City Of Columbus v. Public Utilities Commission

• Decision Date: 05 July 1921
• Docket Number: 16562
• Citation: City Of Columbus v. Public Utilities Commission, 103 Ohio St. 79, 133 N.E. 800 (Ohio 1921)
• Parties: The City Of Columbus, By Etc., v. The Public Utilities Commission Et Al.
• Court: Ohio Supreme Court

133 N.E. 800

103 Ohio St. 79

The City Of Columbus, By Etc., v. The Public Utilities Commission Et Al.

No. 16562

Supreme Court of Ohio

July 5, 1921

Public utilities commission - Jurisdiction - Telephone companies - Merger of corporations - Authority to increase rates - Existing municipal franchise - Power of municipality to establish rates.

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Mr Henry L. Scarlett and Mr. Charles A. Leach, city solicitors for plaintiff in error.

Messrs Daugherty, Todd & Rare); Messrs. Tolles, Hogsett, Ginn &amp Morley and Messrs. E. H. & w. B. Turner, for defendants in error.

It is ordered and adjudged that the order of the public utilities commission be, and the same is hereby, reversed.Four members of the court concur in this judgment.But inasmuch as the judges who concur are not agreed upon the grounds of reversal, no authoritative opinion setting forth the reasons of the judgment is filed in the case.The views of the individual judges may, however, be stated in separate opinions.

Order reversed.MARSHALL, C. J., JOHNSON, HOUGH and WANAMAKER, JJ., concur.

MARSHALL C. J., concurring.

This cause comes from the Public Utilities Commission, and the city of Columbus seeks reversal of an Order made by the commission relative to rates to be charged by The Ohio State Telephone Company in the city Of Columbus, Ohio.The order of the commission approves rates in excess of Certain rates stipulated in a franchise granted by the city of Columbus to The Columbus Citizens Telephone Company, in 1899, and the commission claims the right to fix a rate in excess of the provisions of said ordinance, by virtue of a reservation made by the commission in certain merger proceedings in the year 1914, wherein a number of telephone companies having plants in cities throughout the state of Ohio merged their plants and their companies into one corporation then formed under Ohio laws under the name of The Ohio State Telephone Company.

The question presented by this record is whether the municipality, in 1899, had the power to make a contract with the telephone company agreeing upon a rate for product and service for a period of twenty-five years.

On May 8, 1899, the city of Columbus passed an ordinance granting a franchise to The Columbus Citizens Telephone Company, which company was not theretofore doing business in the city of Columbus, authorizing and empowering the board of public works to enter into a contract with the company, and pursuant to the provisions of the ordinance the board of public works did, on the 5th day of June, 1899, enter into such contract.And on the 12th day of June, 1899, another ordinance was passed affirming the contract, in which ordinance the provisions of the contract were fully set out.The contract provided that the telephone company, its successors and assigns, be granted the right and privilege, for the period of twenty-five years from the taking effect of the contract and ordinance, to enter upon and use the streets and public ways of the city for the purpose of digging trenches and laying conduits therein, erecting poles, and placing wires and cables in said conduits and on said poles, and all other necessary things to enable the company to construct, maintain and operate a telephone exchange, toll lines, and fire-alarm system.One of the provisions of the contract was that the city required the telephone company to lay not exceeding five miles of trench in the business portion of the city, and, if thereafter deemed necessary, to require other trenches and underground work, stipulating that in such event the company would be entitled to certain increases in the minimum-rate provisions~ as extensions were required by the city.It was further stipulated that for full copper metallic circuit connections the telephone company should be entitled to charge for residences a sum not exceeding $30 per year, and for business houses and offices a sum not exceeding $42 per year, within the corporate limits of the city, and that the rates charged patrons of the company under like circumstances should be uniform.The provision for increases of rates specifically provided that if the city should at any time after five years require the telephone company to place additional wires under ground the charges for rentals might be equitably increased, not exceeding $1 per month per telephone in excess of the original charges.The 13th subdivision of the contract contained the following provision: "The said The Columbus Citizens Telephone Company hereby agrees to faithfully and completely, carry out and fulfill each and all of the obligations, conditions and requirements in said contract contained on its part to be kept, observed and performed."The same provision appears in the second ordinance passed under date of June 5, 1899.Thereupon the company did construct its telephone exchange and system and did construct a conduit system In connection therewith.No complaint is made as to a full compliance by the telephone company of all the provisions of the franchise, except as to the increase in the rates, as hereinbefore stated, in excess of the established rates under the original contract.

