City of Osceola v. Middle States Utilities Co.
| Decision Date | 20 November 1934 |
| Docket Number | 42193 |
| Citation | 257 N.W. 340,219 Iowa 192 |
| Parties | CITY OF OSCEOLA et al., Appellees, v. MIDDLE STATES UTILITIES COMPANY, Defendant, Appellant; W. E. HAHN, Defendant |
| Court | Iowa Supreme Court |
Appeal from Clarke District Court.--HOMER A. FULLER, Judge.
An action to enjoin the defendant Middle States Utilities Company from increasing its telephone rates to patrons in the city of Osceola. From a decree granting the relief prayed said defendant appeals.
Reversed.
Hughes O'Brien & Faville, and Donnelly, Lynch, Anderson & Lynch for appellant.
O. M. Slaymaker and R. E. Killmar, for appellees.
Prior to October 1, 1897, the Iowa Telephone Company installed and operated a local and long distance telephone system in and through the city of Osceola, Iowa. The Clearfield & Mt. Ayr Telephone Company built a long distance line through said city in November, 1897. The Southern Iowa Telephone Company, as successor to the Clearfield & Mt. Ayr Company, put in operation a local exchange in said city in 1901. In March, 1913, the city, by proper ordinance and an election, granted a franchise to Ayres-Emary-Gibson to operate a local telephone exchange in Osceola. The franchise thus acquired was transferred to the Clarke County Mutual Telephone Company, which put in such local exchange. In December, 1920, the Iowa Telephone Company changed its name to the Northwestern Bell Telephone Company. Through a series of transfers, the dates of which are not material here, all the rights of all these companies eventually (in March, 1929) were transferred to the Middle States Utilities Company of Iowa. On September 1, 1929, the Middle States Utilities Company raised the rates charged for telephone service in said city to $ 3.75 for an individual wall business telephone and $ 2.25 for an individual wall residence telephone, per month. A 25-cent reduction was allowed if paid by the 10th of the month. In October, 1929, the petition in this action was filed in the district court of Clarke county, Iowa.
On the 5th day of April, 1897, the said city of Osceola passed two ordinances alleged to grant franchises, one to the Iowa Telephone Company and one to the Clearfield & Mt. Ayr Telephone Company for the establishment of local exchanges in said city. As will be later shown, neither of these transactions had any validity because of the lack of power on the part of the city to grant the same.
The first question raised by the appellant is bottomed on the following conceded facts: That the telephone company, "an Iowa corporation," constructed a long distance telephone system through the town of Osceola and put in operation a local system prior to October 1, 1897, and it is the claim of the present holder of the rights of the Iowa Telephone Company that it thereby acquired a perpetual franchise to operate such local and long distance system in said town of Osceola.
This gives rise to a question that has on several occasions been before this court. The right to grant such franchises is a part of the sovereignty of the state, and prior to the date on which the Code of 1897 went into operation, that power rested with the legislature. In pursuance thereof, the legislature enacted section 1324 of the Code of 1873, and following the same the General Assembly enacted chapter 104 of the Acts of the Nineteenth General Assembly. The material part of the aforesaid section 1324 of the Code of 1873 reads as follows:
"Any person or company may construct a telegraph 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."
The amendment made to said section by the aforesaid Nineteenth General Assembly was to insert after the word "telegraph" in the first line thereof the words "or telephone". The purpose of this amendment was to extend to telephone companies the same rights as were given to the telegraph companies in the aforesaid section 1324. This court has held that a telephone company which constructed its lines, either long distance or local or both, in a city or town, under the aforesaid amended section, thereby acquired a perpetual franchise for the use and occupation of the streets and alleys of such town, subject to the reserved rights of the state. This is the conclusion reached in our cases as follows: Chamberlain v. Iowa Telephone Co., 119 Iowa 619, 93 N.W. 596; State v. Nebraska Telephone Co., 127 Iowa 194, 103 N.W. 120; State v. Chariton Telephone Co., 173 Iowa 497, 155 N.W. 968; State v. Iowa Telephone Co., 175 Iowa 607, 154 N.W. 678, Ann. Cas. 1917E, 539.
