City of Des Moines v. Iowa Tel. Co.

• Decision Date: 05 April 1917
• Docket Number: No. 30792.,30792.
• Citation: 181 Iowa 1282,162 N.W. 323
• Parties: CITY OF DES MOINES v. IOWA TELEPHONE CO.
• Court: Iowa Supreme Court

181 Iowa 1282

162 N.W. 323

CITY OF DES MOINES

v.IOWA TELEPHONE CO.

No. 30792.

Supreme Court of Iowa.

April 5, 1917.

Preston and Weaver, JJ., dissenting.

Appeal from District Court, Polk County; Lawrence De Graff, Judge.

Action to recover rental fees for the space occupied by defendant with its poles and wires in the streets of the city of Des Moines under an ordinance passed by the city on December 30, 1912. The petition is in five counts, and seeks to recover the sum of $1 for each pole, and $1 for each mile of wire in the streets for the years 1910, 1911, 1912, 1913, and for part of the year 1914. The defendant denied generally and pleaded that as successor to the Central Union Telephone Company it acquired the right in perpetuity to maintain its wires and poles in the streets of the city free of charge. It also pleaded a former adjudication and an estoppel on the part of the city by its conduct and laches from maintaining this action. It also questioned the power of the city to assess and collect rentals for the use of its streets. On these issues the case was submitted to the jury on the theory that without reference to the ordinance the city was entitled to recover the reasonable value of the space occupied by the defendant for the years in question. The jury returned a verdict for plaintiff in the sum of $71,658.49, and from a judgment rendered thereon, defendant appeals. Reversed.Parker, Parrish & Miller, of Des Moines, for appellant.

H. W. Byers, Guy A Miller, and Thos. Watters, Jr., of Des Moines, for appellee.

DEEMER, J.

The Central Union Telephone Company was a corporation organized under the laws of the state of Illinois, and some time in the year 1882 it constructed a telephone exchange in the city of Des Moines, erecting its poles, wires, and other apparatus upon the streets, alleys, and public places of said city. It also erected exchanges in Davenport, Keokuk, Dubuque, and other cities in the state, and constructed and used long-distance lines connecting said exchanges.

About September 1, 1896, the Central Company sold to the Iowa Telephone Company, a corporation organized under the laws of this state, all its tangible property in this state, and also assigned and transferred to said company all its rights and franchises to operate it said exchanges and toll lines. After taking over the property by the Iowa Telephone Company it improved and extended the same, and has maintained and used the same for the transmission of messages down until the present. Its business is both state and interstate in character. At the time this action was commenced it had 13,991 poles and 27,385.7 miles of wire within the city of Des Moines.

On December 30, 1912, the city council of Des Moines passed an ordinance requiring every person or corporation to pay a rental fee of $1 for each and every telegraph or telephone pole used, possessed, or maintained by it upon any of the parks, streets, or alleys of the city, and $1 per mile of wires owned or used by any telegraph or telephone company. This ordinance became effective January 11, 1913.

This action was brought in October of the year 1913, and the first count of the petition is based upon the ordinance just quoted. The other counts were for the reasonable rental value of the space occupied by the defendant company of the streets, alleys, and public grounds of the city with its poles, wires, etc. The trial court eliminated the ordinance, and submitted the question to the jury as to the reasonable rental value of the space occupied by defendant.

Defendant claims that it was authorized by an act of the Legislature to use the streets and alleys of the city, and entitled to such use without being subject to any charge for rentals. The act upon which it relies reads as follows:

Or “any person or company may construct a telegraph or telephone line along the public highways of this state, or across the rivers or over any lands belonging to the state or to any private individual, and may erect the necessary fixtures therefor: Provided, that when any highway along which said line has been constructed shall be changed, said person or company shall, upon ninety days' notice in writing, remove said line to said highway as established. Said notice contemplated herein may be served on any agent or operator in the employ of said person or company. Such fixtures must not be so constructed as to incommode the public in the use of any highway or the navigation of any stream; nor shall they be set up on the private grounds of any individual without paying him a just equivalent for the damages he thereby sustains.” McClain's Annotated Code 1882, pp. 374, 375; Code 1873, as amended by Acts 19th Gen. Assem. c. 104.