On July 5,1914, The Columbus Citizens Telephone Company and thirteen other companies, applied to the public utilities commission for an order approving a merger agreement, and, after hearing, the commission approved the merger and approved the rates theretofore established by each and all of the telephone companies respectively, including the franchise-rates established by the contract entered into in 1899 between the city of Columbus and The Columbus Citizens Telephone Company.The order of the commission upon this point was as follows: "Ordered, that the authority herein granted, and the consent and approval of the Commission herein given be, and the same are hereby conditioned upon the provision that nothing in this order shall be held or construed to prevent, preclude or estop the Commission * * * of fixing and determining, at any time in the future, rates, charges, tolls and rentals that may be charged by said consolidated company, at any or all of its exchanges, or by any constituent company, upon complaint of any party or person or upon the Commission's own initiative," etc.

The city of Columbus was not a party to the proceedings in which that order was made.Thereafter, the merger company, The Ohio State Telephone Company, continued to comply with the rate provisions of the franchise of 1899, until February 1, 1917, at which time a new schedule of rates was filed by it with the Public Utilities Commission, without any application having been previously made for a modification of the commission's former order wherein the existing rates were required to be maintained.The new schedule demanded $54 per year for business telephones, with a cash discount of $3.Thereupon the city of Columbus brought suit in the court of common pleas Of Franklin county to enjoin the collection of the excess rates.A demurrer to that petition was sustained and the case appealed to the court of appeals, where the decision of the court of common pleas was reversed, the court of appeals holding that the provisions of the franchise were binding.That case has never been disposed of for the reason that an issue of fact was made as to whether or not the city of Columbus had ever required the telephone company to extend its underground system beyond the original five-mile limitation, and the case has lain dormant in that court, apparently pending a decision of the proceedings before the Public Utilities Commission.The case in the state court of appeals is reported in City of Columbus v. Ohio State Telephone Co., 13 Ohio App. 232.

On February 12, 1918, the telephone company filed an application with the Public Utilities Commission seeking a modification of its merger rate order of July, 1914, and pursuant to such application the commission, on June 3,1918, made an order requiring an inventory and valuation of all the property used and useful of the telephone company.Pending final disposition of that matter the commission on November 26,1919, made an emergency order, over the objection of the city of Columbus, fixing the rates of the company in the amounts requested, without hearing any evidence as to the cost of product and service.It is from this order that error proceedings are prosecuted in this court.

The application of the telephone company for confirmation of the new schedule of rates filed by it contains the following allegations:

"That by reason of the great increase in operating cost due to increased cost of materials, supplies and labor, and also due to the extended and enlarged service furnished by your petitioner to its subscribers and the public by reason of the greatly increased number of service lines and telephones installed and operated within the City of Columbus aforesaid and the extension of telephone service necessarily 'incident to such increase, the rates, charges, tolls and rentals fixed by your Honorable Commission by its said order of July 23,1914, are now and have been since a date prior to February 1,1917, unreasonably low and grossly inadequate; that said rates are insufficient to and have not pro- duced sufficient incOme properly to maintain and Operate the said telephone system in the City of Columbus; and that unless your petitioner shall be permitted to charge and collect said increased rates set forth in the schedule filed January 1, 1917, it will not only be unable adequately to discharge its obligation as a telephone company, both to its subscribers and the public, but it will continue to operate at an actual loss of large sums of money, and without any or adequate return on capital invested, and will be compelled to dissipate...