Northern Kentucky Tel. Co. v. SOUTHERN BELL TEL. & T. CO.

• Decision Date: 29 August 1932
• Docket Number: No. 3939.,3939.
• Citation: 1 F. Supp. 576
• Parties: NORTHERN KENTUCKY TELEPHONE CO. v. SOUTHERN BELL TELEPHONE & TELEGRAPH CO. et al.
• Court: U.S. District Court — Eastern District of Kentucky

1 F. Supp. 576

NORTHERN KENTUCKY TELEPHONE CO. v. SOUTHERN BELL TELEPHONE & TELEGRAPH CO. et al.

No. 3939.

District Court, E. D. Kentucky.

August 29, 1932.

Wm. J. Donovan, Bethuel M. Webster, Jr., and Breck P. McAllister, all of New York City, and M. J. Hennessey, of Augusta, Ky., for plaintiff.

Trabue, Doolan, Helm & Helm, of Louisville, Ky., and E. D. Smith, of Atlanta, Ga., for Southern Bell Telephone § Telegraph Co.

Carl M. Jacobs, of Cincinnati, Ohio, for Cincinnati & Suburban Telephone Co.

Myers & Howard, of Covington, Ky., for Citizens' Telephone Co.

ANDREW M. J. COCHRAN, District Judge.

This action is before me on plaintiff's demurrers to the second paragraph of each of the answers of the defendants, and motions to strike from the first paragraph certain portions thereof. The defendants ask that these demurrers be carried back to the petition, which they claim to be insufficient, and have also filed demurrers thereto.

Proper disposition of these matters calls for an accurate understanding of the nature of the cause of action set forth in the petition, and of its allegations. The action is brought under section 7 of the Sherman Anti-Trust Act (15 USCA § 15 note) to recover treble damages for a conspiracy in restraint of interstate commerce, declared illegal by section 1 of the act (15 USCA § 1), amounting to the sum of $1,050,000, and attorney's fees. The petition consists of sixteen literary paragraphs each separately numbered. The first eight set forth inducement matter, the next six the cause of action, the next the damages sustained, and the last the prayer. The inducement is concerned mainly with the parties to the action. The plaintiff is a Delaware corporation. It was organized in 1926 to engage in the telephone business in Bracken and adjoining counties in this district, by furnishing to the residents thereof telephone service between points within this state, and, through physical connections and agreements with other telephone companies, in interstate commerce. In furtherance of this purpose, it installed a telephone plant in Bracken county, and in 1926 acquired the plant of the Robertson County Telephone Company, in Robertson county, which adjoins Bracken county on the South, which company had a telephone exchange at Mt. Olivet, its county seat, and on or about January 1, 1927, it began the operation of both plants, and has continued to operate same ever since. It has about 550 subscribers in Bracken county, and approximately 200 in Robertson. The telephone exchange at Mt. Olivet, then and ever since, has had physical connection with plaintiff's exchange in Bracken county, and with that of the defendant Southern Bell Telephone & Telegraph Company. That company is a New York corporation, with office and place of business at Louisville. It then, and ever since has, operated and does now operate and maintain telephone exchanges and telegraph lines between points in Kentucky, and between points in Kentucky and points in all parts of the United States and in foreign countries, either by agreements with other telephone companies with whose lines it has physical connection, or by its own lines.

The defendant Cincinnati & Suburban Bell Telephone Company is an Ohio corporation, with principal office and place of business in Cincinnati, Ohio. During the times set forth in the petition it carried on the telephone business by telephone exchanges and telegraph lines between points within Ohio, between points in Ohio and points in this state, and between points in all parts of the United States by agreements with other companies with whose lines it connected, or by its own lines. The defendant Citizens' Telephone Company, a wholly owned subsidiary of the Cincinnati & Suburban Bell Telephone Company, is a Kentucky corporation, with its principal office and place of business in Cincinnati, Ohio, and an office and place of business in Covington, in this district. During those times it has carried on the telephone business by telephone exchanges and telephone lines between points within Kentucky, and between points within Kentucky and points in all parts of the United States and foreign countries by agreements with other companies with whose line it connects, and by its own lines.

