Farmers' & Merchants' Co-Op. Tel. Co. v. Boswell Tel. Co.

• Decision Date: 16 May 1918
• Docket Number: Nos. 23076,23087.,s. 23076
• Citation: 119 N.E. 513,187 Ind. 371
• Court: Indiana Supreme Court
• Parties: FARMERS' & MERCHANTS' CO-OP. TELEPHONE CO., BOSWELL, IND., v. BOSWELL TELEPHONE CO. McVICKER et al. v. SAME.

187 Ind. 371

119 N.E. 513

FARMERS' & MERCHANTS' CO-OP. TELEPHONE CO., BOSWELL, IND.,

v.BOSWELL TELEPHONE CO.

McVICKER et al.

v.SAME.

Nos. 23076, 23087.

Supreme Court of Indiana.

May 16, 1918.

Appeal from Circuit Court, Benton County; James P. Wason, Judge.

Two suits by the Boswell Telephone Company against the Farmers' & Merchants' Cooperative Telephone Company, Boswell, Ind., and against Frederick McVicker and others, consolidated. Decree for complainant in each case, and the defendants appeal. Affirmed.

Burke Walker, Elmore Barce, Daniel Fraser, and Will H. Isham, all of Fowler, for appellants. Charles Valentine McAdams and Clyde H. Jones, both of La Fayette, for appellee.

HARVEY, J.

By order of this court the above causes were consolidated. The Boswell Telephone Company was granted, in 1912, by the town of Boswell, Ind., a franchise to operate a telephone exchange and plant. Thereunder said company operated in the streets and alleys of said town, until November, 1913, when the company surrendered its franchise and accepted from the Public Service Commission of Indiana an indeterminate permit, under which it is still operating. The telephone system of the company extended into territory adjacent to said town, and its exchange was, and is, connected with a large number of telephones in and beyond said town, and the company has an investment of about twenty thousand dollars in said plant.

In April, 1913, the Farmer's & Merchants' Co-operative Telephone Company of Boswell was incorporated, and applied to the town for a franchise to use its streets and alleys. The town board considered the form of such franchise, and advertised that the application for same would be heard by the board on a named date. Thereupon the Boswell Telephone Company, appellee, applied to the circuit court of an order preventing the granting of a franchise to the Farmers' Company; the petition alleging the foregoing facts and that the Farmers' Company had not applied to the Public Service Commission for a certificate of public convenience and necessity, justifying the duplication of investment in a telephone plant in Boswell, and alleging that the granting of such franchise would result in such duplication, and consequent detriment to the plant and service of the petitioner.

The Farmers' Company, by affidavit, resisted the granting of such restraining order, alleging that the Boswell Telephone Company was seeking to monopolized the telephone business in said community; that the damage threatened to the Boswell Company was merely that anticipated from prospective competition; that the granting of such order would restrain trade and commerce, and be contrary to public policy; that the Boswell Company had its remedy at law, in that it may appear before the board and resist the granting of said franchise, and recover damages if it suffer injury by the operation of the Farmers' Company. A similar affidavit was filed by the town.

The court entered an order restraining the granting by the town of a franchise to the Farmers' Company until the Public Service Commission of Indiana should first grant a certificate of necessity therefor. The Farmers' Company thereupon demurred to the complaint for the reason that (1) the court had no jurisdiction of the subject-matter; (2) the plaintiff had no legal capacity to sue; and (3) the complaint did not state facts sufficient. Said demurrer was overruled, as was the motion to dissolve the restraining order. Upon its election not to amend, a permanent injunction was entered, with judgment against the defendant. Error is assigned upon each of said rulings.

Appellant's first proposition is that section 97 of the Public Utility Act (section 10052t3, Burns 1914) is unconstitutional. That portion of said section here involved reads as follows:

“No license, permit or franchise shall be granted to any person, copartnership or corporation to own, operate, manage or control any plant or equipment of any public utility in any municipality where there is in operation a public utility engaged in similar service under a license, franchise or permit without first securing from the commission a declaration, after a public hearing of all parties interested, that public convenience and necessity require such second *** utility.”

The first reason asserted in support of said proposition is that the title of the act is not sufficient to embrace said section 97, in that the title is “An act concerning public utilities, creating a Public Service Commission, abolishing the Railroad Commission of Indiana, and conferring the powers of the Railroad Commission on the Public Service Commission” whereas section 97 deprives municipalities of an inherent right and power to say, in the first instance, whether a franchise shall be granted which will result in such duplication of investment, and said title does not refer to, or purport to affect, the powers of cities and towns. Appellant argues that cities and towns have exclusive control of their streets, their power thereover limited only by necessity, and that this power cannot be destroyed by any such indirect legislation.

