Figari v. New York Tel. Co.

Decision Date25 July 1969
Citation32 A.D.2d 434,303 N.Y.S.2d 245
PartiesIn the Matter of Joseph FIGARI et al., Appellants, v. NEW YORK TELEPHONE COMPANY, Respondent.
CourtNew York Supreme Court — Appellate Division


Alfred J. Skidmore, Hicksville, for appellants.

G. Wallace Bates, New York City (James R. Billingsley and Gerald E. Murray, New York City, of counsel), for respondent.

BRENNAN, Acting Presiding Justice.

This appeal presents an important question concerning the constitutionality of a tariff filed by the respondent and approved by the Public Service Commission (hereinafter referred to as the Commission). The petitioners commenced this proceeding pursuant to article 78 of the CPLR to compel the respondent to restore their telephone service which had been terminated for their failure to comply with the tariff in question.

The individual petitioners are representatives of the corporate petitioner, Let Freedom Ring, Incorporated, which is a non-profit corporation organized under the laws of the State of Florida. The corporate petitioner was established purportedly 'to disseminate anti-communist, anti-socialist and pro-American information, through the use of telephone tape recordings.' Each of the individual petitioners subscribed to the respondent's Sponsored Recorded Announcement Service, using telephone lines and numbers supplied by the respondent. Every week the corporate petitioner would distribute a two and one-half minute tape recording to the individual petitioners which could be heard by any person who dialed the telephone number advertised for that purpose.

In 1965 the respondent, which is a member of the Bell Telephone System, received complaints concerning anonymous recording announcements. The complaints originally were directed to the Federal Communications Commission which referred them to the respondent. The gist of the complaints was that the respondent was transmitting libelous messages and that, in order to enable those libeled to ascertain the sponsor, the respondent should enact a rule which would require the sponsors to identify themselves on the recordings. Prior to November 1, 1965 the respondent revised its tariffs to permit it to identify the sponsor on request. At that time, proposed Federal legislation, which was never enacted, was pending. The respondent claims that that disclosure requirement became too burdensome and it therefore enacted the tariff in question (No. 800) which became effective on January 1, 1966 and, as of 1968, was in effect in similar form in 46 states. The tariff requires the individual subscriber to state his name and address on the recording. The individual petitioners refused to comply and, after notice from the respondent, their recording service was terminated, Feist's in July, 1968 and Figari's in September, 1968.

Prior thereto, on December 29, 1965, the New York Civil Liberties Union filed a complaint with the Public Service Commission, seeking to prevent the tariff from becoming effective. On March 1, 1966 the Commission dismissed the complaint and held that the tariff does not violate the Public Service Law. Thereafter, on June 9, 1966, the Commission 'denied' a petition for reconsideration. In an opinion, the Commission concluded that the tariff was reasonable but refused to pass upon the constitutional question, on the ground that that was solely within the 'province' of the courts.

In the instant proceeding the petitioners allege that the tariff is unconstitutional 'unjustly and unreasonably arbitrary and discriminatory' and in violation of the Public Service Law. Special Term dismissed the petition on the ground that all administrative remedies had not been exhausted and that the court could not treat the proceeding as an action for declaratory judgment since the Commission had not been made a party.

Generally, before a proceeding attacking a rule or regulation of an administrative agency will be heard in a State court, the petitioners must first exhaust their administrative remedies (CPLR 7801, subd. 1). The Commission is empowered to hold hearings concerning rules and regulations promulgated by telephone companies and may determine whether they are 'unjust, unreasonable or unjustly discriminatory' (Public Service Law, § 97, subds. 1, 2; Freedom Finance Co. v. New York Tel. Co., 29 A.D.2d 545, 285 N.Y.S.2d 163). All rules enacted by the respondent must be filed with the Commission and cannot be modified until 'legally changed' (16 NYCRR 630.3, 630.5). The respondent contends that before the constitutional question may be adjudicated in court the other issues raised in the petition must be passed upon by the Commission. However, in the matter of the complaint by the New York Civil Liberties Union the Commission unequivocally held that the tariff provision was reasonable and did not violate the Public Service Law. Since the Commission has already expressed itself on those issues, its technical expertise on such matters is no longer required. Consequently, the only new question, other than constitutionality, upon which the Commission could express itself, is whether the tariff is unjustly discriminatory as applied to these petitioners.

