City of Wichita v. Old Colony Trust Co.

• Decision Date: 05 September 1904
• Docket Number: 2,002.
• Citation: 132 F. 641
• Parties: CITY OF WICHITA v. OLD COLONY TRUST CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

132 F. 641

CITY OF WICHITA v. OLD COLONY TRUST CO. et al.

No. 2,002.

United States Court of Appeals, Eighth Circuit.

September 5, 1904

A. E Helm and Earl Blake (S. S. Ashbaugh and David Smyth, on the brief), for appellant.

R. R Vermilion and Edward P. Gates (C. V. Ferguson, Rozzelle Vineyard & Thacher, Lucien Baker, and Robert P. Clapp, on the brief), for appellees.

Before SANBORN and VAN DEVANTER, Circuit Judges, and AMIDON District Judge.

AMIDON District Judge.

The Missouri & Kansas Telephone Company is now, and has been for nearly 20 years, the owner of a telephone system in the city of Wichita, which not only serves the purpose of a local exchange, but is at the same time part of an extensive system of long distance telephones reaching from St. Louis, Mo., to the western part of the state of Kansas. The complainants below (appellees here), the Old Colony Trust Company and Charles J. Hubbard, are trustees under a mortgage executed by the telephone company upon all its property to secure the payment of $1,250,000 of its bonds. In 1902 the mayor and council of the city, claiming that the right of the telephone company to occupy its streets and alleys had terminated, adopted a resolution, which, after reciting among other things 'that the said Missouri & Kansas Telephone Company have now no right or authority to maintain and operate its wires, poles, cables, and electrical appliances along, in, over, through, under, or across the public streets, alleys, and public grounds of said city,' required the company to remove its telephone system from the city on or before the 1st day of September, 1902, and in case of its failure so to do the chief of police, fire marshal, and city electrician were directed to remove the same. In furtherance of the same purpose, an ordinance was passed making it a criminal offense for any person, firm, or corporation to set any poles or string any wires in the streets, alleys, or public places of the city, or maintain the same therein, without first having obtained the consent of the city therefor. Under this ordinance the employees and officers of the telephone company were arrested and fined, and the poles set for the repair and extension of its system were cut down and removed. Believing that the city authorities were about to carry the above resolution into effect, the complainants filed their bill herein on the 23d day of August, 1902, reciting the above facts and other facts upon which the telephone company based its right to maintain and extend its system. Issue was joined and testimony taken. At the final hearing a permanent injunction was granted, which, in substance, restrained the city from destroying the telephone system as established and from interfering with the telephone company in repairing and extending the same. Against that decree the city brings the present appeal.

The telephone company bases its right to maintain and extend its system upon three grounds: (1) Ordinance of the city of Wichita No. 391; (2) Ordinance No. 1,356; (3) a general statute of the state of Kansas. The case can best be considered in connection with these several claims.

Ordinance No. 391 was passed in November, 1886. It grants to the United Telephone Company, its successors and assigns, the right to erect and maintain posts, poles, and other fixtures necessary in carrying electric wires in, along, across, and under the streets and alleys of said city. No term being expressly fixed, it is limited by general statute of the state to twenty years. At the time this ordinance was passed the United Telephone Company was the owner of the local exchange in the city of Wichita. On the 25th of February, 1887, by deed dated on that day, this company conveyed to the Missouri, & Kansas Telephone Company all its telephone lines as then located, and also the poles, wires, magnetic bells, and switch boards of said company, in said city, together with all the appurtenances thereunto belonging or in anywise appertaining. The franchise is not expressly mentioned in the deed. For this reason the city contends that it did not pass. The grant should be interpreted so as to give effect to the intention of the parties. After the conveyance of the property, the right created by the- ordinance was of little value to the grantor, and the property without the right would have likewise been of little value to the grantee. It would be a violent construction to hold that the grantor intended simply to convey the tangible property without at the same time transferring the right which alone would make the property of any use. If, notwithstanding its deed, the United Telephone Company were here asserting ownership of the franchise, its contention could not be sustained; much less can a third party assert such a claim. The conveyance by a railroad company of its road, roadbed, and appurtenances has been held to convey the franchise to operate the same by a necessary implication. Coe v. Columbus R.R. Co., 10 OhioSt. 373, 75 Am.Dec. 518.