The inducement sets forth certain facts as to another telephone company which is not sued. It is the Kentucky State Telephone Company, a Delaware corporation with an office and place of business in Lexington, Ky., and also in Brooksville, county seat of Bracken county. It is engaged in the telephone business. In or about 1928 it acquired the telephone business and property of the Bracken County Telephone Company, a corporation then and theretofore engaged in the telephone business in Bracken and adjoining counties, between points within Kentucky, between points within Kentucky and points in all parts of the United States and in foreign countries by agreements with the defendant Southern Bell Telephone & Telegraph Company with which it had physical connections, which business it has carried on ever since. In the last paragraph of the inducement it is set forth that plaintiff had made application to each of the defendants for a physical connection between its lines and those of the defendants, and for interchange of telephone messages between its subscribers and points in the telephone lines of defendants and points in the telephone lines of companies whose telephone lines were connected throughout the United States and foreign countries, so that it might engage in interstate telephone business. Nothing is said in this paragraph as to the result of such application.

This brings us to the next six paragraphs which set forth plaintiff's cause of action. The ninth paragraph has to do with the conspiracy and the other five with what was done in furtherance thereof. It is alleged in the ninth paragraph that the defendants, the Bracken County Telephone Company, Kentucky State Telephone Company, and others whose names were unknown to plaintiff, on or about January, 1927, and continuously therefrom until the filing of the petition engaged in a conspiracy to restrain (which conspiracy had restrained) plaintiff's interstate commerce in the manner and by the means thereinafter set forth, and that they had so done with the intent and purpose of injuring plaintiff and excluding it from interstate commerce, and in execution of such conspiracy and to accomplish its objects they had done the acts set forth in the succeeding five paragraphs.

The first act, set forth in the tenth paragraph, is that the Bracken County Telephone Company and the defendant Citizens' Telephone Company connived and co-operated to oppose the application of plaintiff for a franchise before the fiscal court of Bracken county, and employed attorneys to oppose such application, and by these and other acts compelled plaintiff to resort to protracted and expensive litigation to establish its right to such franchise. They opposed the granting of a franchise to plaintiff at every step in the application and litigation. The fiscal court of Bracken county had no power to grant the plaintiff a franchise to operate and engage in the telephone business. What was meant is that plaintiff applied to that court for a grant of the right to use and occupy the public highways of Bracken county for the erection and maintenance of its telephone lines. It was this application which these two companies opposed. It was not alleged when this application was made and granted, but it appears from the case of Northern Kentucky Mutual Telephone Co. v. Bracken County, 220 Ky. 297, 295 S. W. 146, that it was some time in 1926 and 1927. No other defendant is charged with taking part in this opposition than the Citizens' Telephone Company, though if prior thereto there was the conspiracy alleged the other two defendants were chargeable therewith. It is not unlikely that the Bracken County Telephone Company's line was physically connected with that of this defendant, and there was interchange of messages between the two lines, though this is not alleged. The Bracken County Telephone Company, no doubt, opposed the application because the undertaking of plaintiff was an attack upon its business in Bracken county, and may have threatened its life. If the defendant Citizens' Telephone Company was so connected with that company, it no doubt joined in the opposition because of sympathy with its business associate and with a desire not to have to deal with two companies in handling Bracken county business. The granting of the application did not necessarily involve interstate commerce on the part of plaintiff. It was only necessary in order that it might engage in such commerce. To that end it was essential for plaintiff to obtain an interstate line or form an interstate connection.

The second act, set forth in the eleventh paragraph, is that in or about February, 1927, the defendants Southern Bell Telephone & Telegraph Company and Cincinnati & Suburban Telephone Company refused to agree with plaintiff to an interchange of messages between plaintiff's subscribers and points throughout the United States and foreign countries by means of a physical connection of their lines with the line of the Higginsport Telephone Company in Higginsport, Ohio, situated on the Ohio river opposite Bracken county, with which they had an agreement for the interchange of messages, and because thereof it did not effect a physical connection between its line and that of that company for which it was negotiating, and was not in this way put in position to do interstate business. I do not understand that plaintiff desired any connection with the Higginsport Telephone Company, unless it could obtain such an agreement from those defendants. It is not alleged whether both of the defendant companies had physical connection with the Higginsport Telephone Company, which is not likely, and if only one, which one. Nor is the exact...