Cumberland Telephone & Telegraph Co. v. City of Calhoun

• Decision Date: 17 December 1912
• Citation: Cumberland Telephone & Telegraph Co. v. City of Calhoun, 151 Ky. 241, 151 S.W. 659 (Ky. Ct. App. 1912)
• Parties: CUMBERLAND TELEPHONE & TELEGRAPH CO. v. CITY OF CALHOUN et al.
• Court: Kentucky Court of Appeals

151 S.W. 659

151 Ky. 241

CUMBERLAND TELEPHONE & TELEGRAPH CO. v. CITY OF CALHOUN et al.

Court of Appeals of Kentucky.

December 17, 1912

Appeal from Circuit Court, McLean County.

Action by the Cumberland Telephone & Telegraph Company against the City of Calhoun and another.From a judgment for defendantsplaintiff appeals.Affirmed.

J. W Boston and Wm. B. Noe, both of Calhoun, for appellant.

G. H Cary, of Calhoun, and L. P. Tanner, of Owensboro, for appellees.

CARROLL J.

This suit was instituted by the appellant against the city of Calhoun and the police judge thereof for the purpose of testing the validity of an ordinance that imposed a license tax of $100 upon appellant for the privilege of operating an exchange in the city, and with the purpose of having the ordinance declared invalid.

Calhoun is a city of the fifth class, and the ordinance attacked imposed upon "each telephone exchange" a license fee of $100.The validity of the ordinance is assailed upon the ground that a telephone company, which pays both an ad valorem and a franchise tax to the city of Calhoun, as it is averred the telephone company did to the city of Calhoun cannot be required to pay a business or occupation tax such as the ordinance provided for.The ordinance is also assailed upon the ground that the license tax imposed is unreasonable, oppressive, and confiscatory.

No evidence was taken in the case, but it appears from the petition, which was dismissed by the lower court: That the appellant is a corporation, organized under the laws of Kentucky, and engaged in the operation of telephone lines and telephone exchanges in the city of Calhoun and elsewhere in the state.That in July, 1894, the board of trustees of the town of Calhoun, it being then a town of the sixth class, adopted the following resolution: "On motion it was ordered to let the Cumberland Telephone Company put up telephone poles on the West side of Ferry street to Second street; thence along Second street to Poplar street; thence along Poplar street to the river, without any damage to trees or property; said poles to be thirty feet above ground or over."That, under the authority granted by this resolution, the telephone company soon after proceeded to erect lines and poles and to establish a telephone exchange in Calhoun, and has continued to the present time to conduct an exchange in the city and occupy many streets of the city other than those mentioned in the resolution with its poles and wires.It further appears that in 1906, 1907, 1908, 1909, and 1910 a franchise tax was imposed upon appellant by the state board of valuation and assessment, which board apportioned to the city of Calhoun its proportionate part of the franchise tax for each of these years, and the same was paid by the appellant to the city.It is further shown that it has paid for a number of years annually to the city an ad valorem or property tax upon its property situated therein.

If the appellant had, in fact, a franchise authorizing it to operate and conduct a telephone exchange in the city of Calhoun, and to occupy the streets, and it also paid an ad valorem or property tax to the city, it was not within the power of the council to charge it, as the ordinance does, with an occupation tax or a tax for the privilege of conducting its business in the city.This was expressly decided in Cumberland Telephone & Telegraph Co. v. Hopkins,121 Ky. 850, 90 S.W. 594, 28 Ky. Law Rep. 846, where the court, in holding invalid a license tax attempted to be imposed by ordinance upon the Cumberland Telephone & Telegraph Company for the privilege of operating an exchange and conducting its business in the city of Eminence, after it had purchased, in the manner provided in the Constitution, a franchise to do business in the city, said: "After having sold the telephone company the privilege of putting up and operating its line and conducting its business in the town, the municipality cannot afterwards, without the consent of the telephone company, impose an additional charge for the identical privilege.This franchise sold by the city to appellant telephone company was the creature of the city.It was not only to occupy its streets, the consideration being compensation for the right of way, but it was for operating its exchange in the city and receiving tolls there at upon its business.*** The ordinance selling the franchise by its terms went further than to grant the right to occupy the city streets and alleys.It expressly dealt with and sold for a consideration the privilege of doing the identical business in the city that it is doing."Again, in Adams Express Co. v. Boldrick,141 Ky. 113, 132 S.W. 175, in considering a similar question, we said: "To put it in another way, the general council, under this statute, has authority to impose either a license tax or a franchise tax upon all corporations or persons engaged in business in the city, for the privilege of doing business there, but it cannot exact, for the privilege of doing business, both a franchise tax and a license tax at the same time or for the same period."

But the principle announced in these cases does not sustain appellant in its effort to defeat the license tax, because it never obtained, in the manner pointed out in the Constitution, a franchise from the city authorizing it to erect lines or poles or establish an exchange in the city.Section 164 of the Constitution provides that: "No county, city, town, taxing district or other municipality shall be authorized or permitted to grant any franchise or privilege, or make any contract in reference thereto, for a term exceeding twenty years.Before granting such franchise or privilege for a term of years, such municipality shall first, after due advertisement, receive bids therefor publicly, and award the same to the highest and best bidder; but it shall have the right to reject any or all bids.This section shall not apply to a trunk railway."And a city is not authorized or permitted to grant to any public service corporation the privilege to use or occupy the streets or public ways of the city except as provided in the section.Putting aside for the moment the consideration of the privilege conferred by the resolution, to which we will later advert, when a public service corporation uses or occupies the streets or public ways of a city without having first obtained the right to do so under section 164 of the Constitution, and in the manner prescribed by the Legislature, if legislation has been enacted to carry into effect the section, it is nothing more than a trespasser, and cannot invoke in its favor any of the laws enacted for the protection or benefit of corporations that have observed the law, or shield itself from the consequences that may be visited upon the head of a wrongdoer.Woodall v. South Covington & Cincinnati Street Ry. Co.,137 Ky. 512, 124 S.W. 843;Nicholasville Water Co. v. Board of Councilmen,36 S.W. 549, 38 S.W. 430, 18 Ky. Law Rep. 592;City of Somerset v. Smith,105 Ky. 678, 49 S.W. 456, 20 Ky. Law Rep. 1488;City of Providence v. Providence Electric Light Co.,122 Ky. 237, 91 S.W. 664, 28 Ky. Law Rep. 1015;Monarch v. Owensboro City Ry. Co.,119 Ky. 939, 85 S.W. 193, 27 Ky. Law Rep. 380;Keith v. Johnson,109 Ky. 421, 59 S.W. 487, 22 Ky. Law Rep. 947;Merchants' Police & Dist. Telegraph Co. v. Citizens' Telephone Co.,123 Ky. 90, 93 S.W. 642, 29 Ky. Law Rep. 512;Hilliard v. Fetter Lighting & Heating Co.,127 Ky. 95, 105 S.W. 115, 31 Ky. Law Rep. 1330;East Tenn. Telephone Co. v. Anderson County Telephone Co., 115 Ky. 488, 74 S.W. 218, 24 Ky. Law Rep. 2358;Rough River Telephone Co. v. Cumberland Telegraph & Telephone Co.,119 Ky. 470, 84 S.W. 517, 27 Ky. Law Rep. 32;Rural Home Telephone Co. v. Ky. & Ind.

Telephone Co., 128 Ky. 209, 107 S.W....