City of Superior v. Douglas Cnty. Tel. Co.

• Decision Date: 21 October 1909
• Citation: 122 N.W. 1023,141 Wis. 363
• Parties: CITY OF SUPERIOR v. DOUGLAS COUNTY TELEPHONE CO. ET AL.
• Court: Wisconsin Supreme Court

141 Wis. 363

122 N.W. 1023

CITY OF SUPERIOR

v.DOUGLAS COUNTY TELEPHONE CO. ET AL.

Supreme Court of Wisconsin.

Oct. 5, 1909.

Dissenting Opinion Oct. 21, 1909.

Appeal from Circuit Court, Dane County; E. Ray Stevens, Judge.

Action by the City of Superior against the Douglas County Telephone Company, and B. H. Meyer and others, constituting the Railroad Commission of Wisconsin. From an order denying a temporary injunction and sustaining a general demurrer to the complaint and sustaining a special demurrer interposed by the Railroad Commission, plaintiff appeals. Reversed in part, and affirmed in part.

Action to enjoin defendant telephone company from discontinuing maintenance of telephones in plaintiff's city and public library buildings under the agreement to do so free of charge to it pursuant to which they were placed therein, and nullify action of the State Railroad Commission requiring such discontinuance.

The complaint is to this effect: About May, 1904, plaintiff and defendant telephone company made an agreement whereby the former extended to the latter the privilege of placing one telephone in each of eleven of the former's departments in its city building and one in its public library building and promised to maintain the same so as to afford telephone communication between the company's patrons and such public officers, making all changes in such buildings necessary to the proper installation, and continue the facilities for telephone communication thus created during the life of the agreement and, in consideration of such privilege and the advantage to such company thus created of making its service more desirable to existing patrons and so to retaining their patronage and gaining new customers upon the faith of such increased scope of service, it agreed to accept the privilege as granted with the condition affixed thereto that telephone service should be first-class at all times and be continued so long as the company should maintain and operate a telephone system in the city. The company duly performed by installing and maintaining the telephones and full performance on both sides was continued down to the commencement of this action, when such performance, on the part of the company, was about to be interrupted, and could only be prevented by judicial intervention, because, October 14, 1908, defendant Railroad Commission, basing its action on the law of 1907 (Laws 1907, p. 448, c. 499) creating such commission, ordered the company, in disregard of its agreement, which was in full force at the time such legislation took effect, to discontinue performance. The company, pursuant to such order, notified plaintiff that it would cease performance of its agreement after November 10, 1908. The agreement contemplated substantial benefits to the telephone company as consideration for performance of its obligation, which benefits have in fact been enjoyed while some injury has been caused to plaintiff's property by reason of changes in its buildings necessarily made in the course of installing the telephones, and some benefit has accrued to the public. The discontinuance of the telephone service and removal of the telephones will inflict a substantial injury to plaintiff by reason of consequent necessary repairs. Appropriate relief was prayed for. A motion on behalf of the plaintiff for a temporary injunction was denied. The Railroad Commission demurred to the complaint for insufficiency and the same was sustained. Both determinations were closed by a single order from which this appeal was taken.

Marshall and Barnes, JJ., dissenting in part.

Thos. E. Lyons and T. L. McIntosh for appellant.

F. L. Gilbert, Atty. Gen., A. C. Titus, Asst. Atty. Gen., Miller, Mack & Fairchild, and Geo. B. Hudnall, for respondents.

MARSHALL, J. (after stating the facts as above).

The arguments of counsel cover a very wide range as to whether the transactionsdetailed in the statement show that a contract was made between appellant and respondent telephone company. On that branch, waiving the matter of public policy, such purely elementary principles are involved that it is not thought best to follow the intricacies of the arguments with which the court has been favored. What constitutes a contract, in the general sense, is too familiar to require discussion. If there was an offer on one side to render a service to the other within the competency of that other to receive for the use of its officers in the conduct of the public business or the convenience of the public, in exchange for a privilege of value within the competency of such other to grant and which was granted in such exchange, subject to legitimate conditions which were accepted, there is hardly room for argument but that a valid contract was made.

