General Telephone Company v. City of Wellington
| Decision Date | 03 October 1956 |
| Docket Number | No. A-5395,A-5395 |
| Citation | 156 Tex. 238,294 S.W.2d 385,16 P.U.R.3d 61 |
| Parties | , 16 P.U.R.3d 61 GENERAL TELEPHONE COMPANY OF THE SOUTHWEST, Petitioner, v. CITY OF WELLINGTON et al., Respondents. |
| Court | Texas Supreme Court |
Don S. Holdridge, San Angelo, Joe A. Keith, Sherman, for petitioner.
Paul Spillman, City Atty., Wellington, for respondent.
The subject matter of this suit is that of temporary injunctions in telephone rate disputes arising under Art. 1119, Vernon's Tex.Civ.Stats., copied in footnote. 1
Our petitioner, General Telephone Company of the Southwest (plaintiff below) complains of the denial by the trial court and Amarillo Court of Civil Appeals of a temporary injunction restraining the respondents, City of Wellington, its Mayor and City Council members (defendants below) from requiring, by prosecution under a penalty ordinance (No. 332, approved August 24, 1954) or otherwise, the observance by petitioner of the terms of a rate ordinance (No. 333 approved September 14, 1954) fixing the charges for petitioner's local telephone service rendered 'subscribers residing within the city limits of the City of Wellington'. The judgment as here complained of also refused to restrain the respondents City and others 'From interfering in any way with the plaintiff in-collecting fair and reasonable-charges for telephone service in the City of Wellington, Texas, until such time as the defendant City Council shall prescribe fair and reasonable rates and charges.' For the opinion of the appellate court see 279 S.W.2d 922. As hereinafter further explained, we think this action was erroneous.
Actually the suit began prior to the passage of the rate ordinance in question (No. 333, supra), but while it was pending the petitioner made representations to the respondents in their official capacity for an increase in rates. Thereafter Ordinance No. 333 was passed providing an increase which, while substantial, was yet not sufficient in the view of the petitioner to make its permitted return nonconfiscatory.
Petitioner's pleadings contemplated that, if the temporary injunction were granted, petitioner would proceed, pending further action of the City, to collect such charges as petitioner should itself fix as reasonable, and in this behalf offered to put up an adequate bond guaranteeing the return to each subscriber of any overcharges which might develop to have been such as the result of the final decree.
Petitioner's pleadings, which were duly verified and accompanied by affidavits, including financial statements and calculations, alleged in brief that the rates prescribed by Ordinance No. 333 would result in a return to it of somewhat less than 2% of the fair value of its properties employed in the business.
These allegations and figures were all upon the basis of the so-called 'Wellington, Texas, Local Exchange', an enterprise or activity of the petitioner, being a single telephone exchange, furnishing ordinary local call service at regular monthly rates to all subscribers in the community centering in and including the City of Wellington. Although the 'exchange' thus necessarily included a substantial amount of property and number of subscribers located outside the city limits, the profit and loss accounting was kept, and the petitioner's instant case was presented for all practical purposes, like that of any other single community business would have been run and accounted for, that is, as if the city limit lines did not exist.
The pleadings of the respondents included a sworn plea in abatement, many pages of special exceptions, and an unsworn answer consisting of a general denial and other matters not now necessary to mention.
Nowhere did the respondents plead under oath (or otherwise unless as a result of the general denial) that the ordinance rates were reasonable or nonconfiscatory, or that any of the figures submitted by the petitioners as to valuation of properties or otherwise were erroneous or that any sort of separation of accounts of the properties and operations exclusively within the city from those without would have shown the ordinance rates to have been reasonable.
Upon the hearing the petitioner telephone company supported its sworn pleadings with the testimony of various of its officers or other purportedly expert witnesses. The respondents, although cross examining the witnesses and making numerous objections to their testimony, introduced no evidence whatever of their own, nor elicited any admission from the petitioner's witnesses that the ordinance rates were reasonable or nonconfiscatory, or that, unless as hereinafter discussed, the figures submitted by the petitioner were erroneous.
