Cablevision of Chicago v. Colby Cable Corp.

• Decision Date: 09 March 1981
• Docket Number: No. 3-780A208,3-780A208
• Citation: 417 N.E.2d 348
• Parties: CABLEVISION OF CHICAGO, an Illinois Limited Partnership, and George W. Carlson, Plaintiffs-Appellants, v. COLBY CABLE CORPORATION d/b/a United Cable Television of Northern Indiana; Indiana Bell Telephone Company, Incorporated; Northern Indiana Public Service Company, and City of Hammond, Indiana, Defendants-Appellees.
• Court: Indiana Appellate Court

Page 348

417 N.E.2d 348

CABLEVISION OF CHICAGO, an Illinois Limited Partnership, and George W. Carlson, Plaintiffs-Appellants, v. COLBY CABLE CORPORATION d/b/a United Cable Television of

Northern Indiana; Indiana Bell Telephone Company,

Incorporated; Northern Indiana Public Service Company, and

City of Hammond, Indiana, Defendants-Appellees.

No. 3-780A208.

Court of Appeals of Indiana, Fourth District.

March 9, 1981.

Wayne C. Ponader, Theodore J. Nowacki, David R. Day, Bose McKinney & Evans, Indianapolis, William A. O'Rourke, Smith & Funk, Hammond, for plaintiffs-appellants.

James V. Donadio, G. Daniel Kelley, Jr., James A. Shanahan, Indianapolis, John E. Leeney, Alfred R. Uzis, Hammond, Joseph G. Manta, Philadelphia, Pa., Ice, Miller, Donadio & Ryan, Indianapolis, Leeney & Uzis, Hammond, Frumkin & Manta, Philadelphia, Pa., for Colby Cable Corp.

David C. Jensen, Eichhorn, Eichhorn & Link, Hammond, for Indiana Bell Telephone Company and Northern Indiana Public Service Co.

CHIPMAN, Judge.

This is an interlocutory appeal from the denial of a preliminary injunction. The plaintiffs, George Carlson and Cablevision of Chicago, brought this action for declaratory and injunctive relief challenging the validity of a cable television franchise purportedly granted by the City of Hammond to defendant Colby Cable Corporation d/b/a United Cable Television of Northern Indiana (United) in 1971.

Affirmed.

Between December 1970 and April 1971 Julian Colby met with the mayor of Hammond and various members of the city's Common Council (Council) and Board of Public Works and Safety (Board) to discuss the possibility of obtaining a cable television franchise. As a result of these meetings Colby drafted a franchise ordinance which was submitted to the Board at a meeting held February 16, 1971. At this meeting the Board recommended the Colby ordinance be submitted to the Common Council for passage.

On February 22, 1971, the Colby ordinance was introduced to the Council. Following a public hearing and various amendments and deletions, ¹ the franchise ordinance was unanimously adopted by the Council on April 2, 1971, and approved by the Mayor April 16, 1971.

During 1973 and 1974 Colby spent approximately $20,000 in obtaining the strand-mapping ² for the cable television system. For the next several years, however, the project stalled during a period of time coinciding with a general setback in the cable television industry. Then, as the state of the art improved, Julian Colby found himself unable to obtain funds to properly develop a cable television system in the Hammond area. This led to the May 2, 1979, sale of Colby Cablevision Corporation stock to Larry Flinn, and eventually to United. Prior to the sale, Flinn asked for an opinion from the Hammond City Attorney as to the validity of the Colby franchise. In an opinion letter dated April 11, 1979, the City Attorney stated the ordinance was "in full force and effect and has not been amended, rescinded or repealed since the date of passage."

To construct the cable television system it was necessary for United to attach the coaxial cable, which actually carries the television signals, to utility poles owned by two utilities in the Hammond area, Indiana Bell Telephone Company, Inc. (Bell) and Northern Indiana Public Service Company (NIPSCO). United entered into pole attachment agreements with Bell and NIPSCO on July 11, 1979, and October 1, 1979, respectively.

During the summer of 1979 United opened an office and brought in a chief engineer in order to commence construction. Julian Colby investigated and completed the acquisition of a tower site. Flinn spent the summer obtaining bonds for United, culminating in a $12,000 bond furnished to Bell and a $60,000 bond furnished to NIPSCO, each personally guaranteed by Flinn. In October of 1979 United submitted approximately 102 individual applications for pole license permits to Bell and NIPSCO. A survey for the United applications began November 12, 1979. During the survey, representatives of Bell, NIPSCO and United inspected each utility pole to determine whether it would be necessary to move any of the existing lines in order to attach the television cable. ³ By Christmas 1979, United had expended nearly $500,000 on the project.

The survey was completed February 18, 1980, however, Bell and NIPSCO started moving their respective wires on February 11, 1980, in order to make room for United's cable. By February 15, 1980, United's expenditures on the project totaled approximately $950,000 and by June 1980 exceeded $3,000,000.