This statute has not been substantially changed, and now appears as section 2158 of the Code. The controversy turns largely upon this section, although to a complete understanding of the case it may be well to say that on or about July 6, 1891, the city granted a franchise to the Central Union Company, whereby it reserved the use of 20 phones free of charge for city business. This ordinance also provided that:

“The rights and privileges hereby granted may at all times be subject to such ordinances or regulations of a police nature as the city council of said city may be authorized to impose and shall see fit to adopt, and said city shall have the right to attach to the top cross-arm of said telephone company's poles and fixtures its fire alarm and police wires: Provided that such attachments shall be made and maintained by said city so as not to interfere with the proper use and operation of said telephone company's plant, and said attachment shall be made under the direction of said company's local manager. And any power of the city regarding the placing of wires and fixtures underground is hereby reserved to be exercised hereafter as the city council may deem necessary.”

On April 6, 1903, the city passed another ordinance requiring telephone, telegraph, and other wires within certain districts to be placed underground, and also regulating the erection of ærial poles outside of said district. Again on December 30, 1912, the council passed another regulatory ordinance regarding the planting and placing of poles, the laying of conduits, the stretching of wires, and fixing the rental charge, which we have hitherto mentioned. Under this ordinance all telephone companies were required to file with the city engineer between the 1st day of January and April of each year a list of all the poles and wires occupying space in the streets of the city. The defendant complied with this last provision, but has failed to pay the rentals. As already stated, the case was not tried on the theory that recovery could be had under this or any other ordinance; the sole basis of liability being predicated upon the thought that as the city had the fee title to its streets and power from the Legislature to control the use thereof, it had the right to recover from defendant the reasonable rental value for the use of the space in the streets used and occupied by the defendant, during the five years next preceding the bringing of the action.

The defendant vigorously challenges this contention, and asserts that it and its predecessors had the right under the legislative grant of authority to use and occupy the streets and alleys of the city without securing the consent of the city, and without being liable to it for the use thereof. It also contends that the city had no power or authority from the Legislature to impose a rental for the use of the streets with its poles and wires, and that the Legislature, having plenary power, granted to it the right to use the city streets without compensation, and required no reimbursement to any one save owners of private property. Again, it contends that the legislative grant after acceptancethereof by the defendant and its predecessors and the investment of large sums on the strength thereof became a grant, and that the city could not thereafter impose any other conditions or provisions upon the exercise of the power conferred. It concedes the right of the city to exercise its police power, which neither the Legislature, or its creature, the municipality, could bargain away, and it also concedes that it is liable to taxation on its property under the law, but it denies the right to exact license fees save as an exercise of the police power, and denies the right of the city in the absence of express authority to impose a license or tax. Having acted under a grant from the state, it denies the right of the city to take away the grant or to impose any conditions thereon in the absence of express legislative authority, and claims that no such authority has been given, even if it were within the power of the Legislature to do so.

On the other hand, the city contends that it owns its streets, alleys, and public grounds the same as any private owner; that the Legislature by the act in question gave nothing but a mere permissive right which was at all times subject to such exactions as the city might see fit to impose for the use of its property and in the absence of any express authority from the Legislature, and without any ordinance it is entitled to recover the reasonable value of the use of its property.

While something is said regarding the reserved power of the state under its Constitution and laws, but little attention is given to this matter in argument, and that question is foreclosed by the recent decision of State ex rel. Shaver v. Iowa Telephone Co., 154 N. W. 678, wherein it is held that the additional legislation is simply regulatory in character, and was not intended to and did not apply to companies who took advantage of the section of the Code heretofore quoted.

Whilst it is broadly contended that there are statutes authorizing the city to exact a rental or a license fee for the use of the streets and alleys by telephone, telegraph,...