Department of Public Utilities v. New England Tel. & Tel. Co.

• Decision Date: 06 February 1950
• Parties: DEPARTMENT OF PUBLIC UTILITIES v. NEW ENGLAND TELEPHONE AND TELEGRAPH CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

325 Mass. 281

90 N.E.2d 328

DEPARTMENT OF PUBLIC UTILITIES v. NEW ENGLAND TELEPHONE AND TELEGRAPH CO.

Supreme Judicial Court of Massachusetts, Suffolk.

February 6, 1950

Argued Dec. 9 1949.

J W. Kelleher, Boston (H. Freed, Boston, and F. J. Quirico Pittsfield, with him), for petitioner.

H. P. Moulton Boston (C. C. Cabot, Boston, with him), for respondent.

Before QUA, C. J., and LUMMUS, RONAN, SPALDING and COUNIHAN, JJ.

QUA, Chief Justice.

This is a petition for a writ of mandamus brought by the department in this court, purportedly under G.L. (Ter.Ed.) c. 159, § 40 and the last sentence of c. 25, § 5, for the purpose of compelling the company as a common carrier as defined in c. 159, § 12(d), to charge for telephone service the rates contained in schedules filed by the company with the department on March 31, 1949, as modified by rate sheets filed May 13, 1949, and to refrain from charging, as it is now doing, the higher rates contained in schedules previously filed by it on April 21, 1948.

The single justice of this court ruled that the company was properly charging the higher rates and entered judgment dismissing the petition. The department appealed to the full court. G.L. (Ter.Ed.) c. 213, § 1D, inserted by St. 1943, c. 374, § 4.

Inasmuch as the case depends almost entirely upon the statutory system of this Commonwealth regulating intrastate activities of common carriers, including telephone companies, we have gathered in a footnote pertinent portions of the principal statutes involved. ^[1]

The starting point in stating the facts may be taken to be a decision and order of the department on July 24, 1947, authorizing the company to file revised schedules of rates amounting to an increase over rates then in force of about $5,000,000. These schedules were filed on that day and became effective on July 25. On April 21, 1948, the company filed with the department schedules of rates designed to effect a still further increase of about $10,000,000, or a total increase of about $15,000,000 over the rates in effect before July 25, 1947. These have been called the $15,000,000 rates. To allow for the thirty day interval between the filing and the taking effect of these rates as required by G.L. (Ter.Ed.) c. 159, § 19, when the department does not order 'otherwise,' these rates were designated as 'Effective: May 21, 1948.' But on April 22, 1948, the day after the filing of the schedules for these rates, the department suspended their taking effect until March 21, 1949, the maximum period of ten months permitted by G.L. (Ter.Ed.) c. 159, § 20, as amended by St. 1939, c. 18.

Thereupon the department instituted upon its own motion an investigation (D.P.U. 8181) as to the propriety of the proposed rates. On March 18, 1949, three days before the expiration of the suspension, the department announced its decision, wherein it ordered both that the proposed $15,000,000 rates filed April 21, 1948, be disallowed and that the rates filed July 24, 1947, and then in effect be cancelled. Inasmuch as this would leave the company without any rates at all and would fall short of a full performance of the department's duty in the matter, see National Dock & Storage Warehouse Co. v. Boston & Maine Railroad, 227 Mass. 197, 201-202, 116 N.E. 544, the department further 'ordered' that the company 'shall file' on or before April 1, 1949, new schedules of rates to take effect on that day, a principal feature of which was to be the addition of five per cent to each customer's monthly bill for local service based on the rates in effect before the increase of 1947. Some other concessions which need not be stated were made to the company in this order. On March 31, 1949, in accordance with the order of the department of March 18, the company filed, to be effective April 1, 1949, schedules of rates on each sheet of which was marked 'Issued in compliance with Order of March 18, 1949, in D.P.U. 8181.' These rates provided for the addition of five per cent to each monthly bill according to the order and have been called the five per cent rates. They went into effect on April 1, 1949, in accordance with the order. In a letter of transmittal to the department for the attention of its rate engineer which accompanied these rates and which was sent in compliance with a rule of the department, the company included this statement, 'These revised sheets are filed pursuant to the order of the department in D. P. U. 8181, dated March 18, 1949. The company believes and contends that the order of the department in D. P. U. 8181, and the rulings of the department made therein in so far as they were adverse to the company, are unlawful, and that the order is contrary to Articles X and XII of the Declaration of Rights of the Massachusetts Constitution, and the company objects thereto. The filing of these revised sheets is made without prejudice to, and does not constitute a waiver of, such contentions and objections; on the contrary, the company insists thereon, and to that end, proposes to take appropriate action under G.L. (Ter.Ed.) c. 25, § 5.'