[1] This proposition overlooks the fundamental point that the streets of a municipality are parts of the general highways of the state, and, as such, the state has primary control thereover when the interests of the public are concerned, and such power thereover as municipalities have, when the interests of the general public are involved, are granted to the municipalities by the state, (Grant Trunk Co. v. South Bend, 174 Ind. 203, 89 N. E. 885, 91 N. E. 809, 36 L. R. A. [N. S.] 850), and may be withdrawn by the state; in effect, an agency for public welfare is thus established and may be thus ended in the municipality. Appellant cites to its said proposition Vandalia, etc., Co. v. State, 166 Ind. 219, 76 N. E. 980, 117 Am. St. Rep. 370. This decision holds that a city or town cannot of its own will deprive itself, by contract, of powers delegated to it for public welfare. So far as it touches the question, this decision holds that as to streets and alleys, when public and general welfare are concerned, the power of cities and towns are not inherent, but are conferred. The decision in Indiana Railway Co. v. Calvert, 168 Ind. 321, 80 N. E. 961, 10 L. R. A. (N. S.) 780, 11 Ann. Cas. 635, cited by appellant, is to the same effect. See, also, decisions cited to this point in Winfield v. Public Service Commission, 118 N. E. 531, 533;Coverdale v. Edwards, 155 Ind. 374, 380, 58 N. E. 495;State ex rel. v. Stickelman, 182 Ind. 102, 106, 105 N. E. 777.

[2] The use of the state's highways, including as a part thereof the streets of municipalities, by public utilities, and the matter of license to so use are so inseparable that “An act concerning public utilities” may properly embrace provisions for the granting or refusal of such licenses, and may name a new agency for the consideration of and action upon applications therefor. The title of said act embraces the subject-matter of section 97. State v. Monarch, etc., 267 Ill. 528, 108 N. E. 716, Ann. Cas. 1916A, 528;Illys v. White River, 175 Ind. 118, 93 N. E. 670;Board v. Scanlon, 178 Ind. 142, 98 N. E. 801;Marion v. Simmons, 180 Ind. 289, 102 N. E. 132;Pittsburgh v. Chappell, 183 Ind. 141, 106 N. E. 403, Ann. Cas. 1918A, 627;In re Talbott, 58 Ind. App. 426, 108 N. E. 240;Halstead v. Olney Dean, 182 Ind. 446, 105 N. E. 903;Plank R. Co. v. Hannaman, 22 Ind. 484.

[3] Section 97 does not create a monopoly in the utility granted the first franchise. The utility holding the first and only franchise, so long as it is the only franchise, is practically, and only in that sense, a monopoly. That such practical monopoly may exist, see Indianapolis Cable Co. v. Citizens', etc., Co., 127 Ind. 369, 388, 24 N. E. 1054, 26 N. E. 893, 8 L. R. A. 539;City R. Co. v. Citizens' R. Co., 166 U. S. 557, 17 Sup. Ct. 653, 41 L. Ed. 1114. But the utility has no exclusive privilege as between itself and the public welfare or interests. The state may authorize a second. If the state determines not to grant a second, it is not because the first is exclusive, but because, in the state's opinion, public welfare will not be serve by the second. Appellant took its charter from the state and asked a franchise from the town, knowing this to be the law. Grand Trunk Co. v. South Bend, etc., 174 Ind. 203, 214-223, 89 N. E. 885, 91 N. E. 809, 36 L. R. A. (N. S.) 850. Therefore appellee's rights are not in the sense claimed a monopoly.

The state has not given to appellee, as appellant asserts, “an exclusive monopoly which it did not have before,” and taken “from appellant, and all manner of persons and corporations, a right they did not have before this enactment,” because whatever right appellee so took, and whatever right appellant therefore had, were subject to regulation by the state, and “the mere fact that a statute or ordinance, which may reasonably be regarded as conducive to the welfare of the public, regulates a trade or business, or lays some burden upon it, does not render it unconstitutional.” Indiana R. Co. v. Calvert, 168 Ind. 321, page 332, 80 N. E. 961, 10 L. R. A. (N. S.) 780, 11 Ann. Cas. 635.

[4] The foregoing explanation of the relations of the state, municipalities, and public utilities, each to the other, and their respective powers and rights, assists in disposing of several of appellant's other propositions, to wit: While the General Assembly shall not grant to any citizen, or class of citizens, privileges or immunities which, upon the same terms, shall not equally belong to all citizens, the Assembly may, directly or indirectly, for the public welfare, grant or withhold franchise for the use of the public highways, and in thus exercising its police powers, the state may make discriminations and distinctions, and judge of the reasonableness thereof. Consumers' Gas Company v. Harless, 131 Ind. 446, 29 N. E. 1062, 15 L. R. A....