Cablevision of Chicago (Cablevision) is an Illinois limited partnership engaged in the business of developing and promoting cable television systems in the Lake County, Indiana and Chicago areas. Daniel Sweeney of Cablevision met with the mayor of Hammond in July of 1979 to investigate the possibility of obtaining a cable television franchise. Sweeney was informed that a non-exclusive franchise had previously been granted to Colby in 1971. Sweeney, an attorney, received a copy of the Colby ordinance on or about August 23, 1979; he testified that he had "severe questions" about the validity of the Colby franchise from the first day he received a copy of the ordinance.

Cablevision and George Carlson, a taxpayer and member of the Hammond Common Council, commenced this action on June 9, 1980, seeking an order declaring invalid the purported cable television franchise Colby received in 1971 and requesting the defendants be permanently enjoined from exercising any of their rights under the 1971 ordinance. Plaintiffs also sought a preliminary injunction to halt any further construction. The complaint primarily questions the validity of United's franchise because the Colby ordinance was not preceded by a contract with the Hammond Board of Public Works and Safety, as required by chapter 21, section 5 of the Cities and Towns Act of 1905, presently Ind.Code 18-1-21-5. Generally, section 5 authorizes a city or town to grant franchises to various public utilities. ⁴

The defendants raise several lines of defense. They first contend that in 1971 cable television was not a "public utility" within the purview of IC 18-1-21-5. If, however, we determine cable television was a public utility then they contend the facts establish the company substantially complied with the statutory requirements for obtaining a valid franchise. As additional lines of defense they argue the plaintiffs lack standing to maintain this action and if they do have standing they are barred from relief by the equitable doctrines of estoppel and laches.

Trial of this cause commenced on June 16, 1980, and evidence was presented by all parties except the City of Hammond. ⁵ The trial was continued on June 18 to allow for additional discovery. On June 19, the trial court refused to issue a preliminary injunction for the plaintiffs, and this appeal follows.

We affirm.

I. STANDING

The doctrine of standing serves as a prudential limitation on the ability of individuals to seek redress in our courts. Generally, we yield to the political process and deny standing in those instances where a plaintiff alleges no special injury different in kind from that which is suffered by the community in general. ⁶ A well established exception to this rule is that a taxpayer may maintain an action when the injury complained of is the unlawful collection or expenditure of public funds. State ex rel. Haberkorn v. Dekalb Circuit Court, (1968) 251 Ind. 283, 241 N.E.2d 62; Zoercher v. Agler, (1930) 202 Ind. 214, 172 N.E. 186; Haywood Pub. Co. v. West et al., (1942) 110 Ind.App. 568, 39 N.E.2d 785. We also require the plaintiff to allege and show injury to a present interest, that is, to demonstrate his injury is more than a remote possibility. Department of Financial Institutions v. Johnson Chevrolet Co., (1950) 228 Ind. 397, 92 N.E.2d 714. Defendants argue neither Carlson nor Cablevision have standing in this case. They contend Mr. Carlson has not alleged nor shown any special injury, and that Cablevision does not have a present interest in the outcome of this litigation. We conclude that only Mr. Carlson should be dismissed from this lawsuit.

The record shows George Carlson has been a member of the Hammond Common Council for twenty-five years. Oddly enough he was the Councilman who introduced the Colby franchise ordinance for approval in 1971. He is a utility user and a taxpayer to "all local governmental entities." Carlson argues that as a taxpayer he has standing to "enforce public rights" where the action of the governmental body is "clearly" or "patently" illegal, citing Zoercher v. Agler, supra, Montagano v. City of Elkhart, (1971) 149 Ind.App. 283, 271 N.E.2d 475, and Meinschein v. J. R. Short Milling Co., (1973) 157 Ind.App. 53, 298 N.E.2d 495.

Zoercher v. Agler is readily distinguishable. That action was instituted by taxpayers against the City of South Bend and the State Board of Tax Commissioners to challenge the legality of a tax levy. The plaintiffs' standing in Zoercher was not based simply upon the fact they were taxpayers; they had standing because there was a nexus between their status as taxpayers and the injury complained of, i. e. the illegal collection of a tax. In the present case Carlson does not seek to challenge the legality of a tax, nor is he alleging the waste of public funds since there is neither a tax nor expenditure of funds by the City of Hammond. There is no connection between his status as a taxpayer and the alleged violation of statute. Zoercher simply cannot be read to give any taxpayer standing to enforce any public right.

Carlson also cites Montagano v. City of Elkhart, supra, for the proposition that a taxpayer has standing to challenge the actions of a public body which are clearly or patently illegal. In Montagano taxpayers of the City of Elkhart sought to challenge an annexation ordinance passed by the city council. They...