The theories of the trial judge in denying the temporary injunction are largely reflected in his 'Conclusions of Law' copied fully in the footnote. 2 His 'Findings of Fact' therein referred to consisted largely of the text of Ordinances Nos. 332 and 333 and general conclusions to the effect that the City, while not having changed or modified either ordinance, was yet taking no affirmative action against the petitioner under either. In response to a subsequent request by the petitioner for additional findings, the court (a) expressly refused to find that the prescribed rates would be or that they would not be found on final hearing to be confiscatory; (b) found the confiscatory character of said rates to be subject to 'reasonable doubt', and to constitute 'a seriously debatable issue'; (c) found in effect that, even though an injunction might issue on final hearing, the petitioner would yet be unable to make or collect retroactive charges so as to compensate itself for the services meanwhile rendered by it at the rates fixed by the ordinance; and (d) approved the bond tendered by the petitioner as good and sufficient and 'adequate to protect the customers of plaintiff under * * * a temporary injunction, had one been granted by the court.'
The Court of Civil Appeals, in affirming, gave as a general reason for its action that the record showed no abuse of discretion by the trial court, quoting at length in this behalf from City of Baytown v. General Telephone Co. of Southwest, Tex.Civ.App., 256 S.W.2d 187 () which sustained a temporary injunction against enforcement of ordinance rates. As actual or possible subsidiary or alternative reasons it mentioned: (a) that a temporary injunction is always properly refused where the record shows an actual net return, however small, on the fair value of the properties, from the rates sought to be enjoined; (b) absence of evidence showing 'what the rates are outside of the city limits' and of 'evidence separating the values in the city and the rural areas.' (In this connection the court observed that it did not have to pass on the City's contention that the City had no power to regulate rates beyond its borders); (c) that the status quo was the ordinance rate. The court also observed (d) that 'What was a reasonable rate of return was not to be determined by this requested injunction and neither is there a showing that the purported increase would not have produced more than the eight per cent permitted under the law.'
(1) The appellate court evidently, and we think correctly, disregarded what appears to have been one of the trial court's two primary reasons for its action, to wit, the fact that the respondents were not then threatening enforcement of the ordinance rates. The petitioner could not assume that it was free, without benefit of judicial protection, to disregard the formal pronouncement of the body authorized by statute to establish rates. Still less could it assume, that, if it ignored the rate ordinance, the City would fail to take recourse to the penalty ordinance which the City itself had recently enacted.
The other primary ground of the trial court's judgment was approved by the Court of Civil Appeals to the effect that the status quo to be preserved by temporary injunction in cases like the present is the rate sought to be enjoined. This, as the petitioner correctly contends, is in clear conflict with City of Houston v. Southwestern Bell Tel. Co., Tex.Civ.App., 263 S.W.2d 169, wr. of er. refused, and the City of Baytown case, supra, and must yield thereto.
The respondents, evidently referring to observation (d) of the appellate court above quoted, state that it '* * * properly held there was no showing in the record that the purported increase would not have produced more than eight per cent (8%) permitted under the law because no evidence was offered as to what the rate of return would have been within the city limits of the City of Wellington, Texas.' Since 'purported increase' would seem necessarily to refer, not to the ordinance rates in suit, but to the rates which the petitioner had unsuccessfully asked the City to establish, the argument is not relevant. It was so pointed out in the City of Houston case, supra. The true question in connection with the petitioner's allegations and proof of a single exchange operation is as to how the latter may demonstrate or fail to demonstrate the unreasonableness of the rates sought to be enjoined. We will return to this 'single exchange' question later.
Nor can we agree that the refusal of the injunction is to be supported by the petitioner's admission of an actual net return on the fair value of its properties (less than 2 per cent) under the rates sought to be enjoined. The one decision cited in support of this proposition, Lone Star Gas Co. v. State, does not so decide. The brief statement in that opinion to the effect that any net return, however small, precludes a claim of 'confiscation', 137 Tex. 279, 306, 153 S.W.2d 681, 696, occurred in the course of an exposition of this Court's disagreement with the view of the court below that Art. 6059, Vernon's Tex.Civ.Stats. (review of Railroad Commission gas rate orders) 'does...
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