City of Louisville v. Cumberland Telephone Telegraph Company

• Decision Date: 07 June 1912
• Docket Number: No. 761,761
• Citation: 56 L.Ed. 1151,225 U.S. 430,32 S.Ct. 741
• Parties: CITY OF LOUISVILLE, Appt., v. CUMBERLAND TELEPHONE & TELEGRAPH COMPANY
• Court: U.S. Supreme Court

225 U.S. 430

32 S.Ct. 741

56 L.Ed. 1151

CITY OF LOUISVILLE, Appt.,

v CUMBERLAND TELEPHONE & TELEGRAPH COMPANY.

No. 761.

Argued March 7 and 8, 1912.

Decided June 7, 1912.

Messrs. Clayton B. Blakey, Huston Quin, and Joseph S. Lawton for appellant.

[Argument of Counsel from page 431 intentionally omitted] Messrs. William L. Granbery, Alexander Pope Humphrey, and Alexander Pope Humphrey, Jr., for appellee.

Mr. Justice Holmes delivered the opinion of the court:

This is a bill to prevent the enforcement of an ordinance of the city of Louisville fixing telephone rates, passed in 1909, after the attempt of the city to deprive the appellee of its franchise, when that seemed likely to fail. See Louisville v. Cumberland Teleph. & Teleg. Co. [May 13, 1912, 224 U. S. 649, 56 L. ed. ——, 32 Sup. Ct. Rep. 572]. The question raised is the usual one of con- fiscation. In consequence of the conclusion to which we have come we shall make a much more summary statement of the facts than in other circumstances might be necessary. The case was referred to a master and he reported in favor of the city. He was of opinion that in the first year after the ordinance should go into effect there would be a less of $30,000, but that in another year or so, in view of the probable increase of subscribers, the company would get back to its former net revenue with a probable continuous increase thereafter and would earn a sufficient return. The judge was of a different opinion, and for the purposes of the present decision only we shall adopt his figures, subject to the changes that we shall state, which leave us unprepared to sustain the decree without giving the ordinance a trial to show its actual effect.

The judge's values were:

                  Plant, including tool lines......... $1,575,000.00
                  Real estate............................ 162,000.00
                  Supplies on hand........................ 18,000.00
                  Working capital......................... 33,000.00
                                                         -----------
                                                       $1,788,000.00
                 
                  Gross earnings for 1908
                   including 15 per cent of
                   receipts from toll lines
                 
                   This was undisputed.................. $325,838.30
                 
                  The court added 10 per cent
                  more of the toll line receipts
                   making................................ 330,926.38
                 
                  The master was of opinion that
                   the remaining 85 per cent
                   should be added, making the
                   total gross earnings................. $369,087.00
                 
                  For the purpose of such an
                   estimate as this we think
                   that the toll lines should
                   be either in or out, and if
                   they are to be counted in
                   the property upon which the
                   appellee is not to be prevented 
                 
                

                   by law from earning
                   a fair return, as they are
                   above, and the expenses charged
                   to the appellee, the whole
                   return from them should be
                   added to the gross earnings
                   of the appellee. So we take
                   the total gross earnings as.......... $369,087.00
                 
                  Expenses as found
                   by the master and
                   accepted by the
                   judge............................... $216,363.07
                 
                  But this includes
                   amount charged
                   to the Exchange
                   for the use of
                   real estate (less
                   expenses for
                   repairs), which
                   in view of the
                   inclusion of real
                   estate above, it
                   should not............................ 11,707.52
                                                        -----------
                                                        $204,655.55
                 
                  Deduct corrected expenses from
                   gross earnings....................... 204,655.55
                                                        -----------
                   Net earnings........................ $164,431.45
                 
                  Even is we deduct from the net
                   earnings a sum estimated by
                   the judge as necessary above
                   actual expenditures of 1908
                   to make good average
                   depreciation......................... 24,095.02
                                                         ---------
                   we have............................ $140,336,43
                   which is nearly 8

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