Delaware Sports Service, In re

• Decision Date: 06 August 1963
• Citation: 57 Del. 1,196 A.2d 215
• Parties: , 57 Del. 1, 51 P.U.R.3d 512 In the Matter of DELAWARE SPORTS SERVICE, a Partnership.
• Court: Delaware Superior Court

Page 215

196 A.2d 215

7 Storey 1, 57 Del. 1, 51 P.U.R.3d 512

In the Matter of DELAWARE SPORTS SERVICE, a Partnership.

Superior Court of Delaware, New Castle County.

Aug. 6, 1963.

Rehearing Denied Oct. 7, 1963.

E. Norman Veasey, Chief Deputy Atty. Gen., and Ruth M. Ferrell, Deputy Atty. Gen., Wilmington, on the briefs, for the State, intervenor. Januar D. Bove, Jr., former Atty. Gen., Trial Atty. before the Commission.

Henry A. Wise, Jr., and Richard Allen Paul (of Wise & Suddard), Wilmington, for Delaware Sports Service.

Hugh L. Corroon (of Berl, Potter & Anderson), Wilmington, for Diamond State Tel. Co.

STIFTEL, Judge

Appeal from an order of the Public Service Commission which refused to direct the Diamond State Telephone Company to continue its telephone service to the Delaware Sports Service.

The following facts are not in dispute:

The Delaware Sports Service has been located in Wilmington, Delaware, for more than a decade. Its only reason for existence is to supply 'flash race track results' to its customers. Generally, its method of operation is to place an employee inside a race track who instantaneously communicates, by visual device, such as hand signals, or by radio, with an employee outside the race track who has an open telephone line to relay the information he acquires to Delaware Sports Service in Wilmington. For many years Delaware Sports Service, or its predecessor in name, Delaware Wired Music, supplied instantaneous detailed information on each race to the Wilmington headquarters but in recent years only the name of the winner of each race has been supplied. However, any customer on the open line from the race track through the Wilmington switchboard was able to determine the time the horses left the post and the time the horses finished the race.

A person became a customer of Delaware Sports Service by telephoning the Wilmington office and asking the operator of Delaware Sports Service what Delaware Sports Service had available. The customer was told that he was entitled to the name of the unofficial winner of one race for $20; of two races for $30; and of five races for $50. The money was payable in advance by sending a Western Union money order telegram to Delaware Sports Service. The customer seldom used his own name when calling Delaware Sports Service for the results. When a person would call for results, the switchboard operator would immediately check her records so as to determine whether or not the money order had been transmitted in advance. If so, she would give the customer the immediate result, which was usually no more than one to three minutes after the race was run and sometimes sooner.

For many years the Attorney General's office had attempted to terminate the business of the Delaware Sports Service. After an unsuccessful attempt to terminate this business through the courts in 1949, Tollin v. State, 7 Terry 120, 78 A.2d 810, the Legislature, on the recommendation of the then Attorney General, enacted certain statutes which the Attorney General hoped to use to eliminate businesses of this nature. ¹

The present phase started in 1959. On October 13, 1959, the Attorney General sent a letter to the Diamond State Telephone Company requesting it to discontinue its service to Sports Service; whereupon Diamond State notified Delaware Sports Service of its intention to discontinue telephone service to it pursuant to Title 11 Delaware Code, Sec. 675.

Shortly after the receipt of the Diamond State letter, Sports Service filed an action, on October 22, 1959, in the Court of Chancery, praying that Diamond State be enjoined from discontinuing its telephone service, contending that Sec. 675 of Title 11 Delaware Code was unconstitutional.

On September 8, 1960, the Court of Chancery ruled Section 675 unconstitutional because it failed to provide an opportunity to the telephone subscriber for a hearing, and the Court enjoined Diamond State from terminating plaintiff's present telephone service prior to a hearing presumably before the Commission on the uses to which plaintiff put such service. See Tollin v. Diamond State Telephone Co., Del.Ch., 164 A.2d 254. Thereafter, the Attorney General again requested the Telephone Company to discontinue telephone service to Sports Service. Whereupon, Diamond State notified Sports Service that it would terminate its telephone service unless Sports Service filed a petition with the Public Service Commission by a certain date. Sports Service filed a petition with the Public Service Commission seeking to prohibit the telephone company from terminating its services. As a preliminary step the Commission decided, on briefs, by written opinion dated December 14, 1961, that it had jurisdiction to consider the petition. The Attorney General's request to intervene was granted.