The decision of the department of March 18, 1949, stated that it made no provision for an increase in the wages paid by the company which became effective September 12, 1948, while the investigation was pending; that if the company had (as it asserted) incurred additional reasonable and allowable labor costs of $3,000,000 it was entitled to additional revenues sufficient to provide for this expense; and that if the company's management was of the opinion that because of such labor increase it required revenues additional to those allowed by the decision, it was 'open to the company to seek appropriate relief from this department.' In pursuance of this suggestion, the company filed with the department on March 24, 1949, a petition to increase its rates by four per cent in addition to the five per cent ordered by the department on March 18, so as to make a total surcharge of nine per cent. These have been called the nine per cent rates. In its petition the company stated, 'The company believes and contends that the order of the department in D.P.U. 8181, and the rulings of the department made therein in so far as they were adverse to the company, are unlawful, and that the order is contrary to Article X and XII of the Declaration of Rights of the Massachusetts Constitution. The filing of this petition does not constitute a waiver of such contentions; on the contrary, the company insists thereon and, to that end, proposes to take appropriate action under G.L. (Ter.Ed.) c. 25, § 5. This petition is filed only for the purpose of permitting the company to obtain the earnings and return allowed by the commission which return the company contends is inadequate.'

On April 21, 1949, the company filed in this court a 'Bill of Complaint under G.L. (Ter.Ed.) c. 25, § 5,' for the purpose of annulling the department's order of March 18, 1949, which had disallowed the rates filed April 21, 1948, and had substituted lower rates as hereinbefore set forth. By its bill it sought to establish its right to collect the rates of April 21, 1948, on the ground that the lower rates ordered by the department were unreasonable, confiscatory, and unconstitutional. It also sought a stay pendente lite of the order of the department of March 18, 1949. On May 13, 1949, after hearing, the department, in substance, granted the company's petition of March 24, 1949, for the so called nine per cent rates. Thereupon the company filed with the department, for effect on May 14, the rate sheets necessary to realize the nine per cent rates allowed by the department's order of May 13, and in its letter of transmittal it included a statement that its petition of March 24 was solely for the purpose of obtaining additional revenue to offset the wage increase which the department had not provided for in its order of March 18, but which was stated to be 'necessary in order to permit the company even to attain the 4.853% rate of return which the department allowed.' This letter also repeated the company's contention that the order of March 18 was unconstitutional and its statement that the petition of March 24 had been filed 'only for the purpose of permitting the Company to obtain the earnings and return allowed by the commission [department?] which return the company contends is inadequate.' The letter further referred to the equity suit then already brought in this court and stated that the company was filing the nine per cent rates without prejudice to the contentions in its bill of complaint, without waiver of any rights, and 'solely for the purpose of temporarily minimizing its losses by obtaining even the inadequate return allowed by the department in D. P. U. 8181 pending action of the court in granting the stay applied for, or if such stay be not granted, pending its final decree.' Thereupon the company began charging the nine per cent rates permitted by the department's order of May 13, and did so until the decree of this court of May 25, hereinafter mantioned.

On May 23, 1949, a single justice of this court, after hearing, entered an interlocutory decree in the equity suit, reciting that the company had filed with the department a bond in the sum of $1,000,000, conditioned upon the refund by the company to its customers of any sums that might be collected by it in excess of the sums which might be determined to have been legally collectible, and staying pendente lite the department's order of March 18 disallowing the $15,000,000 rates filed April 21, 1948. This decree was equivalent to a temporary injunction to save the company from irreparable loss, if the court should ultimately decide that the rates imposed by the department were confiscatory....