It is also contended by the city that Ordinance No. 391 was repealed by Ordinances Nos. 538, and 1,356. The first of these was passed in 1888. It was properly terminated at the expiration of five years, and was then succeeded by Ordinance No. 1,356. They are the same in terms, and were passed for and accepted in writing by the Missouri & Kansas Telephone Company. Each contains a general repealing clause. They impose upon the company many duties and grant to it certain rights, and among them the same rights, in substance, as are granted by Ordinance No. 391. Did they repeal that ordinance? If the United Telephone Company had continued to be the owner of the franchise granted by Ordinance 391 at the time the subsequent ordinances were passed, it could not be reasonably contended that the latter repealed the former. But by no principle of construction can the transfer of the franchise give to the subsequent ordinances any greater force by way of repeal than they would have possessed if no transfer had been made. Whether one ordinance repeals another must depend upon their terms, and no upon the ownership of the rights which they create.

Section 4 of the two ordinances in favor of the Missouri & Kansas Telephone Company, above referred to, reads as follows:

'The rights and privileges hereby granted to the said company shall be for the period of five years and until terminated by the resolution of the mayor and council of the city of Wichita upon six months' notice to be served upon the managing agent of said company at Wichita, said notice to be served at the any time after six months immediately preceding the expiration of five years from the acceptance of the provisions of this ordinance by said company.'

As the rights granted by these ordinances may be terminated in five years, while those granted by Ordinance 391 run for twenty years, it is further urged by the city that the telephone company waived any rights which it held under the latter ordinance by accepting the former. This contention is also untenable. It is 'the rights and privileges hereby granted' which the city has authority to terminate under section 4. It has no power under that section to terminate any other rights or privileges. The company accepted these ordinances conferring upon it certain benefits and subjecting it to certain obligations upon the condition that the rights and privileges conferred might be terminated at the expiration of five years. From this it by no means follows that the company by implication waived rights which it acquired from another corporation, and for which it paid a large consideration. For the foregoing reasons we hold that the telephone company is the owner of the right granted by Ordinance 391, which by statute will not expire until November, 1906.

The provisions of Ordinance 1,356 have already been explained. It was passed March 23, 1896, and accepted by the company in writing April 1st of the same year. Appellant concedes that it confers upon the Missouri & Kansas Telephone Company the right to maintain and extend its system in the city for the term of twenty years, unless sooner terminated by the mayor and common council pursuant to section 4, which is quoted above in full. The only question in respect to this ordinance is, have the rights of the telephone company under it been terminated? The record of a meeting of the council held on the 24th of September, 1900, contains the following entry:

'On motion of Councilman Burton clerk was instructed to notify the Missouri, Kansas Telephone Company when their present franchise would expire, and that the city would require them to remove their wires and poles from the streets at that time.'

On September 28, 1900, and again on October 13th of the same year, the city clerk served notice upon the telephone company that he had been instructed by the city council to officially notify it that its franchise would expire April 1, 1901. A copy of the motion of Councilman Burton was inserted in the notice. The foregoing is the only action attempted by the city to terminate the rights of the company under the provisions of Ordinance 1,356. Can it be given that effect? An examination of section 4 will show that the discretion which it vests for the termination of the rights and privileges created by the ordinance is reposed in the mayor and council. They are required to exercise that discretion by a resolution. They could terminate those rights and privileges at the expiration of five years, or at any time thereafter within the period of the grant, namely, twenty years. It was for them to fix the time. This they failed entirely to do. The defect is not a lack of record, as urged by counsel for appellant, but a want of action. No evidence was offered to...