City of Weslaco v. General Tel. Co. of the Southwest, 13820

• Decision Date: 29 November 1961
• Docket Number: No. 13820,13820
• Citation: 45 P.U.R.3d 290,359 S.W.2d 260
• Parties: CITY OF WESLACO, Texas, et al., Appellants, v. GENERAL TELEPHONE COMPANY OF THE SOUTHWEST, Appellee.
• Court: Texas Court of Appeals

Page 260

359 S.W.2d 260

45 P.U.R.3d 290

CITY OF WESLACO, Texas, et al., Appellants, v. GENERAL TELEPHONE COMPANY OF THE SOUTHWEST, Appellee.

No. 13820.

Court of Civil Appeals of Texas, San Antonio.

Nov. 29, 1961.

Rehearing Denied July 5, 1962.

Holdridge & Preston, San Angelo, Smith, McIlheran & Jenkines, Weslaco, for appellant.

Holdridge & Preston, San Angelo, for appellee.

POPE, Justice.

This is a telephone rate case. The trial court permanently enjoined the City of Weslaco, a home rule city, from enforcing the terms of a rate regulatory ordinance enacted June 21, 1960. The injunction was granted upon General Telephone's contention that the City had no power to regulate intra-state rates, and the local rates were confiscatory, as that term is used in rate cases. General Telephone Company of the Southwest v. City of Wellington, 156 Tex. 238, 294 S.W.2d 385, 389. We must determine (1) whether General Telephone exhausted its administrative remedy before resorting to the courts, (2) whether a Texas municipality has the power to regulate the rates for intra-state calls which originate among its inhabitants within the City, and (3) whether the depreciation, as an expense items was correctly and consistently computed by the court.

General Telephone exhausted its administrative remedy, and the trial court properly overruled City's plea to abate the suit. Hearings began in January, 1960, and proceeded intermittently on several occasions until June 21, 1960, when the City passed its ordinance fixing both intra-state and local rates. The ordinance was immediately effective. In the course of the hearings, City demanded certain information, particularly with respect to intra-state business. General Telephone steadfastly refused this information on the grounds that the City had no regulatory powers over intra-state rates, and information about long-distance business was irrelevant. Although the City passed the rate regulation ordinance, it undertook to reserve jurisdiction over rate matters for one year and until the requested information was furnished ¹ General Telephone then filed this suit and the trial court correctly overruled City's plea in abatement. As stated in Glen Oaks Utilities, Inc. v. City of Houston, 161 Tex.. 417, 340 S.W.2d 783, 785:

'An administrative body cannot, by reserving for itself the power to change a ruling, deprive the courts of jurisdiction to the detriment of the parties injured by the ruling. Railroad Commission of Texas v. Houston Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591; Southern Surety Co. v. Hendley [Handley], Tex.Civ.App., 226 S.W. 454.'

City, under existing authorizations, does not have rate regulatory powers over intra-state calls. A delegation of such powers must be expressed by clean language or by clear implication. Railroad Commission of Texas v. Houston Natural Gas Corp., 155 Tex. 502, 289 S.W.2d 559; Texas-Louisiana Power Co. v. City of Farmersville, Com.App., 67 S.W.2d 235, 238; Coleman Gas & Oil Co. v. Santa Anna Gas Co., Com.App., 67 S.W.2d 241, 242; City of Baytown v. General Telephone Company of the Southwest, Tex.Civ.App., 256 S.W.2d 187, 190. Such delegation of powers can not extend beyond the territory of the city or its inhabitants. City of Arlington v. Lillard, 116 Tex. 446, 294 S.W. 829. The legislative delegation of powers with respect to local service is apparent, but it is also apparent that the Legislature has treated local and long-distance service as distinct and different problems.

The power to regulate telephone rates comes from Articles 1119, 1124 and 1175(12), Vernon's Tex.Civ.Stats. Under those statutes the business of providing local service may be authorized by a franchise previously granted by a municipality. A franchise is a special privilege conferred by the government upon some one, which privilege does not belong to citizens generally. State v. Austin & N. W. R. Co., 94 Tex. 530, 62 S.W. 1050; 86 C.J.S. Telegraph, Telephone, etc. Sec. 12. In some instances, without such a franchise the privilege can not be exercised. West Texas Utilities Co. v. City of Baird, Tex.Civ.App., 286 S.W.2d 185. It is, of course, without dispute that Weslaco has granted a franchise to General Telephone to provide locan service to the inhabitants of that City.

