City of Roswell v. Mountain States Telephone & Tel. Co.

• Decision Date: 24 June 1935
• Docket Number: No. 1155.,1155.
• Citation: 78 F.2d 379
• Parties: CITY OF ROSWELL, N. M., v. MOUNTAIN STATES TELEPHONE & TELEGRAPH CO.
• Court: U.S. Court of Appeals — Tenth Circuit

78 F.2d 379 (1935)

CITY OF ROSWELL, N. M., v. MOUNTAIN STATES TELEPHONE & TELEGRAPH CO.^*

No. 1155.

Circuit Court of Appeals, Tenth Circuit.

June 24, 1935.

H. C. Buchly and O. O. Askren, both of Roswell, N. M. (Neil B. Watson, of Roswell, N. M., on the brief), for appellant.

E. R. Campbell, of Denver, Colo. (Elmer L. Brock, John P. Akolt, and Milton Smith, all of Denver, Colo., on the brief), for appellee.

Before LEWIS, McDERMOTT, and BRATTON, Circuit Judges.

BRATTON, Circuit Judge.

The city of Roswell instituted this action in the state court to enjoin the Mountain States Telephone & Telegraph Company, hereinafter called the company, from further maintaining its poles, wires, appliances, and equipment in the streets, alleys, and other public places of the city and to require their removal. It was alleged that the company owned a franchise which expired on May 24, 1919, and that it continued thereafter to occupy the streets and alleys without right. Treating such occupancy as a nuisance, a mandatory injunction in the nature of ouster was appropriately prayed.

The suit was seasonably removed to the United States court on the ground of diverse citizenship. The company thereafter answered pleading a grant under chapter 141, Laws of New Mexico 1909, to use and occupy the streets and alleys; a right to such use under Ordinance No. 278, dated February 24, 1914; a prescriptive right or easement subject to reasonable police regulations; laches; limitation; lack of equity; prematurity of the suit and contravention of the Commerce Clause of the Constitution of the United States (article 1, § 8, cl. 3).

These are the facts upon which the rights of the parties rest. The town of Roswell granted a franchise to the Roswell Telephone & Manufacturing Company on May 24, 1894. It was for a fixed period of twenty-five years and by its own provisions expired May 24, 1919. Early in 1909 the Colorado Telephone Company constructed a long-distance telephone line into the city of Roswell and there connected it with the exchange of the local company having the franchise. In making that connection it erected poles, lines, and other equipment at a cost of approximately $10,000, to which the city registered no objection. About two years later, that is on or near March 21, 1911, the Colorado Company purchased the plant, poles, wires, fixtures, and equipment of the local company and within a few months thereafter made additions and improvements in the system within the municipality at an outlay of $61,000. At the time of such purchase and as a part of the transaction, the local company executed a written assignment of its franchise which was filed for record in the county on April 1, 1911. The defendant company was organized on July 17, 1911, by a consolidation of the Colorado Telephone Company and the Tri-State Telephone & Telegraph Company. It then took over all the property, equipment, and businesses of the two former companies, including the telephone system at Roswell. The franchise was assigned to it and the assignment was duly recorded. In the latter part of 1913 the city attorney had a controversy with the company respecting telephone rates, and in connection therewith he and the mayor stated to a representative of the company that it had no right to occupy the streets and alleys because the franchise was not assignable. In reply the spokesman of the company stated that it did not rely upon the franchise; that instead, it relied upon chapter 141, Laws of 1909, for its right and authority to maintain its poles, wires, and equipment in the streets and alleys. The city passed an ordinance in February, 1914 requiring the company to place its wires and cables in a specified area in underground conduits or on combination ornamental poles to be located at places designated by the city engineer and approved by the council, with the provision that the city could maintain its street light fixtures on such poles free of charge. The company erected and has since maintained the ornamental poles and the city has maintained its light fixtures thereon without cost. The city has from time to time directed the places at which certain poles should be placed and the manner in which cables and leads should be maintained at certain places; and the company has complied with the directions. The increase in investment in equipment after the expiration of the franchise and prior to March 31, 1932, was $64,256.38, and the reasonable value of the plant on the latter date was $291,100.59. The company has for some time furnished the city free of cost wires in about 198 feet of cable near the center of the city for the operation of traffic signals, and in May, 1931, the city attached wires to the company's pole line between the city's water plant and its pumping station, a distance of about 6,000 feet, which has since been used to control the station. The company furnishes the city free of charge a certain number of telephones and use of its system for fire, police, and alarm purposes. The company and its predecessors have paid all state, county, and city taxes upon the property within the city, and from 1920 to 1933 it has paid annually a license tax for the privilege of conducting its telephone business.

