Illinois Bell Telephone Co. v. Slattery, 6671.

• Decision Date: 22 February 1939
• Docket Number: No. 6671.,6671.
• Citation: 102 F.2d 58
• Parties: ILLINOIS BELL TELEPHONE CO. v. SLATTERY et al.
• Court: U.S. Court of Appeals — Seventh Circuit

102 F.2d 58 (1939)

ILLINOIS BELL TELEPHONE CO. v. SLATTERY et al.

No. 6671.

Circuit Court of Appeals, Seventh Circuit.

February 22, 1939.

COPYRIGHT MATERIAL OMITTED

Montgomery S. Winning, of Springfield, Ill., Thomas A. Keegan, of Chicago, Ill., and John E. Cassidy, Atty. Gen. of Illinois, for appellants.

William P. Sidley, Kenneth F. Burgess, Leslie N. Jones, W. Clyde Jones, and Barnet Hodes, all of Chicago, Ill., for appellee.

Before MAJOR and TREANOR, Circuit Judges, and WHAM, District Judge.

MAJOR, Circuit Judge.

This is an appeal from a decree of the District Court, specially constituted under Section 266 of the Judicial Code, 28 U.S. C.A. § 380, entered February 5, 1938, denying the claim of the State of Illinois, one of the defendants, to unclaimed refunds in the possession of the plaintiff.

On August 16, 1923, the Illinois Commerce Commission entered an order reducing certain of the plaintiff's rates for telephone coin box service in the City of Chicago. Plaintiff filed its bill of complaint in the Federal District Court on September 20, 1923, praying that an injunction be entered permanently restraining the persons constituting the Illinois Commerce Commission and the Attorney General from enforcing the order. On December 21, 1933, an interlocutory injunction was granted by the Statutory Court which contained the following provision:

"This order shall not take effect until the plaintiff shall enter into its bond or undertaking in the sum of One Million Dollars ($1,000,000), conditioned upon the payment of such costs and damages as may be incurred or suffered by any party who may be found to have been wrongfully enjoined or restrained by a temporary restraining order heretofore, on September 27, 1923, entered in this cause by this court or by this interlocutory injunction, and further conditioned so that in the event that this interlocutory injunction shall be hereafter dissolved, the plaintiff shall refund to its several subscribers, either in cash or by credit upon subsequent bills, any sums paid by them in excess of the sums chargeable to them, pursuant to the provisions of said order of the Illinois Commerce Commission."

On march 1, 1931, an additional bond of $5,000,000 was required conditioned upon the event that if the interlocutory injunction was thereafter dissolved, the plaintiff should: "* * * well and truly repay to each or any of its subscribers, or to the persons entitled thereto, with interest, either in cash or by credit on subsequent bills, and in such way and manner as the said District Court of the United States, for the Northern District of Illinois, may hereafter direct, any sums paid by the said subscribers to the plaintiff for telephone service rendered such subscribers, in excess of the sums chargeable to said subscribers, or any of them, pursuant to the provisions of the said order of the Illinois Commerce Commission, during the period from the date of said temporary restraining order to the date of the final decree that may be hereafter entered, the enforcement of which is enjoined, * * *."

After various proceedings in which the case has on four occasions been in the Supreme Court of the United States (Smith v. Illinois Bell Tel. Co., 269 U.S. 531, 46 S.Ct. 22, 70 L.Ed. 397; Id., 282 U. S. 133, 51 S.Ct. 65, 75 L.Ed. 255; Id., 283 U.S. 808, 51 S.Ct. 646, 75 L.Ed. 1427; Ex parte Smith, 283 U.S. 794, 51 S.Ct. 482, 75 L.Ed. 1419), a decree of permanent injunction was entered on June 28, 1933, which, upon appeal, the Supreme Court in Lindheimer et al. v. Illinois Bell Telephone Company, 292 U.S. 151, 54 S.Ct. 658, 668, 78 L.Ed. 1182, reversed, and remanded the the case with directions "to dissolve the interlocutory injunction, to provide for the refunding, in accordance with the terms of that injunction and of the bonds given pursuant thereto, of the amounts charged by the company in excess of the rates in suit, and to dismiss the bill of complaint." The mandate of the Supreme Court was filed in the District Court on June 1, 1934, and a decree was entered vacating the decree of June 28, 1933, dissolving the interlocutory injunction, directing that the defendants should be paid their taxable costs, appointing counsel to represent subscribers and ordering them to prepare and present within seven days a plan for the refunding of excess charges to the subscribers. This decree provided for the retention of jurisdiction in the following language:

