Postal Telegraph Cable Co v. City of Newport, Ky

• Decision Date: 10 June 1918
• Docket Number: No. 273,273
• Citation: 247 U.S. 464,62 L.Ed. 1215,38 S.Ct. 566
• Parties: POSTAL TELEGRAPH CABLE CO. v. CITY OF NEWPORT, KY
• Court: U.S. Supreme Court

247 U.S. 464

38 S.Ct. 566

62 L.Ed. 1215

POSTAL TELEGRAPH CABLE CO.

v CITY OF NEWPORT, KY.

No. 273.

Argued Jan. 18 and 21, 1918.

Decided June 10, 1918.

Messrs. John R. Schindel and Morrison R. Waite, both of Cincinnati, Ohio, for plaintiff in error.

Mr. Brent Spence, of Newport, Ky., for defendant in error.

Mr. Justice PITNEY delivered the opinion of the Court.

On December 5, 1895, the council of the city of Newport, Kentucky, passed an ordinance purporting to grant to the Postal Telegraph Cable Company and its successors, subject to certain limitations, the right and privilege of erecting poles an stretching wires over the streets and alleys of the city necessary to the establishment, operation, and maintenance of a telegraph system connecting that city with other towns and cities. Among its provisions were these: (a) That unless the company should within thirty days, and in writing, accept the grant subject to the limitations the grant should become void; (b) that nothing in the ordinance should be construed as granting a franchise to the company; and (c) that the company should pay to the city a 'special license tax' of $100 per annum. This company was a New York corporation having the same name as that of plaintiff in error, and will be referred to hereinafter as the first New York company.

On or about January 1, 1897, that company conveyed its property in the state of Kentucky, including all its rights and interests in the city of Newport, to another New York corporation known as the Commercial Cable Company; in 1898 this company conveyed the same property and privileges to another New York corporation known as the Commercial Cable & Telegraph Company; and on or about December 31, 1900, all of said rights and property were transferred and conveyed by the latter company to the plaintiff in error, the Postal Telegraph Cable Company, which is a corporation of the state of Kentucky, and since then has owned and operated the property.

In 1908 suit was brought in a state court by the city against plaintiff in error (hereinafter referred to as defendant) to recover 'license taxes' as specified in the ordinance for a series of years, and a judgment in favor of the city for the years 1903 to 1907 inclusive was sustained by the Court of Appeals of Kentucky, notwithstanding certain contentions of defendant based upon the provisions of the Constitution of the United States respecting the regulation of commerce among the states and the establishment of post offices and post roads (article 1, § 8, pars. 3 and 7), upon the Act of Congress of July 24, 1866 (chapter 230, 14 Stat. 221, Rev. Stat. U. S. § 5263 et seq. [Comp. St. 1916, § 10072 et seq.]), and upon the 'equal protection' clause of the Fourteenth Amendment. 160 Ky. 244, 169 S. W. 700. A writ of error under section 237, Judicial Code (Act of March 3, 1911, ch. 231, 36 Stat. 1087, 1156 [Comp. St. 1916, § 1214]), issued before the taking effect of the Act of September 6, 1916 (chapter 448, 39 Stat. 726), brings the judgment here for review.

The case was decided upon the pleadings and exhibits, which latter included a copy of the ordinance and what was treated as a transcript of the record of a previous suit brought by the city against the first New York company in a state court of Kentucky to recover license taxes under the ordinance for two years ending December 5, 1898, resulting in a judgment in favor of the city, which was affirmed by the court of appeals, opinion reported in 76 S. W. 159, 25 Ky. Law Rep. 635; the judgment being pleaded as a bar to the defense set up in this action.

The pleadings in the present suit are so involved and prolix that a particular recital of them would be tedious. We will present a sufficient summary to show the questions raised and how they were disposed of.

The city alleged the passage of the ordinance, and averred that shortly after its passage and in pursuance of it the first New York company erected poles and strung wires in the streets, and established, operated, and maintained a telegraph system in the city, and thereby the ordinance became a binding contract between the city and the company; but that defendant had failed and refused to pay the sum of $100 per annum for the several years in question, in disregard of its contract.

