Community Antenna Television of Wichita, Inc. v. City of Wichita
| Decision Date | 13 June 1970 |
| Docket Number | No. 45702,45702 |
| Citation | 41 A.L.R.3d 374,471 P.2d 360,205 Kan. 537 |
| Parties | , 41 A.L.R.3d 374 COMMUNITY ANTENNA TELEVISION OF WICHITA, INC., Appellant, v. CITY OF WICHITA, Kansas, a Municipal Corporation, the Board of Commissioners Thereof, William Anderson, Mayor, A. Price Woodard, Walt Keeler, Clarence Vollmer, Donald Enoch and Ralph Eberly, City Clerk, City of Wichita, Kansas, Appellees. |
| Court | Kansas Supreme Court |
1. The home rule amendment in broadening the powers of municipalities did not extend to them the power to enact unreasonable ordinances under the guise of police power.
2. A municipality has no authority under its police power to regulate the business of a private commercial enterprise arbitrarily and unreasonably under the guise of promoting public health or public welfare of a community.
3. Before an ordinance regulating public streets may be sustained under a municipality police power the regulatory provisions chosen must be reasonably designed to accomplish the purpose and have a rational relationship thereto.
4. An ordinance which puts it in the power of the officers of a city to issue a CATV system franchise, or refuse such franchise at will, is arbitrary and void.
5. An ordinance which attempts to force a private commercial enterprise to submit to regulation as a public utility before it can do business in the city is unreasonable and void.
Paul R. Kitch, of Fleeson, Gooing, Coulson & Kitch, Wichita, argued the cause, and Gerrit H. Wormhoudt, of Fleeson, Gooing, Coulson & Kitch, Wichita, was with him on the brief for appellant.
H. E. Jones, of Hershberger, Patterson, Jones & Thompson, Wichita, argued the cause, and John Dekker, of Holmes, Darrah, Dekker, Mellor & Compton, Wichita, was with him on the brief for appellees.
HATCHER, Commissioner.
This is an appeal from a judgment in a declaratory judgment action which was brought to have a municipal ordinance governing the issuance of franchises for community antenna television systems (hereinafter referred to as (CATV) declared null and void.
A statement of the general facts, before we reach the specific provisions of the ordiance, may be helpful.
A CATV system consists of a high receiving tower located on high ground. From this receiving point coaxial cables are distributed through the city. The physical plant is quite similar to a telephone plant and the connections to the homes are not unlike telephone drops entering the homes. The advantage of the system is that more stations can be reached by the high antenna. Every television viewer could see the programs transmitted by distant stations if he were to erect an antenna of the same height but the cost would, of course, be prohibitive.
Most CATV service is provided through cables either leased from the local telephone company or owned by the CATV system and strung on utility poles.
The CATV business is an industry that is seeing tremendous growth. The first commercial CATV installation was established in 1950. Today more than 1800 systems are operating in the United States of which more than twenty are operating in Kansas.
It is conceded that CATV systems are engaged in interstate communication so as to be subject to regulation by the Federal Communications Commission. (See United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001, 1008.)
On September 20, 1966, the city commission of the city of Wichita, Kansas adopted ordinance No. 28-882 which is involved in this controversy. It dictates the terms and conditions under which a CATV system may be conducted in the city of Wichita.
The plaintiff, the Community Antenna Television of Wichita, Inc., proposes to operate its system through lines leased from Southwestern Bell Telephone Company although it is, if necessary, ready to use its own cables strung on public utility company poles.
The ordinance contained a form of application for franchise which required a detailed statement of all matters specified in the ordinance, and stated:
In connection with the ordinance there were also directions for applying for a franchise which stated in part:
Four bidders sought the Wichita CATV franchise from the Board of Commissioners of the city of Wichita. The plaintiff was not among them. Each bidder proposed to use public untility poles to carry the bidder's own cable. The bidders made cash offers to the city ranging from $25,000 to $100,000 and, in addition, each bidder proposed to pay to the city percentages of its annual revenue with the minimum payments ranging from $8,000 (subject to the $25,000 penalty set forth in the ordinance) to $77,500 and the maximum payments, as projected, ranging from $153,600 to $386,500.
It was stated by plaintiff in oral argument, and the statement was not refuted by the defendant, that the franchise was granted to the highest bidder and all other applications were refused.
We now come to the provisions of the ordinance. The ordinance under attack consists of some twenty-one printed pages and space should not be used for its reproduction in full.
The ordinance devotes considerable space to provisions for the regulation of the use of streets and alleys, to which no objection is made, but commingled therewith are provisions attempting to regulate the conduct of the business itself. Some of such provisions are summarized:
1. A franchise is not to be granted when, in the opinion of the commission, it is not in the public interest.
2. A schedule of proposed rates and charges must be approved by the city commission and no change may be made in the rates and charges without the prior approval of the commission expressed by resolution.
3. The ordinance controls the duration and renewal of a CATV system's right to do business; its internal records and books and the transferability of its right to do business.
4. The time when a system is to commence business is controlled.
5. A system is required to serve all customers desiring to be attached.
6. The location of a CATV system's office is controlled.
7. All of a system's operational standards are controlled, including band equipment, signal level, signal-to-noise ratio, hum modulation of the picture signal, the VSWR of components used, etc.
8. The ordinance would regulate the signals brought into the city and the channels to be used.
9. The city commission may grant a franchise for a CATV system to such applicant as appears, in its opinion, to be best qualified.
10. A franchise payment is required of a sum equal to a percentage of the gross annual receipts of the grantee.
11. The ordinance required the furnishing, free of charge, of outside connections and services to all hospitals, public and parochial schools located within the city and to municipal buildings.
The validity of the ordinance was chaolenged by a declaratory judgment action. The trial court concluded in part:
'The franchise payment called for under Ordinance No. 28-882-Sec. 5-insofar as the same pertains to a payment to the city of a sum equal to a percentage of the gross annual receipts of the grantee bears no reasonable relationship to expense and inconvenience to be occasioned by the city but is purely a revenue measure.
'Further, that the requirement of Ordinance 28-882-Sec. 15(i), calling for the furnishing, free of charge, outside connections and services to all hospitals, public and parochial schools located within the City, and to Municipal Buildings bears no reasonable relationship to the expense and inconvenience to be occasioned by the city.'
The trial court further concluded that--
'The ordinance is severable and by reason thereof all portions of said ordinance not specifically declared to be unconstitutional and void are valid and existing.'
The plaintiff has appealed.
The appellant argues that a municipality may regulate a private business enterprise only pursuant to the reasonable nondiscriminatory exercise of its police power, and the ordinance in question is arbitrary, discriminatory, unreasonable and therefore void.
The appellee contends that the police power of the city to regulate the use of streets and alleys justifies the ordinance.
The parties do not appear to disagree as to the general principles of law by which the provisions of the ordinance must be measured. We will next consider the applicable law.
We first note that the trial court concluded:
'Community antenna television service is a commercial enterprise of nonpublic utility character.'
Both parties have accepted and adopted the conclusion. We therefore accept the statement as conclusive in this particular case without consideration or determination of the question.
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