Home Telephone Co. v. City of Carthage

• Decision Date: 21 March 1911
• Citation: 139 S.W. 547,235 Mo. 644
• Parties: HOME TELEPHONE COMPANY v. CITY OF CARTHAGE, Appellant
• Court: Missouri Supreme Court

139 S.W. 547

235 Mo. 644

HOME TELEPHONE COMPANY v. CITY OF CARTHAGE, Appellant

Supreme Court of Missouri

March 21, 1911

Appeal from Jasper Circuit Court. -- Hon. Hugh Dabbs, Judge.

Reversed and remanded.

Perkins & Blair, J. D. Harris, H. L. Shannon and R. A. Hockensmith for appellants.

(1) The court erred in excluding Circular No. 12, issued by Theodore Gary Investment Company. The evidence shows that Gary is the president of the respondent Home Telephone Co. and president of Theodore Gary Investment Co. It shows that the net earnings of the Telephone Co. for the year preceding the statement were $ 50,135. The effect of the evidence of R. W Frey, secretary and treasurer Home Telephone Co. is that he prepared the data contained in the circular relating to the Home Telephone Company. Exhibit B sworn to by Theodore Gary president of Home Telephone Co., shows that the total value of its property on June 1, 1907, was only $ 33,814.50. At the trial respondent's witnesses arbitrarily fixed the value of the Carthage plant at one-fourth, which would make the total value of the Carthage plant amount to $ 8,453.62. (2) The investment on which a public service corporation is entitled to base its compensation in determining the sufficiency of rates cannot include property not at present actually employed in collecting or distributing the commodity, however useful it may have been in the past or may yet be in the future. Water Co. v. San Diego, 38 L R. A. 460. Neither should estimated cost of supposed needed additions or future improvements be included. (3) Regardless of whether or not Carthage under its charter and the Act approved May 8, 1907, Laws 1907, p. 119, had power to fix telephone rates, the franchise under which respondent Telephone Co. is operating fixes the maximum rate it may charge and beyond the rate so fixed the respondent cannot go since the franchise is a contract and binding upon respondent, it having accepted the provisions thereof and been operating thereunder during all the times mentioned in the petition. Where a city makes a contract which its charter does not permit, yet does not prohibit, although the contract is ultra vires the corporation, yet it is not illegal, because not prohibited by the charter. St. Louis v. Davidson, 102 Mo. 153; 2 Dillon, Mun. Corp. (4 Ed.) sec. 936; McDonald v. Mayor, 68 N.Y. 23; Bigelow, Estop. (5 Ed.) 685. By the terms of the ordinance granting the Telephone Co. its franchise rights in the city of Carthage (including immunity from certain taxation) contractual relations were established between the city and the Telephone Co., and since the Telephone Company has derived benefits under that contract it cannot now retain those benefits and repudiate the source from which those benefits spring by denying the validity of the contract in which they originated. In short it is estopped to grasp the benefits of that contract with one eager hand, while thrusting aside its burden with the other. St. Louis v. Davidson, 102 Mo. 153; Unionville v. Martin, 95 Mo.App. 39; Devers v. Howard, 88 Mo.App. 261; Gas. Co v. Muncie, 160 Ind. 97; Rushville v. Gas Co., 164 Ind. 162; Noblesville v. Gas Co., 157 Ind. 162. (4) The decree of the court fails to find and state the value of respondent's telephone plant or property in the city of Carthage or the value of its property as a whole, fails to find and state the amount of its reasonable and necessary expenses or cost of maintenance, and fails to find and state the amount of revenue or income received therefrom and fails to state what, in the opinion of the court, would be a reasonable profit on respondent's investment, so that this court is not informed by said decree or otherwise, what amount of profit the trial court deemed reasonable or unreasonable. By the decree, ordinance No. 926 is declared to be unreasonable and void and defendant is enjoined from taking any steps to enforce the maximum rates mentioned in said ordinance. The maximum rates mentioned in said ordinance are the same as the rates prescribed in the franchise ordinance No. 317 and that ordinance being a contract binding on the Telephone Co., the city is entitled to enforce the rates prescribed therein, hence, that part of the decree enjoining the city from taking any steps to enforce the maximum rates mentioned in ordinance No. 926 is unwarranted and erroneous, even if the rest of the decree could be upheld. The evidence of respondent's late superintendent shows that in February, 1908, the respondent established and undertook to put in force new rates in excess of the rates prescribed in said ordinances No. 317 and 926. Respondent's position is that in arriving at the basis upon which to figure a percentage of earnings to provide a fair return, there should be included every dollar that ever has been spent by itself and its predecessors in constructing and maintaining a telephone system in the city; appellant's position is that there should be an allowance for depreciation and that the value of the telephone property in use for the benefit of the public at the time of the use is the proper criterion. Appellant contends that the decree is erroneous and for the wrong party and that this cause should be reversed.

