Marquis v. Polk County Tel. Co.

• Decision Date: 01 July 1916
• Docket Number: 19312
• Citation: 158 N.W. 927,100 Neb. 140
• Parties: WILLIAM J. MARQUIS, APPELLANT, v. POLK COUNTY TELEPHONE COMPANY, APPELLEE
• Court: Nebraska Supreme Court

158 N.W. 927

100 Neb. 140

WILLIAM J. MARQUIS, APPELLANT, v. POLK COUNTY TELEPHONE COMPANY, APPELLEE

No. 19312

Supreme Court of Nebraska

July 1, 1916

APPEAL from the State Railway Commission. Affirmed.

AFFIRMED.

V. E Wilson, for appellant.

King Bittner & Campbell and Mills & Beebe, contra.

LETTON J. MORRISSEY, C. J., not sitting.

OPINION

LETTON, J.

This is an appeal from a ruling and order of the state railway commission.

In 1902 the city of Stromsburg passed an ordinance granting a right of way to the Golden Rod Telephone Company and its assigns through the streets of that city for telephone and telegraph purposes, and it was further provided "that the real value or use of any telephone in any public office or place of business in said city shall not at any time exceed the sum of one and 50/100 ($ 1.50) dollars per month, or in any private dwelling-house the sum of one ($ 1.00) dollar per month, and that the city of Stromsburg, Nebraska, shall have the use of three telephones, during the life of this ordinance, free of rental charge or any charge whatever." It was also provided that the telephone company "shall at all times permit their poles to be used for the purpose of placing and maintaining thereon any wires which may be necessary for the use of the police or fire department for the use of the city." The defendant is the successor and assignee of the Golden Rod Telephone Company. The complainant is the user of a business telephone. He charges that on April 1,1913, without the consent of the city of Stromsburg, the respondent arbitrarily increased the charge made by it for the use of business telephones to the sum of $ 2.50 a month.

For a second cause of action, it is alleged that the respondent's charge for a residence telephone is $ 1 a month in the city and $ 1 a month for the farm lines; that the service is poor and defective; that the charges for the use of a business telephone are unreasonable, unjust, excessive and discriminatory, and that a just and reasonable charge for the business telephones is not more than $ 1.50 a month. Respondent pleads the adoption of the constitutional amendment creating the state railway commission; that the rates of which complaint is made were filed with and approved by that body; it denies that the lines, equipment or service are faulty; and alleges that the rate of $ 1.50 a month for a business telephone is insufficient to justify carrying on the business; that to have continued to carry on the business at such rate would have bankrupted the defendant; and that $ 2.50 a month is a fair charge.

The railway commission, after a hearing, dismissed the complaint, but made certain orders as to maintenance and repairs, the validity of which is not in issue.

Complainant admits that the city of Stromsburg had no express authority from the state to grant a franchise or to enter into an agreement fixing telephone rates, but he contends that the city had implied power to do so by reason of its ownership and control of the streets, alleys and public grounds, and by reason of power to contract conferred upon it by statute. In the ordinance granting the franchise, the city contracted in its own behalf for the use of the poles of the grantee for carrying wires of the city for fire and police purposes, and also contracted for its free use of certain telephones. These considerations moved directly to the city. The real question is whether the city had power to contract in behalf of telephone users in such a manner that the right of regulation at that time inherent in the legislature was taken away. Unless the legislature by its own act specifically parted with the power to regulate and conferred it upon the municipal corporation in direct terms, such a power could not exist in the city, and whatever contract or agreement was made between it and the telephone company in behalf of telephone users within its limits was, and must necessarily have been, made subject to the legislative right of regulation. Indeed, to hold that an implied power to contract exists from the right to control the streets, and that contracts so made might not be impaired, might prove exceedingly detrimental to the public welfare. The progress of invention in the cheapening of processes has been so startling in recent years that a rate which is fair to both parties now may, in the case of gas, electric light, power, transportation, or like companies, yield in a few years an excessive profit on the capital invested. In such a case, the public might be powerless to impair the obligation of the contract.

The courts, therefore, will not hold that the exclusive power to contract exists unless plainly and expressly granted. State v. Wyandotte County Gas Co., 88 Kan. 165, 127 P. 639, affirmed on error to the supreme court of the United States under the title, Wyandotte County Gas Co. v. State of Kansas, 231 U.S. 622, 58 L.Ed. 404, 34 S.Ct. 226; Home Telephone & Telegraph Co. v. City of Los Angeles, 211 U.S. 265, 53 L.Ed. 176, 29 S.Ct. 50; Benwood v. Public Service Commission, 75 W.Va. 127, 83 S.E. 295, L. R. A. 1915C, 261, and note, p. 264; Milwaukee Electric Ry. & Light Co. v. Railroad Commission, 153 Wis. 592, 142 N.W. 491; City of Kenosha v. Kenosha Home Telephone Co., 149 Wis. 338, 135 N.W. 848.

This court has held in a number of cases that contracts made by public service corporations are made with the right of regulation as a part of the contract, and that the power to lower excessive rates or to increase inadequate rates still rested solely in the legislature until by virtue of the constitutional amendment the same power was extended to the state railway commission. McCook Irrigation & Water Power Co. v. Burtless, 98 Neb. 141, 152 N.W. 334, and cases cited. The fact that at the time the franchise ordinance in question was passed the railway commission was not in existence is not material. That body was given power to regulate the rates of common carriers, and by section 6124, Rev. St. 1913, the term "common carrier" is expressly made to include telephone companies.

There is a distinction between the cases cited by the complainant and the conditions here. In some of these cases there were constitutional or statutory provisions which were controlling, in others the contract provisions of the franchises under consideration did not relate to the fixing of rates. But, even if these authorities were to the contrary, we believe that the reasoning of the cases cited is more persuasive.

It is next contended that the commission erred in requiring the complainant to assume the burden of proof; in fixing too great an amount as the present value of the property of respondent; in fixing too great an amount which the telephone company is permitted to earn in the future for the purpose of maintenance and depreciation and for dividends, and in finding that the new rate does not discriminate unjustly against the users of business telephones.

Section 6128, Rev. St. 1913, provides that, in any appeal prosecuted from a decision in which the charges of a common carrier are involved, such decision shall be received in any appeal "as prima facie evidence that the rates therein fixed are...