Nevertheless, the cases uniformly hold that, where an attack is concentrated upon the discriminatory application of a rule promulgated by a public utility, the courts may exercise jurisdiction in the first instance and mandamus is a proper remedy (Matter of Leitner v. New York Tel. Co., 277 N.Y. 180, 13 N.E.2d 763; Murray v. New York Tel. Co., 170 App.Div. 17, 156 N.Y.S. 151, affd. 226 N.Y. 590, 123 N.E. 879; Lemoyne Arms, Inc. v. Central N.Y. Power Corp., 191 Misc. 709, 76 N.Y.S.2d 703). Furthermore, initial resort to the courts is clearly proper where only questions of law are raised (Kovarsky v. Brooklyn Union Gas Co., 279 N.Y. 304, 18 N.E.2d 287); and, in our opinion, the issue of the constitutionality of a rule approved by the regulatory agency presents such a question (1, 4 Davis, Administrative Law, §§ 2.13, 30.09; see Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22). Support for this view is found in those cases concerning the constitutionality of a zoning ordinance which hold that relief may initially be sought in the courts (Vernon Park Realty v. City of Mount Vernon, 307 N.Y. 493, 121 N.E.2d 517; Levitt v. Incorporated Vil. of Sands Point, 6 N.Y.2d 269, 189 N.Y.S.2d 212, 160 N.E.2d 501).

Consequently, Special Term had jurisdiction in the first instance to consider the constitutional question and, in the exercise of discretion, should have taken jurisdiction of the discrimination claim; and, since the issue of reasonableness has been passed upon by the Commission, the court should have considered that claim De novo (see Annual Survey of American Law, 1968, Schwartz, pp. 91--92). Furthermore, the learned Justice could have directed that notice be given to the Attorney General (CPLR 1012, subd. (b)) and permitted him to intervene on behalf of the Commission (CPLR 1012, subd. (a), par. 1; CPLR 7802, subd. (d); Lemoyne Arms, Inc. v. Central N.Y. Power Corp., 191 Misc. 709, 76 N.Y.S.2d 703, Supra) or ordered a severance and separate trial of the issues (CPLR 407, 1003).

While the respondent did not urge nonjoinder below, and has not urged it on this appeal (CPLR 3211, subd. (a), par. 10; CPLR 3211, subd. (e); cf. Fed.Rules Civ.Pro., 19, 21, 12, subd. (b), par. (7), 12, subd. (h), par. (2)), the court may raise the point at any stage of the proceedings (First Nat. Bank of Amsterdam v. Shuler, 153 N.Y. 163, 170, 47 N.E. 262, 264; CPLR 1003; 2 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 1001.03). Hence, we shall now consider whether the Commission is a necessary party (CPLR 1001, subd. (a)). The primary reasons for compulsory joinder of parties are to prevent multiplicity of suits and to protect absentees who ought not to be jeopardized if they have a 'material interest in the subject matter' (Steinbach v. Prudential Ins. Co., 172 N.Y. 471, 478, 65 N.E. 281, 283; First Nat. Bank of Amsterdam v. Shuler, Supra; Mahr v. Norwich Union Fire Ins. Soc., 127 N.Y. 452, 28 N.E. 391; 2 Weinstein-Korn-Miller, N.Y.Civ.Prac., pars. 1001.01, 1001.05). However, where complete relief may be accorded between the parties and the absent party will not be inequitably affected, the absentee is not a necessary party (CPLR 1001, subd. (a)).

In Kovarsky v. Brooklyn Union Gas Co., 279 N.Y. 304, 18 N.E.2d 287, Supra, the plaintiff sued for an injunction, declaratory judgment concerning a question of law, and an accounting. The Commission was not a party and the Court of Appeals held that the matter should not be remanded to it. Moreover, in Matter of Shillitani v. Valentine, 296 N.Y. 161, 71 N.E.2d 450 our highest court held that the Police Commissioner was not a necessary or proper party in an article 78 proceeding to restore telephone service which had been terminated because of alleged unlawful use. There the court said (p. 164, 71 N.E.2d p. 451):

'Approval of the commissioner is not a statutory condition precedent to the granting of the relief sought * * *.

'Whether or no service should be terminated or discontinued is a decision that must be made by the telephone company. That power--as well as duty--rests with the public utility, and it may not delegate the one or avoid the other. * * * But whether the action is justified or warranted must be determined by the telephone company upon the facts presented. That being so, the telephone company is the only indispensable, necessary or proper party in a proceeding such as that before us.'

The instant proceeding is not unlike Matter of Castaways Motel v. Schuyler, 24 N.Y.2d 120, 299 N.Y.S.2d 148, 247 N.E.2d 124, which presented a far stronger case for finding the nonparty regulatory agency a necessary party. There the regulatory agency's consent was required by statute and the...

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