Postal Cable Tel. Co. v. Cumberland Tel. & Tel. Co.

• Decision Date: 30 March 1910
• Docket Number: 358.
• Citation: 177 F. 726
• Court: U.S. District Court — Middle District of Tennessee
• Parties: POSTAL CABLE TELEGRAPH CO. v. CUMBERLAND TELEPHONE & TELEGRAPH CO.

177 F. 726

POSTAL CABLE TELEGRAPH CO. v. CUMBERLAND TELEPHONE & TELEGRAPH CO.

No. 358.

United States Circuit Court, M.D. Tennessee.

March 30, 1910

John W Green, John D. Caldwell, Anderson, Felder, Rountree & Wilson and William W. Cook, for complainant.

William L. Granbery, for defendant.

SANFORD District Judge.

I am of opinion that the motion of the complainant telegraph company should be granted so as to enjoin the defendant telephone company pending this litigation from removing its telephone instruments in the office of the telegraph company in Nashville and other towns and cities in Tennessee, and from refusing to furnish such instruments and telephone service to the telegraph company at the same rates as heretofore in all such towns and cities where the telegraph company has been heretofore paying merely the flat rates paid by other patrons of the telephone company having telephones in their business houses.

1. A telephone company, which is often described as a common carrier of news, is engaged in a quasi public service affected with a public interest, for which it is endowed with some of the sovereign powers of the state, and as such is held to the obligation of an impartial and undiscriminating service to the public upon common-law principles. Cumberland Telephone & Telegraph Co. v. Kelly (C.C.A., 6th Cir.) 160 F. 316, 87 C.C.A. 268; State v. Telephone Co. (C.C.) 23 F. 539; State v. Telegraph & Telephone Co. (C.C.) 47 F. 633, 638; Chesapeake Telephone Co. v. Railway Co., 66 Md. 399, 414, 7 A. 809, 59 Am.Rep. 167; Hockett v. State, 105 Ind. 250, 258, 5 N.E. 178, 55 Am.Rep. 201; Cent. Union Telephone Co. v. State, 118 Ind. 194, 19 N.E. 604, 10 Am.St.Rep. 114; State v. Telephone Co., 61 S.C. 83, 39 S.E. 257, 55 L.R.A. 139, 85 Am.St.Rep. 870; Stat v. Telephone Co., 17 Neb. 126, 22 N.W. 237, 52 Am.Rep. 404; State v. Telephone Co., 93 Mo.App. 349, 67 S.W. 684. Thus, in accordance with this general rule, it is held under the great weight of authority that a telephone company operating a telephone system under a license from the owner of the patent binding it not to furnish telephone service to any telegraph company except to one particular telegraph company may nevertheless be compelled to discharge its obligation of equal service and to furnish like facilities and service to other telegraph companies under like terms and conditions. State v. Telephone Co. (C.C.) 23 F. 539; State v. Telegraph & Telephone Co. (C.C.) 47 F. 633, 638; Delaware Telephone Co. v. State, 50 F. 677, 2 C.C.A. 1; State v. Telegraph Co., 36 Ohio St. 296, 38 Am.Rep. 583; American Union Telegraph Co. v. Telephone Co. (C.C.) 1 Fed. 698; Bell Telephone Co. v. Commonwealth (Pa.) 3 Atl. 825; Chesapeake Telephone Co. v. Telegraph Co., 66 Md. 399, 7 A. 809, 59 Am.Dec. 167. This common-law obligation of a telephone company is enforced, under severe penalty, by chapter 66, Tenn. Acts 1885, Sec. 11, which provides that:

'Every telephone company doing business within this state, and engaged in a general telephone business, shall supply all applicants for telephone connection and facilities without discrimination or partiality, provided such applicant comply with the reasonable regulations of the company, and no such company shall impose any condition or restriction upon any such applicant that is not imposed impartially upon all persons or companies in like situations, nor shall such company discriminate against any individual or company engaged in lawful business by requiring as condition for furnishing such facilities that they shall not be used in the business of the applicant or otherwise, under penalty of one hundred dollars for each day such company continues such discrimination and refuses such facilities after compliance or offer to comply with the reasonable regulations, and time to furnish the same has elapsed, to be recovered by the applicant whose application is so neglected or refused.'

