Standish Telephone Co. v. Saco River Tel. & Tel. Co.

• Decision Date: 14 March 1989
• Citation: 555 A.2d 478
• Parties: STANDISH TELEPHONE COMPANY v. SACO RIVER TELEGRAPH & TELEPHONE COMPANY and Public Utilities Commission.
• Court: Maine Supreme Court

Page 478

555 A.2d 478

STANDISH TELEPHONE COMPANY v. SACO RIVER TELEGRAPH & TELEPHONE COMPANY and Public Utilities Commission.

Supreme Judicial Court of Maine.

Argued Nov. 15, 1988.

Decided March 14, 1989.

Michael T. Healy (orally), Mary Ann Lynch, Verrill & Dana, Portland, for plaintiff.

Harold J. Carroll (orally), Rackemann, Sawyer & Brewster, Boston, Mass., for Saco River Tel. & Tel.

Joseph G. Donahue, Peter G. Ballou (orally), Deborah J. Ross, Maine Public Utilities Com'n, Augusta, for P.U.C.

Before ROBERTS, WATHEN, GLASSMAN, CLIFFORD, HORNBY and COLLINS, JJ.

CLIFFORD, Justice.

Standish Telephone Company ("Standish") appeals from an April 25, 1988 order of the Public Utilities Commission ("Commission") dismissing a petition concerning a long-standing territory dispute between Standish and Saco River Telegraph and Telephone Company ("Saco") for lack of jurisdiction. Concluding that the issue of the Commission's jurisdiction is res judicata, we vacate the order of dismissal.

Standish, a publicly regulated utility, was incorporated in 1907 under the general laws of the State of Maine. Pursuant to its certificate of incorporation, it was and is authorized to provide telephone service to the towns of Baldwin, Buxton, Hollis, Limington and Standish. Saco was created by private and special laws enacted by the Maine Legislature in 1889, 1895 and 1897 to provide telephone service to the towns of Buxton, Hollis and Standish. ¹

In the 1930's, Standish and Saco were disputing the territory to be served by each of them and the ownership of poles and other equipment within the disputed territory. In December 1938, Standish and Saco, in an attempt to resolve the dispute, entered into an agreement regarding telephone service in Buxton, Hollis and Standish. The agreement, in essence, separated the service territories of both companies, and established a boundary line between them. Under the agreement, Standish sold to Saco its property south of the geographic boundary line for $2100 and agreed not to serve any customers south of that line. Saco agreed not to serve customers north of the boundary line except those customers it was serving at the time. The agreement was conditional, subject to approval of the Commission. The Commission approved the agreement in a December 8, 1938 order.

In April 1986, Saco petitioned the Commission to investigate and resolve the boundary dispute that was the subject of the 1938 agreement and order, alleging that Standish was making incursions into territory that, under the agreement and order, was the exclusive territory of Saco.

After various motions were filed, on December 29, 1986, the Commission issued an order asserting its jurisdiction to interpret the 1938 order and to resolve disputes concerning its interpretation. However, on its own motion, the Commission reconsidered and reversed its December 1986 order, and, in its order of April 25, 1988, relied on Poland Tel. Co. v. Pine Tree Tel. & Tel. Co., 218 A.2d 487 (Me.1966), and concluded that it had no jurisdiction in 1938 to enter the order approving the agreement between Standish and Saco. It further concluded that under the Poland Tel. decision it continued to lack jurisdiction over the territorial dispute between them.

In its appeal, Standish argues that (1) the 1938 agreement between Standish and Saco amounts to a petition to approve an abandonment of service and sale of property, and that the Commission acted within its jurisdiction in issuing its order approving the agreement; (2) the Commission had jurisdiction in 1938 and still has jurisdiction to resolve territory disputes between two utilities serving the same territory; and (3) irrespective of the Commission's lack of subject matter jurisdiction to enter the order in 1938, that order was not appealed by any party and the issue of the jurisdiction of the Commission is res judicata. The Commission joins Saco in contesting Standish's first two arguments, but joins Standish in its res judicata contention. ²

Standish argues that even if the Commission lacked jurisdiction to limit the service territory of a legislatively created utility, it clearly did have jurisdiction to approve an abandonment of service and sale of property, and the 1938 petition to approve the agreement between Standish and Saco was in fact a petition to abandon service and to sell property pursuant to P.L.1933, ch. 155, later codified as R.S. ch. 40, § 47 (1944) (current version at 35-A M.R.S.A. § 1104 (1988)). ³

