Southern Bell T. & T. Co. v. City of Louisville

• Decision Date: 20 June 1936
• Citation: 265 Ky. 286
• Parties: Southern Bell Telephone & Telegraph Co. v. City of Louisville.
• Court: United States State Supreme Court — District of Kentucky

265 Ky. 286

Southern Bell Telephone & Telegraph Co. v. City of Louisville.

Court of Appeals of Kentucky. In Court of Appeals.

Decided June 20, 1936.

1. Municipal Corporations. — Act giving Public Service Commission exclusive jurisdiction to regulate rates and service of enumerated utilities held not violative of constitutional provision prohibiting Legislature from releasing or extinguishing indebtedness or "liability" of any corporation or individual to any municipality, since provision referred to fixed money liability and not to a contractual right to fix such rates (Acts 1934, c. 145, sec. 4, and sec. 4(n); Constitution, sec. 52).

2. Telegraphs and Telephones. — Constitutional provision prohibiting telephone company from erecting its poles or other apparatus along streets without city's consent held not to prevent Public Service Commission from regulating rates and service of enumerated utilities (Acts 1934, c. 145; Constitution, sec. 163).

3. Public Service Commissions. — Constitutional provision that no city shall grant franchise for term exceeding 20 years and requiring it to receive bids therefor publicly and to award it to highest and best bidder held not to prevent Public Service Commission from regulating rates and service of enumerated utilities (Acts 1934, c. 145; Constitution, sec. 164).

4. Public Service Commissions. — Power conferred upon municipalities to enter into contracts fixing rates in first instance for public utility service does not deprive state of its right to exercise its police power of regulating rates, since such right is primarily legislative function and right is essentially a police power (Acts 1934, c. 145).

5. Constitutional Law. — Municipality may be granted power to make irrevocable contracts as to rates and exclusive power of regulation either by constitutional provision or legislative enactment, but presumption that such surrender of power has been made will not be indulged unless grant is expressed in clear and unmistakable language or is necessarily implied from powers expressly granted (Acts 1934, c. 145).

6. Telegraphs and Telephones. — Where telephone company at time of enactment of ordinance fixing rates for specific period was not operating under franchise granted to it by city under Constitution, city could contract with telephone company under its then existing franchise relative to rates (Acts 1934, c. 145; Constitution, secs. 163, 164, and sec. 201 as amended in 1917).

7. Telegraphs and Telephones. — City by enacting ordinance permitting consolidation of competing telephone companies pursuant to constitutional provision and fixing rates to be charged for specific period did not acquire any greater power to regulate future rates than it then had, and hence city could not contend after expiration of such specific period that it had power under ordinance to continue to regulate rates, notwithstanding statute vesting such power in Public Service Commission (Acts 1934, c. 145, sec. 4, and sec. 4(n); Constitution, secs. 163, 164, and sec. 201 as amended in 1917).

8. Telegraphs and Telephones. — Even if ordinance enacted pursuant to constitutional provision, permitting consolidation of competing telephone companies and fixing telephone rates within city for specific period, was binding on parties and could not be impaired in that respect by legislative enactment, city held without power to regulate such rates after expiration of period, in view of statute creating Public Service Commission and giving it exclusive jurisdiction of regulation of rates and service of enumerated utilities (Acts 1934, c. 145, sec. 4, and sec. 4(n); Constitution, secs. 163, 164, and sec. 201 as amended in 1917).

9. Telegraphs and Telephones. — Constitutional provision authorizing telegraph and telephone companies to construct and maintain telegraph lines within state and providing for reasonable regulation thereof by General Assembly held not to exclude telephone companies by implication from legislative control, since presumption that state has surrendered its power of regulation by constitutional provision will not be indulged unless such intention is clearly expressed or is necessarily implied (Acts 1934, c. 145; Constitution, sec. 199).

10. Public Service Commissions. — Procedure prescribed in act creating Public Service Commission, to be followed when a change in utility rates is sought, must be followed by municipalities as well as others who are permitted by the act to file complaints (Acts 1934, c. 145, sec. 6).

E.D. SMITH, JOHN T. GOREE and TRABUE, DOOLAN, HELM & HELM for appellant.

MARK BEAUCHAMP, GEORGE SLAFF and SAMUEL SLAFF for appellee.

OPINION BY JUDGE REES.

Overruling motion to dissolve temporary injunction.

This case is before me on a motion made by the defendant, city of Louisville, to dissolve a temporary injunction granted by the circuit court enjoining the city from enforcing an ordinance which provides for a reduction of plaintiff's rates for local exchange telephone service within the city of Louisville.

In its petition, the plaintiff alleged that the ordinance was void (1) because the city is without power to regulate or change the rates of the telephone company; and (2) because the rates prescribed by the ordinance are confiscatory and therefore constitute a denial of due process. The chancellor who heard the motion for a temporary injunction was of the opinion that the ordinance was void because the city had no right to fix maximum telephone rates to be charged by the plaintiff, and he overruled defendant's demurrer to the petition and granted the injunction without considering the reasonableness of the rates prescribed by the ordinance.

As I view the case, a correct decision of the question presented hinges upon the effect to be given to the Public Service Commission Act of 1934 as it relates to the right, if any, which the city of Louisville theretofore had to regulate plaintiff's telephone rates. The General Assembly of the commonwealth of Kentucky, at its regular 1934 session, passed a comprehensive act providing for the regulation and control of public utilities within the commonwealth, and creating a Public Service Commission to administer it. Acts 1934, c. 145. The commission was given jurisdiction over certain utilities enumerated in the act, including telephone and telegraph companies, and was empowered to fix just and reasonable rates after a hearing upon reasonable notice, its findings to be subject to judicial review. Subsection (n) of section 4 of the act empowers the commission, after a hearing has been had in the manner prescribed in the act, "to enforce, originate, establish, change and promulgate any rate, rates, joint rates, charges, tolls, schedules or service standards of any utility, subject to the provisions of this act, that are now fixed or that may in the future be fixed, by any contract, franchise or otherwise, between any municipality and any such utility, and all rights, privileges and obligations arising out of any such contracts and agreements regulating any such rates, charges, schedules or service standards, shall be subject to the jurisdiction and supervision of the commission." That it was the intention of the Legislature to clothe the Public Service Commission with complete control over rates and services of the utilities enumerated in the act is evidenced by the concluding paragraph of section 4, which reads:

"Nothing in this section or elsewhere in this act contained is intended or shall be construed to limit or restrict the police jurisdiction, contract rights, or powers of municipalities or political subdivisions, except as to the regulation of rates and service, exclusive jurisdiction over which is lodged in the Public Service Commission."

Every utility subject to the regulation of the commission is required to file with the commission a schedule showing all rates then being collected, and is required to adhere to such schedule until a change is authorized by the commission after a hearing as provided for in the act. The act does not contravene any of the constitutional provisions to which the defendant has directed my attention. Section 52 of the Constitution, which prohibits the Legislature from releasing or extinguishing the indebtedness or liability of any corporation or individual to any municipality, is not violated by the act, though the word "liability" be given a broader significance than the word "indebtedness." The plaintiff is the owner of the franchise granted by the General Assembly of Kentucky to the Ohio Valley...