Fink v. City of Clarendon

• Decision Date: 24 March 1926
• Docket Number: (No. 2693.)
• Citation: 282 S.W. 912
• Parties: FINK v. CITY OF CLARENDON.
• Court: Texas Court of Appeals

282 S.W. 912

FINK v. CITY OF CLARENDON.

(No. 2693.)

Court of Civil Appeals of Texas. Amarillo.

March 24, 1926.

Appeal from District Court, Donley County; R. L. Templeton, Judge.

Suit by the City of Clarendon against O. L. Fink. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

A. T. Cole, of Clarendon, and E. A. Simpson, of Amarillo, for appellant.

W. T. Link, of Clarendon, for appellee.

JACKSON, J.

Appellee, a municipal corporation, organized under the general laws of Texas, and having adopted the commission form of government, sought and obtained from the district court in chambers a temporary injunction restraining O. L. Fink, appellant, the owner of the telephone properties in the corporate limits of Clarendon, from charging and collecting from his patrons for local service more than $2 per month for each resident phone furnished, and more than $3 per month for each business phone furnished.

Appellee alleged that the Clarendon Telephone & Telegraph Company, a partnership composed of T. L. Benedict, Geo. W. Washington, and Dr. W. M. Gray, in the year 1907 had prepared and presented to the proper city officials an ordinance granting to said company a 20-year franchise for doing a telephone business in Clarendon, which ordinance was properly passed and accepted by said company. The city also alleges that this franchise ordinance was amended, and the amendment accepted in the year 1908, but, as there was no change in the amendment that affects the disposition of this appeal, it is unnecessary to consider the original ordinance and the amendment thereto separately.

Appellee specifically pleads certain provisions of said franchise ordinance and the duties and obligations imposed therein and the effect thereof.

The franchise ordinance and the amendment authorizes the Clarendon Telephone & Telegraph Company to erect the necessary poles, wires, and apparatus on and along the public streets, alleys, and grounds of the city of Clarendon, and to maintain and operate its local lines to various parts of the town, for a period of 20 years. The provisions of the ordinance material to a consideration of this appeal read:

"Said Clarendon Telephone & Telegraph Co. their heirs, assigns, executors, and administrators, shall be required, and are hereby required, to furnish to said city of Clarendon and its inhabitants, during the existence of this franchise, all necessary telephones, with proper connections, with a central station within a reasonable time upon demand; provided that the applicant for such telephone pays the customary charge therefor. Said central station to be kept open for the convenience of said city, and its inhabitants, during such hours as are necessary for the business interest and as conditions demand.

"Said Clarendon Telephone & Telegraph Co. and their heirs, assigns, executors and administrators shall not in any manner discriminate between the city, or any of the inhabitants thereof, in furnishing telephones to any and all persons residing within the city limits, upon the terms that telephones are furnished other persons, as hereinafter specified.

"That said Clarendon Telephone & Telegraph Co. their heirs, assigns, executors and administrators shall establish and maintain uniform rates for telephones, and shall not charge and collect more than $2.50 per month for each telephone furnished to business houses, and not more than $1.50 per month for each telephone furnished and residence houses, provided that said Telephone & Telegraph Co. may require a contract before establishing a telephone in a residence house that said telephone shall in said residence be paid for for a term of six months.

"That should said Clarendon Telephone & Telegraph Co., their heirs, assigns, executors or administrators, fail to establish said telephone and telegraph lines, and exchange within a reasonable time, or having same established, fail to maintain and operate the same, or fail to render to the public reasonable services as herein contemplated during any of the period of time for which this franchise is granted, or fail to perform the things herein before set out, or those hereinafter mentioned, then, and in such instance, said franchise herein granted shall become null and void.