Standish had the burden to demonstrate that by virtue of the petition, Saco intended to abandon territory and did in fact abandon it. Doherty v. Russell, 116 Me. 269, 273 (1917). See also Duryea v. Elkhorn Coal and Coke Corp., 123 Me. 482, 486, 124 A. 206 (1924). The Commission found no abandonment, and we review the findings of the Commission for clear error. New England Tel. & Tel. Co. v. Public Utilities Comm'n, 390 A.2d 8, 32 (Me.1978). Because Standish had the burden, we will not disturb the Commission's finding unless the evidence compelled the Commission to reach a different result. Town of Eustis v. Stratton-Eustis Dev. Corp., 516 A.2d 951, 953 (Me.1986); Luce Co. v. Hoefler, 464 A.2d 213, 215 (Me.1983). The 1938 petition did not mention the abandonment statute nor use abandonment language, and appeared to be a settlement of a service-area dispute entered into to avoid the Commission imposing a settlement on Standish and Saco. The evidence did not compel the Commission to find that Saco intended the 1938 petition to be an abandonment of service.

Standish next claims that the Commission had jurisdiction to enter the 1938 order and continues to have jurisdiction to deal with the subject matter of the order. Because we conclude that the Commission's jurisdiction to enter the 1938 order is res judicata, conclusively established by the Commission's 1938 exercise of that power in an order sought by the parties to the proceeding, and not appealed from, it is unnecessary for us to decide whether in 1938 the Commission had jurisdiction to approve an agreement between Standish and Saco limiting the service area of each company. ⁴

It is well established that a valid judgment entered by a court, if not appealed from, generally becomes res judicata and is not subject to later collateral attack. Harrington v. Inhabitants of Town of Garland, 551 F.Supp. 1371, 1375 (D.Me.1982), aff'd, 715 F.2d 1 (1st Cir.1983); S.H. Nevers Corp. v. Husky Hydraulics, Inc., 408 A.2d 676, 678-79 (Me.1979); Thaxter v. Fry, 222 A.2d 686, 691 (Me.1966). There is a strong policy in favor of ending litigation and giving finality to court judgments. Hossler v. Barry, 403 A.2d 762, 767 (Me.1979). Balanced against that policy favoring finality is a requirement that a judgment, in order to become final, must be valid, and that a judgment rendered without subject matter jurisdiction is invalid and has no res judicata effect. S.D. Warren Co. v. Maine Cent. R.R. Co., 126 Me. 23, 25, 135 A. 526 (1926). The more recent trend in the law is to favor finality over an absolute requirement of validity. Northeast Bank N.A. v. Crochere, 438 A.2d 266, 268 n. 7 (Me.1981). In Crochere, we precluded an attack not on direct appeal from an improper placement of a lien by the District Court on property not subject to attachment. Id. at 268. See also Eich v. Gellerson, 441 A.2d 315, 317-18 (Me.1982).

We have extended the principle of the res judicata effect of final judgments to adjudicative decisions of administrative bodies and have applied the Restatement (Second) of Judgments § 83 (1982). Town of N. Berwick v. Jones, 534 A.2d 667, 670-71 (Me.1987); Maines v. Secretary of State, 493 A.2d 326, 328-29 (Me.1985).

In this case, dealing with a fifty-year-old unappealed order of the Commission, entered at the request of these same parties to the proceeding before the Commission, we are persuaded that the rule set out in Restatement (Second) of Judgments § 12 (1982) should be applied to give res judicata effect to the issue of the Commission's subject matter jurisdiction with respect to the 1938 order.

Section 12 provides:

§ 12. Contesting Subject Matter Jurisdiction

When a court has rendered a judgment in a contested action, the judgment precludes the parties from litigating the question of the court's subject matter jurisdiction in subsequent litigation except if:

(1) The subject matter of the action was so plainly beyond the court's jurisdiction that its entertaining the action was a manifest abuse of authority; or

(2) Allowing the judgment to stand would substantially infringe the authority of another tribunal or agency of government; or

(3) The judgment was rendered by a court lacking capability to make an adequately informed determination of a question concerning its own jurisdiction and as a matter of procedural fairness the party seeking to avoid the judgment should have opportunity belatedly to attack the court's subject matter jurisdiction.

Here, the 1938 order was issued by the Commission in its adjudicatory capacity, was not appealed and had the effect of a judgment. ⁵ Although the subsequent decision in Poland Tel. clarifies and limits the Commission's authority to prohibit a legislatively created utility from servicing areas legislation authorizes it to serve, the Commission's approval of the agreement limiting Saco's service area was not "so plainly beyond the [Commission's] jurisdiction that its entertaining the action was a manifest abuse of authority." Restatement (Second) of Judgments, at § 12(1). The agreement dealt with disputes between Standish and Saco pertaining to subjects that the Commission had authority to handle generally, see, R.S. ch. 62, § 54 (1930) (power to set rates and regulate service), § 56 (power to investigate), and in fact continues to consider on a regular basis. See Central Maine Power Co. v. Maine Public Utilities Comm'n, 395 A.2d 414, 428-30 (Me.1978) (discussing investigatory power of...