"To the end that refunds shall be made as required by the mandate of the Supreme Court, this Court reserves and retains jurisdiction of this cause, the parties and the subject matter, to the end that such further orders and decrees shall be entered herein as may be appropriate to protect and settle the equities or rights of the parties hereto and of the several subscribers of the plaintiff and of all persons having rights under the bonds given herein or injunction issued, or in the refunds of the amounts charged by the plaintiff in excess of the rates fixed by the said order of the Illinois Commerce Commission of August 16, 1923; and to provide for the refunding and restitution of such amounts and interest thereon to those who may be entitled thereto;"

Thereafter, on June 11, 1934, counsel for the subscribers presented their report in which they suggested a plan for making refunds. Among other things it was suggested that the payments should be made directly by plaintiff rather than requiring the money to be paid into court and distributed by a Special Master, for the reason that plaintiff was agreeable to undertake such work and to assume the expenses thereof, and also for the reason that plaintiff was in the better position to make such refunds than anyone else. It was also suggested that plaintiff be required to make such refunds within a reasonable period. On June 11, 1934, a decree was entered containing elaborate provisions for the making of such refunds, together with 5% interest thereon, in conformity with the suggestions made by counsel for the subscribers. The decree contained provision for the giving of notice by the plaintiff to its subscribers and fixing June 1, 1937, as the expiration of the period during which claims might be filed and provided —

"On and after that date, to-wit: June 1, 1937, plaintiff shall be released as to all refunds which it has not been able to make in compliance herewith except as to those subscribers who during said six months' period (or prior thereto) shall have made claim theretofore to the plaintiff, and except, further, as to those refunds respecting which questions are pending before this Court at that time or where the matter of refund is in dispute between the subscriber and plaintiff."

It was also provided that plaintiff pay to the City of Chicago the sum of $69,590.70 and to the Attorney General for himself and the Illinois Commerce Commission, the sum of $100, which amounts were determined and fixed as taxable costs such parties were entitled to recover. The last paragraph of such decree is as follows:

"The Court hereby reserves the right to make such other and further orders herein as shall preserve the rights of the subscribers of plaintiff to the refunds herein directed or as shall be necessary to settle questions arising hereunder."

At the time of the entry of this decree, counsel for all interested parties, including the Attorney General as counsel for the Illinois Commerce Commission, as well as the State of Illinois, was present in court and either consented or made no objection to the entry of such decree. On July 23, 1934, a decree was entered which fixed and determined the fees to counsel for subscribers at 7½% of all refunds, whether or not distributed by June 1, 1937. On December 31, 1934, a decree designated as supplemental to that of June 11, 1934, was entered containing additional provisions with reference to the making of refunds by plaintiff, in which decree it was again provided "plaintiff shall be released as to all refunds which it has not been able to make in compliance with this and such former decrees," and concludes "the court hereby reserves the right to make such other and further orders herein as shall preserve the rights of plaintiff and the rights of its subscribers to the refunds directed to be paid by the decrees of this Court, or as shall be necessary or desirable to settle and dispose of questions arising under this and other decrees of this Court."

Plaintiff commenced the work of making refunds immediately following the decree of June 1, 1934, and employed as many as 2000 people at one time for that purpose. The work was performed under the supervision of a representative appointed by the court and during the three years subsequent to June 1, 1934, made to the court numerous reports of its progress and its efforts to locate subscribers who might be entitled to a refund. On June 2, 1937, at the expiration of the three-year period provided for in the decree of June 11, 1934, plaintiff filed its final report which disclosed that the total amount of overcharge, with interest, was $18,798,980.14, of which amount $4,074,254.15 represented interest, and that there remained unrefunded the sum of $1,688,295.68.

On June 3, 1937, the plaintiff filed a petition reciting that the period for making refunds had expired, that it had complied with all former decrees, and that it had incurred expenses to the extent of $2,700,000 in making the refunds. The petition prayed, among other things, that an order be entered permitting the plaintiff to destroy the records relating to the refunds, discharge it from any further liability for refunds, and —

"* * * further finding and adjudging that any sums unrefunded after payment of all proper claims filed on or before June 1, 1937, are and shall remain the property of the plaintiff, Illinois Bell Telephone Company."

On June 14, 1937, the State of Illinois presented a petition in the name of the Attorney General...