This statute is merely declaratory of the common-law obligation of telephone companies, giving a new remedy and imposing severe penalties for nonobservance. Cumberland Telephone & Telegraph Co. v. Kelly, supra.

2. This common-law obligation of equal and undiscriminating service clearly requires that the same charges shall be made to all persons for the rendering of similar service. The rule governing in the analogous case of telegraph companies was stated in Western Union Telegraph Co. v. Call Pub. Co., 181 U.S. 92, 100, 21 Sup.Ct. 561, 564, 45 L.Ed. 765, as follows:

'They are endowed by the state with some of its sovereign powers, such as the right of eminent domain, and so endowed by reason of the public service they render. As a consequence of this, all individuals have equal rights both in respect to service and charges. Of course, such equality of right does not prevent differences in the modes and kinds of service and different charges based thereon. There is no cast-iron line of uniformity which prevents a charge from being above or below a particular sum, or requires that the service shall be exactly along the same lines. But that principle of equality does forbid any difference in charge which is not based upon difference in service, and, even when based upon difference of service, must have some reasonable relation to the amount of differences, and cannot be so great as to produce an unjust discrimination. To affirm that a condition of things exists under which common carriers anywhere in the country engaged in any form of transportation, are relieved from the burdens of these obligations is a proposition which, to say the least, is startling.'

Applying this same rule to telephone companies, it follows that all individuals have equal rights both in respect to services from the telephone company and the charges therefor, and that there can be no lawful difference in charge which is not based upon difference in service and has a reasonable relation to the amount of the difference.

It appears, however, from the bill and the affidavits filed in support of the motion for an injunction that there is no substantial difference in the mode and kind of service rendered by the telephone company to the complainant and to other users of telephones at their business houses. It follows, therefore, that the rule of equal and undiscriminating service prevents the telephone company from charging the telegraph company a higher rate for such service than it charges its other business patrons for similar service.

It is clear that a greater charge is not justified against the telegraph company merely on account of the greater profit which it may receive from the telephone service than other business patrons. To consider as an element entering into the proper charge for service performed by a common carrier the financial value of such service to the customer, irrespective of the nature of the service rendered by the carrier, would manifestly be to introduce an entirely new basis of regulating its rates of service, directly violative of the fundamental rule that they are to depend upon the character of the service rendered, and one which cannot be supported either upon principle or authority. If the telephone company were justified in imposing a greater rate upon a telegraph company than upon other business patrons because of the greater financial benefit of such service to the telegraph company, it could make like discrimination between its other business patrons, and could charge business houses doing a profitable business by means of the telephone a higher rental than others doing a less profitable business; and, if on account of the greater profit involved it is entitled to charge a telegraph company a percentage on the business received by it over the telephone, it might with equal propriety require every business man having a telephone to keep an account of the orders which he receives over the telephone, and charge him, in addition to the usual rental for business telephones, a percentage on the business so received.

The mere statement of such proposition carries its own conclusive answer.

Neither can the charging of a higher rate to the complainant telegraph company than to other business patrons receiving similar services be supported on the ground that it is a competitor in business with the telephone company.

In so far as this defense is predicated upon the statement in the answer that the defendant is engaged not merely in the telephone business but also in the telegraph business proper, it is to be observed that it nowhere appears from the answer that it is engaged in any telegraph business in the state of Tennessee; and, further, the affidavit of G. A. Paine, which is not contradicted, shows that the defendant does practically no public telegraph business for the public.

But even if the defendant were engaged to any material extent in the telegraph business in addition to its telephone business, I am of opinion that its obligations in respect to its telephone business must be determined with reference to that business alone, and that it has not the right to discriminate in charges for telephone service merely because it may also be engaged in another branch of...