"That for and in consideration of the rights and privileges herein granted to the said Clarendon Telephone & Telegraph Co., their heirs, assigns and executors and administrators, they, the said company above mentioned, shall pay to the city council for the use and benefit of said city of Clarendon, the sum of ($50.00) fifty dollars per year after said telephone company shall secure as many as 200 subscribers, and shall operate free of charge a fire alarm and place the same in a convenient building to be designated by the city council of said city, provided said council buy the necessary instruments to operate said fire alarm. Said Telephone & Telegraph Co. further agrees to establish and maintain one telephone for the use of the said town officials, said building to be designated by said city council."

In pursuance to this ordinance the telephone company established a local telephone system in the city, which system has continually and still uses the streets, alleys, and public grounds for its poles, wires, and apparatus.

On April 1, 1922, the company secured from the city officials an extension of the life of said ordinance for a period of an additional 25 years. The prescribed rates for service by the ordinance were maintained by the company until about October 1, 1918, when they were increased by a resolution of the city authorities to the sum of $2 per month for each residence telephone and $3 per month for each business telephone, which increased rates were charged until January 1, 1923, when the appellant herein by purchase became the owner of the Clarendon Telephone & Telegraph Company, and continued to furnish telephone service for said last-named rates until about December 1, 1925, at which time, and in violation of the franchise, he arbitrarily increased the rates for local telephone service to $2.50 per month for each residence telephone and $4 per month for each business telephone in the corporate limits of the city, and, unless his patrons pay this charge not later than the 10th of the month, he discontinues the service.

Appellee alleges in detail the number of telephones in use, both residence and business; the value of the system; the cost of operation, including taxes and depreciation; the gross revenues derived from operation; and that the rate of $2 per month for residence telephones and $3 per month for business telephones, together with the other revenues, actually yield appellant an excess of 10 per cent. upon the value of his investment and plant, and a reasonable and fair return upon the value of the properties used and useful in conducting his telephone business; that in charging and collecting $2.50 per month for each residence telephone and $4 per month for each business telephone the appellant is violating the contract imposed in the franchise ordinance with the city, and is charging an unfair, unjust, and unreasonable rate for the service rendered, and that he is actually collecting, and will continue to collect, such unreasonable and excessive rate for such service unless restrained; that on or about December 8, 1925, the city officials adopted an ordinance permitting appellant to charge for telephone service within the city not exceeding $2 per month for each residence telephone, and not exceeding $3 per month for each business telephone, but said ordinance has been wholly ignored by the appellant, and that irreparable damages will result unless appellant is restrained from violating such ordinance in charging such unreasonable and excessive rates; that appellee, acting by and through its duly constituted officials, passed a resolution complaining of the action of appellant in increasing said telephone rates, a true copy of which was delivered to him on January 4, 1926, but he ignored such resolution and continued to charge such excessive and unreasonable rates.

The appellant answered, and made a motion to dissolve the temporary injunction granted by the court in chambers, demurred generally and specially, denied the equities of the bill, and pleaded that the rates sought to be enforced by appellee were unreasonable and confiscatory, and set out at length and in detail the value of his properties, the depreciation, the operating expenses, the revenues received, and that the increased rates charged and collected are fair and reasonable, and will not yield 10 per cent. upon his investment.

We have not stated in detail the allegations of facts and figures set out by appellee as a basis for showing that the increased rates charged and collected by appellant were unfair, unjust, and unreasonable, nor the alleged facts and figures pleaded by appellant as a basis for proving the rates sought to be imposed by appellee were confiscatory, and that the rates charged and collected by him were reasonable. These allegations present issues of fact on whether the rates contended for by appellee are reasonable, unreasonable, or confiscatory, and, in our view of the record, it is not necessary to determine such issues.

Appellant insists that the franchise ordinance or contract granted to the Clarendon Telephone & Telegraph Company an exclusive right and privilege to construct, maintain, and operate a telephone system within the corporate limits of Clarendon for a period of 20 years, and was therefore void, because in violation of the Constitution of the State, art. 1, § 26, which reads, in part:

"Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed."

McQuillin, Municipal Corporations, vol. 4, par. 1635, says:

"A franchise will not be construed as exclusive, in the absence of express words or necessary implication, and a grant of...