It is undisputed in the record that prior to the taking effect of the Code of 1897 on the 1st of October, the Iowa Telephone Company had constructed a toll line system and a local telephone system in the city of Osceola, and that it was occupying the streets and alleys of said town, and had some fifty-five local telephones in operation in said town, connected with said system. It follows of necessity, therefore, that the rights of the Iowa Telephone Company to so conduct said system and occupy the streets and alleys of said town were perpetual, under our prior holdings. The city answers this proposition by asserting that, while this might be true as an original proposition, whatever rights the company had were lost by abandonment and nonuser.
To a fair understanding of this contention on the part of the city some further statements from the record must be made. First, as to the two ordinances referred to, one granting a franchise to the Iowa Telephone Company and the other to the Clearfield & Mt. Ayr Company, it is to be said that at the time they were passed (in April, 1897) the city had no authority whatever to pass such ordinances and no election was ever held to ratify the same, which, of course, could not add validity under the law as it then existed: and, further, they expired on the 5th day of April, 1922, so they have no bearing on any of the questions involved herein.
What is known in the record as the Ayres-Emary-Gibson ordinance was passed in March, 1913, was a regular ordinance followed by an election, and granted a franchise to operate a local telephone exchange in Osceola. Among other provisions contained therein was a provision that the grantees or their assigns shall not and it is the claim of the appellees that the telephone company has no right to increase its charges in excess of those above specified, and therefore that the appellees were entitled to the injunctive relief granted by the lower court.
That there may be such a thing as an abandonment of a franchise is held and discussed in the following cases: New Jersey, Given, Prosecutor v. Wright, 117 U.S. 648, 6 S.Ct. 907, 29 L.Ed. 1021; Thompson v. Schenectady R. Co. (C. C.) 124 F. 274; New York Elec. Lines Co. v. Empire City Subway Co., 235 U.S. 179, 35 S.Ct. 72, 59 L.Ed. 184; Todd v. Citizens' Gas Co. of Indianapolis (C. C. A.) 46 F.2d 855; Wright v. Milwaukee Elec. Ry. & Light Co., 95 Wis. 29, 69 N.W. 791, 36 L.R.A. 47, 60 Am. St. Rep. 74; while in some of the states it is held that this doctrine of abandonment does not apply where the granting power has not given its consent. 12 R. C. L. p. 204, section 28. But, as a fundamental doctrine in all cases that have been brought to our attention, one of the necessary elements to constitute an abandonment is an intention to abandon; nonuser is not sufficient. See State v. Twin Village Water Co., 98 Me. 214, 56 A. 763; Wright v. Milwaukee Electric Ry. & Light Co., 95 Wis. 29, 69 N.W. 791, 36 L.R.A. 47, 60 Am. St. Rep. 74; Bergen Turnpike Co. v. North Bergen Tp., 95 N.J.L. 369, 111 A. 686; 26 C. J., p. 1042.
For the moment, therefore, we turn to the record to determine whether or not there is any evidence to show such intention. The record shows that after the Iowa Telephone Company had established its long distance and local exchange in said city the Clearfield & Mt. Ayr Telephone Company had come into the field, and shortly thereafter the Iowa Company lost all its local patronage, along about the year 1902, and for several years thereafter had no local telephones in said city except in four business houses which were connected with the switchboard for long distance or toll business. So far as the record is concerned, the poles and wires of the Iowa Telephone Company continued to occupy the same position in the streets and alleys of said city during all of said time; at least, there is no showing in the record that they were ever changed or removed. The Iowa Telephone Company still maintained its switchboard, took care of its toll business, and maintained the usual operators at its office for said purposes. If any conclusion is to be drawn from the record, it is that the Iowa Telephone Company was still exercising its rights under its perpetual franchise and was there ready to do a local business, but the other company had taken away all its patrons. This, in our opinion, is not a sufficient record to sustain the element of intention. In other words, the record is barren of sufficient evidence showing an intention on the part of the Iowa Telephone Company to abandon its rights under the legislative franchise. But, it is insisted that the acts and conduct of the Iowa Telephone Company and its successors...
To continue reading
Request your trial