Intra-state service, on the other hand, may be furnished without the grant of a franchise. This important distinction between local service and intra-state service is made in Athens Telephone Co. v. City of Athens, Tex.Civ.App., 163 S.W. 371. Accord, Athens Telephone Co. v. City of Athens, Tex.Civ.App., 182 S.W. 42. A city may not interfere with such service and the service may be furnished without a franchise, as a matter of right. In contrast with Articles 1124 and 1175(12), which are the source of municipal power to regulate local service, is Article 1416, ² which authorizes intra-state service without the grant of a franchise. That statute applies to long-distance telephone companies. San Antonio & A. P. Ry. Co. v. Southwestern Telegraph & Telephone Co., 93 Tex. 313, 55 S.W. 117, 49 A.L.R. 459. Except for such regulations as will avoid inconveniences to a city in the use of its streets, it has been held that 'the city had no authority to require the telephone company to accept its orcinances as a condition precedent to entering the city.' City of Brownwood v. Borwn Telegraph & Telephone Co., Tex.Civ.App., 152 S.W. 709, 106 Tex. 114, 157 S.W. 1163. The Brownwood case concerned a company that was furnishing intra-state telephone service from Goldthwaite to Temple and desired to erect facilities along the streets and alleys of Brownwood. The Court stated that 'the right of the telephone company to pass through the city or town, over and upon its streets, is absolute, and a city has no authority to deny that right.' We regard it settled, therefore, that the powers of cities over local telephone service are different from and broader than their powers over intra-state service. A franchise, though non-exclusive, may be required for local service but not for intra-state service.

We shall now examine in some detail the two articles upon which Weslaco, as a home rule city, relies for its power to regulate intra-state rates. Article 1175(12) authorizes the City:

'(1) To prohibit the use of any street, alley, highway or grounds of the city by any telegraph, telephone, electric light, street railway, interurban railway, steam railway, gas company, or any other character of public utility without first obtaining the consent of the governing authorities expressed by ordinance and upon apying such compensation as may be prescribed and upon such condition as may be provided by any such ordinance. (2) To determine, fix and regulate the charges, fares or rates of any person, firm or corporation enjoying or that may enjoy the franchise or exercising any other public privilege in said city and to prescribe the kind of service to be furnished by such person, firm or corporation, and the manner in which it shall be rendered, and from time to time alter or change such rules, regulations and compensation; * * *. In order to ascertain all facts necessary for a proper understanding of what is or should be a reasonable rate or regulation, the governing authority shall have full power to inspect the books and compel the attendance of witnesses for such purpose.' (Numerals are added.)

In the first sentence of the quoted statute, there is a requirement that a public utility, before it can use the streets and other grounds of the city, must have municipal consent and must pay for the privilege. This is a lawful requirement for local service, but not for intra-state service. The second sentence specifically states the powers which flow to the city as a result of its grant of a franchise. This statute grants the power over that which is franchised, meaning local service which can be performed only upon the grant of a franchise. The statute says more. It states, not merely that the power to regulate rates applies to franchised corporations, but further limits regulatory powers geographically by adding 'in said city.' See City of Arlington v. Lillard, supra.

The other claimed source of power is Article 1124, which provides:

'(1) Any city having a special charter or a charter adopted or amended under the provisions of chapter 13 of this title, (2) and having authority under its charter to determine, fix and regulate the charges, fares or rates of compensation to be charged by any person, firm or corporation (3) enjoying a franchise in said city, shall in determining, fixing and regulating such charges, fares or rates of compensation, base the same upon the fair value of the property of such person, firm or corporation devoted to furnishing service to such city, or the inhabitants thereof, * * *.' (Numerals are added.)

City meets the first requirement stated in the statute. When we come to the second, however, we find that the charter grant of power is no broader than these statutes which we are parsing. In fact, its powers are there stated to reach a corporation which exercises any right of franchise of public privilege. ³ Intra-state service is not dependent upon any right of franchise of public privilege. At this point, the City fails under Article 1124. The third requirement is a statutory statement that rate regulation may be exercised over a corporation enjoying a franchise in said city. Because General Telephone does have a franchise in said City, its rates may be regulated. The franchise, however, is essential to local service, not intra-state service. We conclude that the powers over rate regulation are co-extensive with the powers over local service which the City possessed in granting its franchise. The powers do not include intra-state service. See, General Telephone Co. of the Southwest v. City of Wellington, 156 Tex. 238, 294 S.W.2d 285, 291; Southwestern Bell Telephone Co. v. City of San Antonio, 5 Cir.,...