Regents of New Mexico v. Albuquerque Broadcasting Co.

• Decision Date: 11 January 1947
• Docket Number: No. 3295.,3295.
• Parties: REGENTS OF NEW MEXICO COLLEGE OF AGRICULTURE & MECHANIC ARTS v. ALBUQUERQUE BROADCASTING CO.
• Court: U.S. Court of Appeals — Tenth Circuit

158 F.2d 900 (1947)

REGENTS OF NEW MEXICO COLLEGE OF AGRICULTURE & MECHANIC ARTS v. ALBUQUERQUE BROADCASTING CO.

No. 3295.

Circuit Court of Appeals, Tenth Circuit.

January 11, 1947.

Joseph F. Zias, of Washington, D. C. (Philip G. Loucks, of Washington, D. C., and C. C. McCulloh, of Santa Fe, N. M., on the brief), for appellant.

W. Theodore Pierson, of Washington, D. C., and Carl A. Hatch, of Clovis, N. M. (A. T. Hannett, of Albuquerque, N. M., on the brief), for appellee.

Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.

PHILLIPS, Circuit Judge.

On May 7, 1936, the New Mexico College of Agriculture and Mechanic Arts,¹ a New Mexico corporation, was the owner of Broadcasting Station KOB, the transmitter, and the real and personal property used in the operation of such station. On that date, the Regents of the College and the Albuquerque Broadcasting Company,² a New Mexico corporation, entered into a contract by which the College sold, and the Broadcasting Company purchased, such station and property. In the contract, the College is referred to as party of the first part, and the Broadcasting Company as party of the second part. The following provisions of the contract are pertinent here:

"And as a further consideration for the sale of the property, real and personal hereinbefore described, the party of the second part agrees that it will furnish to the said party of the first part and to such other educational institutions as it may direct, but for educational purposes only and not for commercial or revenue producing purposes, one hour per day broadcasting time for each day the said station shall be operated, the time so allotted not to be cumulative if unused each day or part of day, but said unused time to be forfeited, and said time to be divided as follows: thirty minutes prior to six o'clock P. M. and thirty minutes subsequent to six o'clock P. M., Mountain Standard Time, the said party of the first part or other institutions to furnish programs at such times in advance of their broadcasting as may be convenient in the operation of said station, said broadcasting time to be furnished to the party of the first part or such other educational institutions as it may direct, free from any cost or expense to it; so long as said Radio Station is operated and maintained by the second party, its successors and assigns, it being understood that the particular time for broadcasting herein provided for shall be selected at the option of the party of the first part, and the first party at its option may have the privilege of furnishing the announcer or broadcaster for such educational programs at its expense, and in the broadcasting by said station the name of the `New Mexico State College at Las Cruces' shall be included in the station announcements.

"It Is Further Understood and Agreed between the parties hereto that the party of the second part shall have complete control of the said Broadcasting Station KOB, its equipment and operation, including unlimited supervision of programs to be broadcast, and that this sale is made subject to the consent of the Federal Communications Commission."

On May 7, 1936, the College executed an assignment to the Broadcasting Company of its license No. B-5-R-130, dated January 28, 1936. The assignment was approved by the Federal Communications Commission,³ effective June 20, 1936. On June 30, 1945, the College made the following written demand upon the Broadcasting Company: "The Board of Regents of the New Mexico College of Agriculture and Mechanic Arts hereby makes formal demand upon you for the following radio time; from 8:30 P. M. to 9:00 P. M. on Sunday, Tuesday, Wednesday, Friday and Saturday, and from 5:30 P. M. to 5:45 P. M. daily except Sunday, and from 10:00 A. M. to 10:30 A. M. on Sunday, in addition to the time now being used by the college; and requests that you signify your willingness to comply with this request within two weeks from the date hereof."

On the same date, the Board of Regents of the College adopted a resolution to the effect that, in the event of the refusal on the part of the Broadcasting Company to comply with the demand within two weeks from the date thereof, the Attorney General of New Mexico be authorized and directed to file a suit to obtain a declaratory judgment or a suit for the specific performance of the contract, or a combination of both actions, in order to determine the rights of the parties under the contract. The demand indicated an unwillingness on the part of the College to give the Broadcasting Company a description of the programs to be offered or to afford the Broadcasting Company an opportunity to determine whether the programs offered would be in the public interest, or whether the times specified from the standpoint of the public interest would be the most desirable periods to broadcast such programs.