The court concluded that the act of 1909 granted to the company the right to maintain its poles, wires, and other equipment in the streets, alleys, and other public places for the conduct of its business; that no franchise from the city was necessary to the exercise of that right; and that none of the other defenses interposed was well taken. The bill was accordingly dismissed and this appeal draws that action in question.

Chapter 141, Laws of 1909, to which reference has been made, is entitled "An Act relating to Corporations for the Purpose of Generating, Producing, Transmitting, Distributing, Selling or Utilizing Gas, Electricity or Steam for Lighting, Heating, Power or other Purposes, and Providing Penalties for Interference with their Pipes, Wires, Meters or other Appliances." The relevant sections provide:

"Section 1. Corporations for the generation, production, transmission, distribution, sale or utilization of gas, electricity, or steam, for lighting, heating, power, manufacturing or other purposes may be organized under the general incorporation laws of this Territory. In addition to the statements now required by law the certificate of incorporation of every such corporation hereafter organized for one or more of such purposes shall set forth: the location of its plant or plants, and the general course and route of its line or lines of pipes, wires, cables or conduits stating the cities, towns or counties where its operations are to be carried on.

"Sec. 2. Such corporations may acquire water rights for power plants or other purposes either by purchase, by appropriation under the laws of this Territory or of the United States or by acquiring rights of persons or corporations having made such appropriations or filed applications therefor, and are authorized to place their pipes, poles, wires, cables, conduits, towers, piers, abutments, stations and other necessary fixtures, appliances and structures, upon or across any of the public roads, streets, alleys, highways and waters in this Territory subject to the regulation of the County Commissioners and local municipal authorities.

"Sec. 3. The County Commissioners of the several counties are hereby authorized to permit such corporation to use the public highways and the streets and alleys of unincorporated towns for their pipes, poles, wires, cables, conduits, towers, transformer stations and other fixtures, appliances and structures: Provided, That such use shall not unnecessarily obstruct public travel and such County Commissioners and municipal authorities of incorporated cities and towns are hereby authorized to grant franchises to corporations for such purposes within their respective jurisdictions."

Chapter 50, Laws 1912, amended section 1 by omitting therefrom the provision requiring a statement concerning the location of the plant and the route of the lines, wires, cables, and conduits, but the amendment has no significance here and may be dismissed without further consideration. The statute in its present form is found in sections 32-401 to 32-403, Comp. St. N. M. 1929. Some argument is advanced as to whether a telephone company comes within its purview. It does not name the corporations embraced therein, but includes them by reference to their functions. It is provided that those created for the purpose of generating, producing, transmitting, distributing, selling, or utilizing gas, electricity, or steam for lighting, heating, power, manufacturing, or other purposes, may be organized under the general incorporation laws of the then territory. The parties stipulated and the court expressly found that the company does and its predecessors did generate and produce electric energy and transmit it over wires for the rendition of telephone service to the public, both local and long distance. We are told that there is no other statute in New Mexico which expressly authorizes the incorporation of a telephone company and our research has failed to disclose one. Section 6 of article 11 of the Constitution of the state authorizes the State Corporation Commission to issue charters to domestic corporations and to grant permits to foreign corporations to transact business within the state; and section 7 expressly empowers the Commission to fix, regulate, and control telephone rates. Ever since New Mexico became a state in 1912, the Commission has construed the statute in question to include telephone companies and has administered it in that manner in issuing domestic charters, in granting permits to foreign corporations, and in the exercise of its constitutional power with respect to rates. The Legislature has convened repeatedly while the administrative body thus interpreted the statute...