Howard Gray, Mooneyham & Phelps and E. L. Shepherd for respondent.

(1) The court did not err in excluding the circular of the Gary Investment Company. There was no testimony that this circular was ever prepared by Mr. Gary or issued by him, but if it was, it shows plainly that it was issued by him as the representative of another corporation, and in the performance of no duty as the agent of the Home Telephone Co. (2) The appellant claims that in determining the sufficiency of rates, property not at the present actually employed cannot be included. This is true and was not done in this case, but it is proper to show all that has been invested in it. Water Works Co. v. San Francisco, 124 F. 592. (3) Appellant urges that whether the city had the right in 1895 to fix telephone rates, yet inasmuch as a franchise was granted and was accepted by the respondent, the respondent is estopped from now denying the validity of that franchise. There are several reasons why this proposition is not before this court. It is elementary in the practice in this State, that a party must try his case in the appellate court on the same theory it was presented in the trial court. In the trial court no issue of estoppel was raised. The appellant filed a general denial, denying there was a franchise granted in 1895, and the suit was brought to enjoin the city from putting into force the provisions of the ordinance of August, 1907. The city, if it intended to rely upon estoppel, should have so declared in its answer. Swinehart v. Railroad, 207 Mo. 423; Bank v. Doran, 109 Mo. 40; Golden v. Tyler, 180 Mo. 196; Carthage v. Light Co., 97 Mo.App. 20; Loving Co. v. Cattle Co., 176 Mo. 330. There was nothing in the pleadings raising the question of estoppel and nothing in the evidence, and the burden is on the party setting up an estoppel to make out the facts on which it rests. Tring v. Krisler, 90 Mo. 649. The rule is also well settled that a party who has not been injured by another's conduct cannot make such conduct grounds for an estoppel. Amy v. Ramsay, 4 Mo. 505; Burke v. Adams, 80 Mo. 504; Noble v. Blount, 77 Mo. 235; Bales v. Perry, 51 Mo. 449. (4) Even admitting the appellant can change his theory in this court, and admitting that he can have the benefit of an estoppel without pleading it, and admitting that it is not necessary to show any testimony upon which to base an estoppel, yet it is well settled that the city had no authority or power to enter into the contract of 1895. St. Louis v. Tel. Co., 96 Mo. 623; State v. Tel. Co., 189 Mo. 83; State v. Sheboggin, 86 N.W. 657; Tel. Co. v. Milwaukee, 104 N.W. 1009; Farmer v. Tel. Co., 74 N.E. 1078; Wright v. Tel. Co., 99 N.Y.S. 85; Water Co. v. Freeport, 180 U.S. 587. (5) To determine the reasonable value of the property at the time it is being used for the public service, and in determining this value, the following elements are to be included in the estimate: The cost of the plant, the cost per annum of operating, including interest paid or money borrowed and reasonably necessary to be used in constructing the same; the annual depreciation of the plant from natural causes resulting from its use; the amount of repairs made necessary and which are not included in the item of natural depreciation. Land Co. v. National City, 174 U.S. 739; Water Works Co. v. Kansas City, 62 F. 853.

KENNISH J. Graves, J., dissents, and Valliant, C. J., not sitting.

OPINION

In Banc.

KENNISH, J.

This suit was instituted in the circuit court of Jasper county on the 28th day of August, 1907, by the respondent, the Home Telephone Company, herein referred to as the complainant, against the City of Carthage, appellant, and certain officers of said city. The Act of the General Assembly of 1907, known as the Public Utilities Act, now sections 9568, 9569 and 9570, Revised Statutes 1909, had gone into force and effect shortly before the filing of this suit, and pursuant to the power conferred upon municipalities by said act, the city of Carthage had adopted an ordinance regulating the telephone business and prescribing maximum rates of charge for the use of telephones within said city. Immediately upon the taking effect of said ordinance, complainant brought this suit for the purpose of having the court decree and adjudge the ordinance invalid and the rates therein prescribed unreasonable, and to have the city and its officers restrained and enjoined from taking any steps for the enforcement thereof.

A restraining order was issued upon the filing of the petition and upon final...