The Broadcasting Company brought this action against the College for a declaratory judgment.

In its complaint, the Broadcasting Company alleged the contract and the demand. It further alleged that it owns and operates radio station KOB which employs apparatus for the transmission, on a frequency assigned by the Commission, of signals by radio to residents of at least 16 states under a license and authorization issued by the Commission, pursuant to the Communications Act of 1934, as amended,⁴ 47 U.S.C.A. § 151 et seq.

In paragraph three of its complaint, the Broadcasting Company alleged that under such Act and the rules, regulations, restrictions, and conditions made and imposed upon the Broadcasting Company by the Commission, the Broadcasting Company "has the right and the duty to exercise its independent judgment and discretion to control, supervise, and direct the use and operation of the station in the interest of the listening public and to choose and select programs and allocate time for the broadcast of programs which will best serve the interest of the listening public" and that it is prohibited by law from assigning such rights or delegating such duties, directly or indirectly, voluntarily or involuntarily, to any person "except completely and absolutely to another who then must become the licensee after and only after obtaining the prior written consent of" the Commission.

It further alleged that by such written demand, the College demanded as of right and continued to demand as of right, contrary to the requirements of the Act, exact periods of time aggregating four and one-half hours per week in perpetuity for the use and control of the College without regard for the interest of the listening public, the exclusive right of the Broadcasting Company to control, supervise, and direct the use and operation of the station, and the nondelegable duties, judgment, and discretion imposed upon the Broadcasting Company to choose and select programs and allocate broadcasting time in the interest of the listening public.

It further alleged that if it acted in compliance with the demand, its acts would constitute a violation of the Act, and the rules, regulations, restrictions, and conditions made and imposed upon it by the Commission, and would subject it to criminal penalties.

The Broadcasting Company prayed for judgment declaring: (1) That it cannot, in any manner, delegate its right to use its best judgment in scheduling programs and allocating the time they are to be broadcast, and, in the interest of the listening public, it has the sole right to schedule and allocate the time when programs furnished by the College under the contract shall be broadcast by the Broadcasting Company; (2) that the Broadcasting Company, under its license from the Commission, is "obligated to broadcast under the rules, regulations, terms, and restrictions imposed upon it" by the Commission; and (3) that the College is without right under the contract to require the Broadcasting Company to assign to the College any period or periods of time for the broadcast of programs without furnishing, in advance, information on the program to be broadcast and without recognizing that it is the sole right and duty of the Broadcasting Company, under its license, to exercise its independent judgment as to the time when the programs of the College shall be scheduled and broadcast.

The College filed an answer and cross-complaint. In its answer, it denied the allegations of paragraph three of the complaint, set out above, and prayed for a judgment declaring that the College "has the absolute right to designate periods that" its "programs shall be broadcast," subject only to the provision of the contract that 30 minutes shall be before 6 p. m. and 30 minutes shall be after 6 p. m., and adjudging that the Broadcasting Company furnish the College whatever periods of radio time the College may demand, limited only by the provision that 30 minutes shall be before 6 p. m. and 30 minutes shall be after 6 p. m., and enjoining the Broadcasting Company from breaching the contract.

In its cross-complaint, it sought damages for alleged breaches of the contract.

In depositions of certain officials of the College, taken by the Broadcasting Company for the purpose of discovery, under Rule 26 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, it was conclusively established that it was the position of the College in making the demand that the Broadcasting Company had no right or duty in behalf of the listening public to refuse to broadcast any programs submitted by the College during periods designated under color of the contract.

The College also filed a motion to dismiss on the following grounds:

"(1) That no federal question is involved in this suit.

"(2) That if any federal question is involved in this suit, it is a federal question of which the Federal Communications Commission has exclusive jurisdiction."

The Broadcasting Company filed a motion for summary judgment.

The trial court overruled the motion to dismiss and entered a...