Defendant's answer alleged that at the time of the enactment of the ordinance defendant was not in existence, and that the Postal Telegraph Cable Company therein referred to was the first New York company; denied that either that company or defendant in any manner or at any time accepted the ordinance, or that the same became a binding c ntract between plaintiff and either company; admitted that shortly after its passage the first New York company began the erection of its poles and wires and the extablishment of its telegraph system, but denied that this was done under or by virtue of the ordinance; alleged on the contrary that that company did not accept but declined to accept the ordinance, as plaintiff well knew, and that the poles were erected and wires strung in and over the streets and alleys of the city by the company under another and independent claim of right, as plaintiff well knew; that that company had accepted the Act of Congress approved July 24, 1866 (chapter 230, 14 Stat. 221, Rev. Stat. U. S. § 5263 et seq. [Comp. St. 1916, § 10072 et seq.]), and acts amendatory thereof, and had complied with their terms, and thereby obtained the right to construct, maintain, and operate its lines of telegraph over and along all post roads of the United States; that under section 3964, Rev. Stat. U. S. (Comp. St. 1916, § 7456), and the Act of Congress of March 1, 1884 (chapter 9, 23 Stat. 3 [Comp. St. 1916, § 7457]), all the streets and alleys of the city of Newport were such post roads, and by virtue of these provisions of the laws of the United States said New York company was entitled to erect its poles and string its wires over and along the streets and alleys of the city, and did so under that authority and not in pursuance of any acceptance of the ordinance, nor under any contract with the city.

Partly in an amendment to the answer, and partly in a rejoinder filed at the same time in response to plaintiff's reply, defendant set up the conveyance by said New York company on or about January 1, 1897, of all its property, rights, and lines of telegraph in the state of Kentucky and elsewhere, including its rights over the roads, streets and alleys in said state and in the various cities and municipalities thereof, to the Commercial Cable Company, a corporation of the state of New York; set up the subsequent conveyances of the same property as we have recited them, terminating with the conveyance to the defendant on or about December 31, 1900; alleged that from January 2, 1897, until June 30, 1898, the Commercial Cable Company of New York operated the Kentucky lines in the name of the Postal Telegraph Cable Company of New York; that from June 30, 1898, until December 31, 1900, the Commercial Cable & Telegraph Company of New York did the same; and that since the last mentioned date defendant had owned and operated and still owned and operated said lines, and was entirely separate and distinct from the first New York company and had no relations with it; that since the last mentioned date defendant had been engaged in operating and maintaining a system of telegraphy in the state of Kentucky between cities and towns in that state and, in connection with other companies, between various other cities and towns in other states; that before the last mentioned date defendant had accepted the Act of Congress of July 24, 1866, and had complied with its terms and ever since had been subject thereto, and thus had obtained the right to construct, maintain, and operate its lines of telegraph over the streets and alleys of the city of Newport, and was doing so pursuant to this right and not by virtue of any contract with the city.

Defendant in its answer further set up that the payment of $100 per annum mentioned in the ordinance was not imposed as a rental but as a special license tax; and that it was not a reasonable rental or a reasonable or lawful exaction as a license tax; also that the ordinance was void and inoperative because said right and privilege was not conferred in accordance with section 164 of the Constitution of the commonwealth of Kentucky then in force, and section 3068. Kentucky Statutes; and also that the alleged contract was beyond the powers of the city, ultra vires, and void.

Defendant further alleged that other telegraph companies and telephone companies were usi g the streets and alleys of the city for poles and wires in a manner substantially similar to their use by the first New York company and by defendant; that none of these companies was subject to the payment of any license tax or was required to pay or agreed to pay any compensation to the city by way of rental, license, or otherwise; that the attempted exaction from defendant of $100 per annum was an unreasonable discrimination between defendant and other telegraph and telephone companies, contrary to the laws of the state of Kentucky and in violation of the Constitution of that state, and also in violation of the first section of the Fourteenth Amendment to the Constitution of the United States; and also that it was an unreasonable, excessive, and unlawful exaction in violation of those provisions of the Constitution of the United States conferring upon Congress the power to regulate commerce among the states and to establish post offices and post roads (article 1, § 8, pars. 3 and 7), and the laws enacted in pursuance thereof, and was therefore null and void.

In what was entitled a 'second amended petition,' but was ordered by the court to be taken as a reply to defendant's answer, plaintiff set up in substance that in a suit brought by it against the first New York company on September 8, 1899, the...