Company to charge and collect for telephone service within the corporate limits of the City of Colorado Springs in accordance with the said schedule of rates submitted with its letter of application of June 5, 1947, to be effective on billing dates subsequent to November 20, 1947.

'It shall be lawful for the said The Mountain States Telephone and Telegraph Company to enforce its general tariff, rules and regulations which shall control said Company in its administration of the telephone service within the corporate limits of the City of Colorado Springs, which tariff, rules and regulations are kept on file by it with the Public Utilities Commission of Colorado.

'Be it further resolved that due to the limited period of experience upon which said rate schedule is predicated and the uncertainty as to the continuance of the conditions which appear to justify said rate schedule at the present time, that this body shall review and reconsider the propriety of said rate schedule on December 14, 1948.

'By order of the City Council of the City of Colorado Springs sitting as a board of Public Utilities within and for the City of Colorado Springs, November 12, 1947.'

The resolution was prepared and adopted pursuant to the provisions of Ordinance 1064, passed August 4, 1920 (being section 1098, article II, Code of Colorado Springs, 1922) which is in the following words: 'No company or corporation operating any public utility in whole or in part within the city of Colorado Springs shall change any rate, fare, charge or regulation substantially affecting its service without the consent of the city council of said city or of the electors thereof.'

The company maintains that since the new schedule adopted November 12, 1947, changed rates substantially affecting its service, it did obtain the consent of the city council by the council's resolution. Reliance is placed upon section 13(a), article III, which reads: 'At legislative sessions the council shall act only by ordinance, resolution or motion.' Subparagraph (b) shows the equal treatment of ordinances and resolutions in respect to recording of votes and measures affecting expenditures of money; subparagraphs (c), (d) and (e) deal with the formalities of ordinances; section 14 with the publication of an adopted ordinance; and section 15 with its amendment or repeal.

It will be noted that the ordinance which requires the 'consent of the city council of said city or of the electors thereof' to be obtained before a utility can make a substantial change in the rate structure, does not specify how the city shall give its consent; and since its charter provides that the council shall act 'only by ordinance, resolution or motion,' it would seem that, the method of consent not having been specified, a consent by resolution[121 Colo. 330] --being one of the three methods by which the charter allows the council to act--would suffice.

Plaintiffs contend that the city council can regulate rates only by ordinance, and that the consent to a new rate schedule filed by the utility is in effect a regulation by the city council and therefore requires action by ordinance. The authorities do not seem to support this latter statement.

Mr. Chief Justice Taft, in Wichita R. & Light Co. v. Public Utilities Comm., 260 U.S. 48, 43 S.Ct. 51, 54, 67 L.Ed. 124, dealt with section 20 of the Kansas Public Utilities law involving a similar consent provision as appears in section 1098, article II, of the code of Colorado Springs of 1922. The case before him involved an attempted changing of contract rates which we do not have in the instant case, but in the course of the opinion he said: 'It is said that the order in this case was authorized by section 20, and therefore that all that was needed was the filing of a schedule of changed rates and the consent of the Commission, and that no finding was required, as in sections 13 and 16. This construction of section 20 is doubtless correct, but it shows that the filing of a schedule of changed rates under that section cannot accomplish the result of abrogating contract rates. It could not do so, any more than would the original filing of a schedule of rates under section 11 requiring every public utility to publish and file with the Commission all schedules of rates do this. The consent of the Commission in section 20 is made necessary only to prevent changing schedules without notice to the Commission, and thus to secure a proper supervision of schedules. Such consent does not involve a hearing or a finding and a decision. The section does not, therefore, cover, or measure the essentials of, the proceeding in this case before the Commission which the order shows was upon pleadings and inter partes. We find nothing in State ex rel. Caster v. Kansas Postal Telegraph-Cable Co., 96 Kan. 298, 150 P. 544, which gives a different construction to section 20.'

Had the city council of Colorado Springs, as the rate-making body, considered the rates unreasonable, then there would have come into play the procedural due process, to which Mr. Chief Justice Taft refers, involving notice and a hearing and finding as to the reasonableness of the rates; and if the rates had been found unreasonable, then a fixing or regulation of them. Any fixing of rates by the council after such a procedure must...