Spintman v. Chesapeake & Potomac Tel. Co. of Md.

• Decision Date: 01 July 1969
• Docket Number: No. 330,330
• Citation: 255 A.2d 304,254 Md. 423
• Parties: Daniel A. SPINTMAN et al. v. The CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF MARYLAND.
• Court: Maryland Court of Appeals

Page 423

254 Md. 423

255 A.2d 304

Daniel A. SPINTMAN et al. v. The CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF MARYLAND.

No. 330.

Court of Appeals of Maryland.

July 1, 1969.

Daniel I. Sherry, Bowie, for appellants.

Robert A. Levetown, Washington, D. C. (Jerrold V. Powers, Sasscer, Clagett, Powers & Channing, Upper Marlboro, Howard C. Anderson, Washington, D. C. and L. Manning Muntzing, Baltimore, on the brief) for appellee.

Before HAMMOND, C. J., and MARBURY, BARNES, FINAN and SMITH, JJ.

FINAN, Judge.

Daniel A. Spintman and Judith A. Spintman, his wife (appellants), are subscribers to the '262' exchange service of the appellee, Chesapeake and Potomac Telephone Company of Maryland. Appellants brought an action in assumpsit for themselves, and on behalf of all other similarly situated subscribers to the '262' exchange service in the City of Bowie, and other areas in Prince George's County, Maryland, that are not within the area designated for telephone rate services as the 'Washington, D. C. Metropolitan Exchange Area' (D. C. Area). The first count of appellants' declaration claims reimbursement for money paid for telephone services at rates that include mileage and other charges which are not included in the rates charged by the appellee for similar services to subscribers within the 'D. C. Area,' to the extent of such mileage and other charges. Appellants allege that they are under substantially similar circumstances as those persons who subscribe to the appellee's service within the 'D. C. Area,' who do not pay such mileage and other charges and that the mileage and other charges applied to appellants are unjustly discriminatory charges for like services under like conditions.

The second count of appellants' declaration claims money paid for telephone service at rates in excess of just and reasonable rates, resulting in excessive compensation to the appellee, and demands reparations to the extent of such excessive compensation in the amount of $2,500,000.00.

The appellee demurred to the appellants' declaration and filed a memorandum in support of its demurrer. The appellee asserted in its memorandum that; (1) complaints that utility rates are unreasonable or discriminatory must be addressed to the Public Service Commission; (2) standards for Commission determination of rates, which are set forth in the Public Service Commission Law (Code (1965 Repl.Vol.) Art. 78, Sections 1-107), do not create private causes of action; (3) the appellants cannot invoke any common law right of reparations; and (4) there is no injustice barring suits for reparations where tariff rates have been charged. Appellants filed a memorandum in opposition to the appellee's demurrer setting forth a number of reasons why the demurrer should not be granted. After hearing argument, the lower court sustained the appellee's demurrer without leave to amend, adopting as its opinion the memorandum, points and authorities in support of appellee's demurrer and the oral argument of the appellee. This appeal on behalf of the appellants followed.

We are presented with the question of whether telephone subscribers who have accepted, used, and paid for telephone service, on terms not alleged to be different from those stipulated in tariffs on file with the Public Service Commission, can attack those tariff rates retroactively and demand refunds in an original court proceeding allegedly based on common law rights.

For the reasons which will hereinafter follow we are of the opinion that the lower court was correct in sustaining the appellee's demurrer without leave to amend.

The appellants rely heavily upon the case of Lewis v. Mayor & City Council of Cumberland, 189 Md. 58, 54 A.2d 319 (1947). However, we think the rationale of the Court in Lewis amply demonstrates why, in our opinion, there is no common law remedy available to the appellants on which they may predicate their right to reparations, assuming, arguendo, that the rates charged by the appellee were unjustifiable. In the Lewis case, an apartment house water consumer challenged a rate established by city ordinance incident to the City of Cumberland's operation of a municipal water company. The lower court invoking common law principles, determined that the rate charged was reasonable and that the classification applicable to the consumer was not discriminatory. This Court in affirming the lower court, emphasized that the common law principle, which forebade excessive or discriminatory rates for services of public utilities, was applied in this case and that the Court could directly do so, only because the regulatory powers of the Public Service Commission of Maryland did not apply to a municipal water company in Allegany County. ¹ Code (1943 Supp.), Art. 23, Sec. 414. In fact there is the strongest implication in the Court's opinion that had the rate making powers of the Public Service Commission applied to a municipal water company, the Court would not have directly entertained a review of the rate. Judge Markell, later Chief Judge, writing for the Court stated:

