Postalcompany v. Borough of New Hope

• Citation: 48 L.Ed. 338,24 S.Ct. 204,192 U.S. 55
• Decision Date: 04 January 1904
• Docket Number: TELEGRAPH-CABLE,No. 92,92
• Parties: POSTALCOMPANY, Plff. in Err. , v. BOROUGH OF NEW HOPE
• Court: United States Supreme Court

192 U.S. 55

24 S.Ct. 204

48 L.Ed. 338

POSTAL TELEGRAPH-CABLE COMPANY, Plff. in Err.,

v BOROUGH OF NEW HOPE.

No. 92.

Argued December 11, 1903.

Decided January 4, 1904.

The borough of New Hope in January, 1899, commenced an action against the telegraph company, the plaintiff in error herein, to recover from it the sum of $552, with interest from the respective times in which portions of the amounts became due, the total charges being due from the defendant, as alleged, on account of a license fee taxed by the borough (by virtue of an ordinance to that effect) of $1 for each pole and of $2.50 for each mile of wire used in the borough by the company, the license to be applied for and the fee to be paid annually.

The company made what is termed in the record an affidavit of defense, which, among other things, averred that it was a corporation organized under the laws of the state of New York, and had accepted the act of Congress, approved July 24, 1866 (14 Stat. at L. 221, chap. 230, relating to the construction of telegraph lines over any post road of the United States), and that its poles and wires through the borough of New Hope were employed and operated in the transmission of messages between the different states, and were therefore instruments of commerce; that the amount of the charges claimed to be due from the defendant under the ordinance was unreasonable, unjust, and excessive; that the fee was sought to be justified as a license merely, but that the amount thereof was wholly disproportionate to the usual, ordinary, and necessary expenses of inspecting and supervising the poles and wires imposed upon the borough of New Hope, and was largely in excess thereof, and the fee was also largely in excess of any additional liability of that kind and character imposed upon the borough in looking after the safety of the poles and wires and to see that they were properly maintained, and was also in excess of any further liability which might or could arise to the borough by reason of any injuries to persons or property which might arise, or may have arisen, by reason of the erection of the poles and the stringing of the wires within the limits of the borough. It was further stated that the charges were more than ten times the amount of all kinds and character of expenses and liability which might have been incurred by the borough by reason of these poles and wires, and that, in view of those circumstances, the assessing of the license tax upon the telegraph company was for the purpose of raising and producing revenue, and was therefore void.

The company averred that it had paid the commonwealth of Pennsylvania all taxes upon the value of its poles and wires, as included in and represented by its capital and upon the gross receipts derived from the use thereof, and it had paid its taxes upon its property in the borough of New Hope. That the expenses incurred by the borough during the period covered by the claim practically amounted to nothing, so far as regarded inspection and supervision.

The parties proceeded to trial, and the borough having proved the passage of the ordinance, and the number of poles and the number of miles of wire as claimed in the complaint, thereupon rested.

The defendant proved that the only work done by the employees of the borough in regard to the poles and wires of the company during the four years included in the claim was to count the poles each year for the purpose of assessing the tax; that no other service on the part of the borough was performed under its police powers, or at all, in regard to inspection. The defendant also showed that it was an interstate telegraph company; that it had no public office in the borough, nor had there been any commercial office therein during the time in question; that there was no office in which business was received for which tolls were charged.

It was proved, also, that the entire value of the line of the company in the borough of New Hope (that is, the cost of the material and construction) amounted to less than $800, and that the claim of the borough, graduated by the number of poles in the borough and the number of miles of wire strung on them, amounted to $138 per year, or to 17 per centum of the cost of the line in the borough.

The company also proved that it employed servants, whose duty is was to erect the poles, and string the wires, and inspect and watch them, and keep them in proper repair and in safe condition; that the authorities of the borough did nothing whatever in the way of inspection of the lines.

The trial judge charged the jury, among other things, that the question which arose in the evidence in the case was that of the validity of the ordinance, to be determined by the amount and character of the charges against the company; that the borough had the right to enact such police regulations as might be necessary and reasonable in the government of the town, but in regard to the taxing question it had no right to go beyond the exercise of what was termed its police power; that if the ordinance was unreasonable in amount, it was void; that the power to demand the license fee must be exercised as a means of regulation, and cannot be used as a source of revenue, and that, when exacted as a police power, it must be limited to the necessary and proper expenses of issuing the license and of inspecting and regulating the business the license covers; that the borough had the right to impose such conditions and regulations as are necessary for the general protection of the streets and the uses of the same in the borough; that in doing this the borough could not be questioned, provided the license fee was a reasonable and just one, and a proper one under the circumstances, and commensurate with the probable requirements and exercise of the police or supervisory power of the borough. The court then said that it had a great deal of doubt as matter of fact and law as to whether this was a reasonable subjection or not, and it was frank to say:

'That we are inclined to the view that this is an arbitrary imposition of a license or tax rate. But it appears that our brethren upon the bench in other localities have adjudged that similar rates are not unreasonable or unnecessary; but it is argued upon the part of the defense that in those cases there was not the same proof as has been developed here. There was not shown as clearly as there is here that the amount of money received as the result of the license was a clear revenue, irrespective of any requirement for police regulation. In...