A hearing on the merits of the petition was held by the Commission March 12, 1962, through March 15, 1962. The intervenor presented 9 witnesses and introduced 26 exhibits. At the conclusion of the hearing, the facts and the law were briefed and the Public Service Commission rendered a written opinion on September 12, 1962, concluding, in effect, that Diamond State was justified in its action because Delaware Sports Service was using its service to further illegal gambling. Subsequently, a motion requesting reargument and reconsideration was filed and the request was denied on October 10, 1962. Sports Service then took this appeal claiming (1) that the hearing before the Public Service Commission was a denial of due process of law; (2) that the findings of the Commission failed to comply with the laws pertaining to hearings before the Public Service Commission, namely, 26 Delaware Code, Secs. 183 and 187; ² and (3) that the Diamond State Telephone Company and the intervenor failed to establish their case by a preponderance of the evidence.

At the hearing, the telephone company argued that it had the right to act to discontinue telephone service to Delaware Sports Service because such service was being used by recipients to further illegal horse race gambling in this state and in other states. Specifically, Diamond claimed it had the right to act by virtue of Sec. 674 of Title 11 Delaware Code, or by reason of tariff No. 1, paragraph 20, ³ which it had previously filed with the Public Service Commission, or under the principle that it is never required to furnish telephone service where the use by the subscriber is against the public policy of this state.

A telephone company must furnish adequate public service to its paying customers without discrimination. 26 Del.Code § 135. See Tracy v. Southern Bell Telephone and Telegraph Co., D.C.Fla., 37 F.Supp. 829, 830. It cannot refuse service to a legitimate enterprise. See Paterson Publishing Co. v. New Jersey Bell Telephone Co., 21 N.J. 460, 122 A.2d 599, 603. Generally, however, a telephone company may take the necessary steps to discontinue such service where it is reasonably satisfied that such service is being utilized by its customer to violate the statutory law against dissemination of racing information, State v. Chesapeake and Potomac Telephone Co., 121 W.Va. 420, 4 S.E.2d 257, 258; or, where the dissemination of such racing information is in violation of one of its published tariffs, McBride v. Western Union Telegraph Co., 9 Cir., 171 F.2d 1; see Hamilton v. Western Union Telegraph Co., D.C.Ohio, 34 F.Supp. 928, 929; or where the use of such telephone service is against public policy, such as in the furtherance of bookmaking, an illegal enterprise in this and other states, Tracy v. Southern Bell Telephone Co., supra; see Taglianetti v. New England Telephone and Telegraph Co., 81 R.I. 351, 103 A.2d 67, 70, 71; Anno: 153 A.L.R. 463.

Sections 674 and 677, Title 11 Delaware Code, makes dissemination of information in furtherance of gambling or for gambling purposes by means of a call service a crime. ⁴ The published tariff permits the telephone company to discontinue service if a law enforcement agency advises that such service is being used or will be used in violation of a law. Sports Service raises many objections to Diamond's use of either the statute or the tariff as a basis for discontinuing service. It is not necessary, here, to explore petitioner's arguments in these directions because the telephone company, as stated above, may also act to discontinue service where such service has a tendency to promote illegal gambling, contrary to public policy. Howard Sports Daily v. Weller, 179 Md. 355, 18 A.2d 210; Hamilton v. Western Union Telegraph Co., D.C. Ohio, 34 F.Supp. 928; Rubin v. Pennsylvania Public Utility Commission, 197 Pa Super. 157, 177 A.2d 128; Lipton v. New York Tel. Co., Sup., 125 N.Y.S.2d 251.

The Commission, in reviewing the purported action of the telephone company to discontinue telephone service to Sports Service, decided that Diamond State was justified in concluding that petitioner was using its telephone service to further illegal gambling over a many state area, against the public policy of this and other states. Its decision is now before this Court on appeal.

On appeal to this Court from the Public Service Commission, the cause is determined from the record, which includes a written copy of the evidence and the findings, order and opinion of the Commission. This Court may affirm, modify or revise the order of the Commission, in whole or in part, or may remand the proceedings to the Commission, in whole or in part. 26 Del.Code, Sec. 192(b). ⁵ The language of Section 192(b) is essentially the same as the language contained in the statute governing appeals from orders of the Workmen's Compensation Commission. 19 Del.Code, Sec. 2350(b). ⁶

The rule which has been applied in workmen's compensation cases is the rule which governs the present case on appeal, In the Matter of Application of Diamond State Telephone Company, Supreme Ct.Del., 107 A.2d 786, 792-793. In workmen's...