'The common law, like present day statutes required that public utility rates be reasonable, but delegated no power to determine for the future what is reasonable. * * * In the absence of direct or delegated legislative regulation of rates, the courts must determine what is reasonable, in a suit by the utility to collect compensation or a suit by the customer to recover excessive compensation extracted from him. * * *.' Id. at 67, 54 A.2d at 323-324. (Emphasis supplied)

The Public Service Commission of Maryland was established by Chapter 180 of the Acts of 1910, and by it the legislature created comprehensive and detailed administrative machinery for the regulation of public utilities throughout the State. We think beyond question that where the legislature expressly provided for the regulation of a public utility by a quasi-legislative body, such as the Public Service Commission, that to the extent that the Commission was endowed with general regulatory powers over a public utility, any private right vested in a consumer by virtue of the common law, to have the reasonableness of a rate determined originally by a court, was abrogated. We do not think it necessary to go into the question of legislative pre-emption of the field by occupation, as we did in the recent case of Mayor and City Council of Baltimore v. Sitnick, Md., ,255 A.2d 376 (1969) (filed June 27, 1969), because in the instant case, which is not a suit for a declaratory judgment, we are confronted with the narrow issue of whether under the facts of this case the common law right of a private consumer to challenge the rate of a public utility survives. It may well be that remedies available at common law to be invoked by a consumer against a utility, or for that matter, the power of a local subdivision to enact some regulatory control, may still exist in the same areas of regulation. Lutz v. State, 167 Md. 12, 15, 172 A. 354 (1934); Hooper v. Mayor etc. Baltimore, 12 Md. 464, 475 (1859). For example, municipal water companies in Allegany County are still exempted from regulation by the Commission by Section 55 of Article 78, and the Commission does not establish rates for any municipal water company for service to consumers within the corporate boundary of the municipality. City of Hagerstown v. Public Serv. Comm., 217 Md. 101, 106, 141 A.2d 699 (1958); and it would further appear that the Commission has not endeavored to establish rules and regulations for taxicab companies in incorporated cities or towns of less than 50,000 population, except Cumberland and Hagerstown. Article 78, Section 45 (1968 Cum.Supp.). However, in the instant case, and what is of concern to us, the language of the statute makes it clear and unmistakable that the legislature intended that the Public Service Commission should have authority to regulate the rates of a public utility such as the Chespeake & Potomac Telephone Company. Article 78, Sections 1 and 2.

The appellants contend that the court may well determine that a rate is discriminatory or produces excessive revenues and grant a retroactive refund to correct this injustice, without in fact, engaging in the function of rate making. This is a spurious argument which advocates that a court may do by indirection that which it is not permitted to do directly.

Where an administrative remedy is available, such as a hearing before the Public Service Commission, to determine the reasonableness of a rate, prior resort to that remedy is a necessary prerequisite to a standing before the courts. Poe v. Baltimore City, 241 Md. 303, 311, 216 A.2d 707 (1966); Gager v. Kasdon, 234 Md. 7, 9, 10, 197 A.2d 837 (1964), appeal dismissed, 379 U.S. 13, 85 S.Ct. 120, 13 L.Ed.2d 24 (1964); Shpak v. Mytych, 231 Md. 414, 417, 418, 190 A.2d 777 (1963).

If we were to follow the argument advanced by the appellants to its logical conclusion, we would witness the chaotic situation where juries would be performing the rate making function of the Public Service Commission by having a veto power over rates. Certainly, such would be the ultimate and practical effect of their action if they were to be allowed to render a verdict for reparation in favor of the plaintiff consumer in an action of assumpsit.

Public utilities are sometimes locally situated and may, on occasions, serve consumers only within the boundary of a political subdivision, but more frequently public utilities have a rate base spread over many political subdivisions, often state-wide in scope and its rates may be, and usually are, applicable to consumers residing in more than one political subdivision. The function of rate making for the purpose of determining what may be a reasonable return on the utilities' investment, as well as the determination of a fair rate base upon which the return may be computed, involves a highly technical and complicated process calling for an...