City of Owensboro v. Top Vision Cable Co. of Ky.
| Decision Date | 22 September 1972 |
| Citation | 487 S.W.2d 283 |
| Parties | CITY OF OWENSBORO, Kentucky, a Municipal corporation of the Second Class, et al., Appellants, v. TOP VISION CABLE COMPANY OF KENTUCKY, a Kentucky corporation, Appellee. TOP VISION CABLE COMPANY OF KENTUCKY, a Kentucky corporation, Cross-Appellant, v. CITY OF OWENSBORO, Kentucky, a Municipal corporation of the Second Class, etal., Cross-Appellees. |
| Court | United States State Supreme Court — District of Kentucky |
Hugh D. Moore, Gilliam & Moore, Owensboro, for appellants and cross-appellees.
Edgar A. Zingman, Jon L. Fleischaker, Wyatt, Grafton & Sloss, Louisville, Joseph H. McKinley, McKinley & Howard, Owensboro, Smith, Pepper, Shack & L'Heureux, Washington, D.C., for appellee and cross-appellant.
GARDNER, Commissioner.
The City of Owensboro advertised for bids for a franchise to provide the citizens with community antenna television service (CATV). Top Vision Cable Company of Kentucky was granted the franchise. Pertinent provisions of the franchise agreement were as follows:
The effective date was December 17, 1965, with the grantee's having the privilege of continuing for 15 years.
Top Vision was granted the right to use the public ways of the city necessary for proper installation and maintenance of the system and also the city granted Top Vision the right, insofar as it could, to use poles and equipment of other utility companies within the city.
Construction was to be completed within two years. If not completed within two years the franchise was to become null and void. The city, in its discretion, could 'extend said two (2) year deadline from time to time upon written application for same by the second party * * *.
Top Vision was to provide coverage of all telecasts originating within a 40-airmile radius of Owensboro.
Top Vision was to pay the city a sum equal to 26 percent of the gross income from the business within the City of Owensboro.
If any provision of the franchise agreement was declared invalid, such declaration would not affect the remainder of the franchise.
Soon after the franchise was granted the Federal Communications Commission promulgated a rule prohibiting the importation of distant television signals into the top 100 television markets. Owensboro is located in one of the 100 largest markets, to wit, the Evansville, Indiana, market. Enforcement of the rule would prevent Top Vision from picking up television signals from Louisville, Nashville, Bowling Green and Paducah. While the franchise agreement required that Top Vision supply coverage of telecasts originating from transmitters located only within a 40-mile radius of Owensboro, if was alleged by Top Vision and seems to have been acknowledged by the city, as shown by subsequent events, that it was anticipated by both parties that a wider coverage would be supplied. Top vision alleged that the FCC rule was such a disappointment to prospective customers that many refused to accept Top Vision's service. This in turn, Top Vision claimed, made it more difficult to obtain capital to complete the work.
Before the initial two-year period expired Top Vision requested and was granted a 12-month extension of time (to December 20, 1968) in which to provide the service. The resolution authorizing the extension contained the provision, '* * * Whereas, the Board of Commissioners is aware of the matters now pending between the Top Vision Cable Company and the Federal Communications Commission and deem said request for an extension of time to be reasonable; * * *.' Near the end of the extended period Top Vision requested and was granted another extension to December 20, 1970. The resolution recited, 'Whereas the Board of Commissioners deem the unforeseen stringent regulation of the Federal Communications Commission now in force and the proposed proceedings challenging them, sufficient cause for granting the written application of Top Vision Cable Company, Inc. for an extension of time within which to complete its system with the City, * * *.'
Top Vision states that the city actively participated in trying to obtain a waiver of the FCC rule; that city officials wrote letters in behalf of Top Vision to the FCC and one of the city commissioners made a personal appearance before the FCC on May 21, 1969, in an effort to get a waiver of the ruling.
On March 26, 1970, in the consolidated cases of Wonderland Ventures, Inc. v. City of Sandusky, etc., 423 F.2d 548 (6th Cir.) (1970), the Court of Appeals for the Sixth Circuit held that the ordinance there in issue (similar to that contained in the present franchise) imposed a gross-receipts tax on CATV systems and was unconstitutional as a burden on interstate commerce in violation of the commerce clause of the United States Constitution. In the wake of that decision, Top Vision requested that it and the city 'renegotiate' the amount to be paid for the use of the public ways of the city. The city refused. Thereupon Top Vision instituted action in the federal court to have declared invalid the provision whereby it was to pay 26 percent of the gross receipts to the city. The city filed a pleading acknowledging the invalidity of the 26-percent provision and the suit was dismissed because no actual controversy existed. The order of dismissal was entered November 23, 1970.
On November 4, 1970, Top Vision made a written request to the city for the third extension. The request was denied by resolution dated November 6, 1970. The present action was instituted by Top Vision on December 19, 1970.
In its complaint Top Vision asked that it be declared that the city had no authority to require that local CATV operations be franchised by the city, and that it be declared that the city could not deny Top Vision the privilege of using the public right of ways upon payment of a reasonable fee. In the alternative Top Vision asked that it be declared that the 26-percent clause was severable and that the remainder of the franchise agreement be held valid with further declarations that Top Vision be required to pay only a reasonable sum for the use of the public ways, that Top Vision be given a reasonable time within which to complete the project, that the city refund the amounts paid under the 26-percent clause, and that the city be prohibited from advertising for the granting of another franchise during the pendency of the action.
The city's motion to dismiss the complaint was overruled. On the same day Top Vision moved for a summary judgment and on the same day the motion for summary judgment was sustained and judgment entered. The judgment made no mention of Top Vision's demand that it be declared that the city had no legislative authority to require CATV operations to be franchised. The judgment provided (1) that the 26-percent clause was severable and the remainder of the agreement was valid, (2) that the city and Top Vision renegotiate and arrive at a reasonable amount to be paid for the use of the public ways, (3) that the city grant Top Vision a reasonable time in which to complete the project, (4) that the city be enjoined from soliciting or considering bids or granting an exclusive franchise for a CATV operation within the city, and (5) that Top Vision not recover the fees paid under the invalid 26-percent clause.
In the city's motion to vacate the judgment one of the grounds was that the judgment was entered without the city's having filed an answer. It is noted that the city waived notice of motion for summary judgment. The judgment recites that the cause was submitted upon motion of the city to dismiss the complaint and upon motion of Top Vision for summary judgment. The judgment also recites that the court 'considered the pleadings, exhibits, memoranda and argument of counsel.' CR 12.02 provides that when upon motion to dismiss because the pleading fails to state a claim matters outside the pleading are presented, the motion shall be treated as one for summary judgment. It is obvious that the court and the parties treated the kindred motions together and that the efforts of the prospective parties relative to the motion to dismiss were also relied on in the motion for a summary judgment. It was not until after the summary judgment had been entered that the city raised the...
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