No pecuniary liability on the part of the city was contemplated in the transaction. Therefore, it is useless to consider appellant's charter provisions respecting the manner of making contracts in that field.

It is obvious that it was important for the telephone company to be able to afford its general customers facilities for communicating by telephone with the public offices. That opportunity could not operate otherwise than to render the service it offered in general more valuable than it would otherwise be and so attract customers and greatly extend its sphere of operations. That which it sought to obtain was then a legitimate basis for a contract. It is just as obvious that the service which it offered in return for the privilege sought could not be otherwise than valuable to appellant as a means of expediting the public business. Such privilege may well have been considered so specially valuable to the company as to be a fair equivalent for the free service, so-called, that is free as regards appellant rendering any direct pecuniary consideration therefor.

No question is raised, or could well be, but what it was competent for appellant to contract for telephone service. So there is no question of competency in general to be considered. It is argued that no contract was made because the offer of the company was only conditionally accepted by appellant. That, of course, does not cut any figure since the modified acceptance was submitted to by the company by installing the telephones. As in the case of any municipal privilege granted, no written acceptance was necessary. The actual enjoyment of the privilege granted was as effective to close the contract as a formal written acceptance, in the absence of any written law requiring a different acceptance.

Even in case of a legislative franchise granted upon specified conditions but without providing any manner of acceptance, use of the franchise constitutes an acceptance and creates contractual obligations. Heath v. Silverthorn Lead Mining & Smelting Co., 39 Wis. 146;Madison, Watertown & Milwaukee Plankroad Company v. Reynolds, 3 Wis. 287.

In a case of this sort parties are competent to contract the same as private persons. An offer on one side may be accepted by unqualified performance on the other, as well as in any other way, in case the offer does not otherwise require. This is so in harmony with the most familiar of elementary principles that nothing further need be said in respect to the matter. The facts show unmistakably that a binding contract was made as appellant claims, unless it is void upon grounds hereafter discussed.

It is suggested that the transaction contemplated treating appellant as a favored customer, contrary to public policy. It is conceded that there was no written law at the time the contract was made prohibiting the company from granting appellant a different rate for service than general customers, but it is insisted the circumstances fall within the common-law rule that a quasi public corporation should afford the service it offers, to every person upon the same basis that it does to any one under the same or similar circumstances; that any substantial departure therefrom is an unjust discrimination and contrary to sound public policy, rendering any contract for such discriminatory service unenforceable by judicial remedies.

The contract in this case having been made before the legislation occurred prohibiting discriminatory rates such legislation does not cut any figure in the case. If the contract were valid when made it is within the constitutional protection precluding the Legislature from impairing the obligations of contracts. Moreover, it is by no means certain but what the special circumstances in this case would, in any event, take the same out of the common-law rule mentioned. We need not go further on this branch of the case than to suggest that it is not every discrimination in the treatment by public service corporations of their customers which is condemned by the common law. Only unjust discriminations are so condemned. For special reasons, in the absence of any written law on the subject, such a corporation may make a different rate to one person than to another, or accept pay from one upon a money rate and from another in service of a legitimate character or some other reasonable equivalent, so long as the compensation demanded is within reason under the circumstances. This subject covers a broad field. We leave it without stating much more than the rule in general, nothing further being at all necessary to the case in hand.

It should be noted that the Legislature in enacting the law of 1907 (Laws 1907, p. 448, c. 499), appreciating there might be contracts existing between public service corporations and customers, valid in the absence of prohibition by written law, and that it was not within its competency to nullify or impair them, expressly provided at section 1797m91, that:

“The furnishing by any public utility, of any product or service at the rates and upon the terms and conditions provided for in any existing contract executed prior to April 1st, 1907, shall not constitute a discrimination within the...