State ex rel. City of Seattle v. Department of Public Utilities of Wash.

• Decision Date: 23 June 1949
• Docket Number: 30954.
• Citation: 207 P.2d 712,33 Wn.2d 896
• Parties: STATE ex rel. CITY OF SEATTLE et al. v. DEPARTMENT OF PUBLIC UTILITIES OF WASHINGTON et al.
• Court: Washington Supreme Court

207 P.2d 712

33 Wn.2d 896

STATE ex rel. CITY OF SEATTLE et al. v. DEPARTMENT OF PUBLIC UTILITIES OF WASHINGTON et al.

No. 30954.

Supreme Court of Washington

June 23, 1949

Department 2

Petition by the State of Washington on the relation of City of Seattle, City of Spokane, City of Bellingham, City of Yakima and City of Tacoma to review an order of the Department of Public Utilities of Washington, Andrew J. Zimmerman as director, authorizing the Pacific Telephone and Telegraph Company to add all municipal occupation, business, excise and use of the streets taxes to its charges for exchange service on a pro rata basis. From that part of judgment which affirmed the order relating to the occupation tax the relators appeal, and from that part of the judgment which referred to the use of the streets, taxes, the Department of Public Utilities of Washington, Andrew J. Zimmerman as director, and the Pacific Telephone and Telegraph Company appeal.

Judgment modified in conformity with opinion.

Appeal from Superior Court, Thurston County; John M. Wilson, judge.

A. C Van Soelen, J. Ambler Newton, Glen E. Wilson, Seattle, G. M Ferris, Spokane, Lane Morthland, City Attorney, Yakima Joseph T. Pemberton, Bellingham, Clarence M. Boyle, Tacoma, for appellants.

Smith Troy, Frederick J. Lordan, George R. LaBissoniere, Olympia, for Dept. of Public Utilities.

McMicken, Rupp & Schweppe, John N. Rupp, Seattle, for appellant and respondent Pacific Tel. & Tel. Co.

SIMPSON Justice.

We have for consideration an appeal involving a judgment entered as a result of our decision in the cas of State ex rel. Pacific Telephone & Telegraph Co. v. Department of Public Service, 19 Wash.2d 200, 142 P.2d 498, 533

.

A short history of the litigation will be of aid to a complete understanding of our conclusions in this case. We shall refer to the cities as such or as appellants, to the Pacific Tel. & Tel. Co., as the company, and to the department as respondent.

June 22, 1938, the company filed with the predecessor of respondent a tariff which sought to pass on to the company's subscribers the amount of those taxes assessed as occupational taxes by the cities against the company. There was also filed additional tariffs which sought a general rate increase in this state. The tariffs were suspended and a hearing set Before the department.

Before the hearings on the general rates were commenced, the department held hearings on the question of assessing to the company's subscribers the occupational taxes. These hearings demonstrated the fact that other public service companies were allowed to pass on to their consumers the occupational taxes. It was shown that the city of Seattle charged the company $161,319.00 annually for the use of its streets.

During 1939 and 1940, extensive hearings were had in which the consolidated rates were considered. The department then made three orders dated July 6, 1940, October 31, 1940, and December 17, 1940. The July order refused to grant the company a right to pass on any of the municipal taxes. The order entered in October rearranged the company's rate schedules, resulting in a decreased rate for exchange service and increasing intrastate rates to a rate in excess of that sought by the company. It also ordered the company to pass on occupational taxes on a pro rata basis. The December order gave the company the privilege of passing on to its subscribers occupation taxes, use-of-streets taxes, and amounts payable under franchise ordinances. The company then sought a review of the department's proceeding which fixed the rates. Certain cities in this state also instituted proceedings to review the department's order which allowed the company to pass on its municipal taxes.

A trial was had in the superior court, and an appeal taken from its judgment to this court.

In our former opinion, we carefully and thoroughly considered every question presented, including those relating to the passing on of the municipal taxes. Our opinion was handed down October 22, 1943. July 10, 1944, the superior court entered its judgment and decree upon the remittitur of this court. A portion of paragraph 4 of that judgment reads:

'The Department may order the Relator to pass on to the subscribers in any municipality any and all taxes, whether denominated occupation taxes, excise taxes, business taxes, or payments for the use of streets * * *'

July 27, 1944, the cities of Seattle and Spokane filed in this court their petition for recall of remittitur and correction of the judgment of which we have just referred. Paragraphs five and six of the petition read as follows:

'V. That Paragraph IV of said judgment and decree on remittitur in so far as it authorizes the Department to 'order the relator to pass on to the subscribers in any municipality any and all taxes whether denominated occupation taxes, excise taxes, business taxes or payments for the use of streets or any other payments not required by the provisions of a valid franchise', without determining the facts and without fixing special exchange rates applicable to said communities, is contrary to law and the decision of this Court, as hereinabove set forth.

'VI. That said judgment and decree on remittitur if permitted to stand will become the law of the case and permit the Department of Public Service to authorize and direct the Telephone Company to pass on said taxes and charges direct as a matter of law without determining the facts and without fixing special exchange rates in said communities in which said taxes and charges are included in the rate base as operating expensee in said communities. That said judgment and decree on remittitur is not is accord with the decision of this Court and is an interference with the jurisdiction and decision of this Court to the extent hereinabove set forth.'

Briefs were filed, and argument was had to the court. The brief on the part of the cities quoted from our decision, as follows:

"We are convinced that the department, in so far as such taxes are concerned, has the power to fix special exchange rates applicable to the different communities which will in effect require the rete payers in each community to absorb a sum equal to the amount of the tax which respondent is required to pay that municipality. More than this the department cannot do.

"Whether or not the present municipal tax situation in this state at this time requires that the department follow the procedure stated is a question to be determined by the department.' (Emphasis ours)'

Appellant cities then presented the argument that paragraph four of the judgment on the remittitur did not comply with the quoted excerpt from our opinion, and said:

'Said Judgment and Decree of the Superior Court if permitted to stand will become the law of the case and permit the Department to 'order' the Company to pass on said charges direct as a matter of law, without any determination of the facts above referred to. This is manifestly not in accord with this Court's decision and to that extent is plainly an interference with the jurisdiction and decision of this Court.'

This court denied the petition to recall the remittitur.

April 21, 1947, the department held a hearing to which appellants and nineteen other cities were invited. July 23, 1947, appellants asked that the case be reopened for the purpose of introducing additional testimony and for reargument. The petition was granted. The rehearing was conducted August 28, 1947.

October 9, 1947, the respondent made and entered its fifth supplemental order entitled 'Authorizing Respondent [the company] to add all Municipal Occupation, Business, Excise and Use of the Streets Taxes to its Charges for Exchange Service on a Pro Rata Basis and Superseding Section 7 of Departmental Order of October 31, 1940, Herein.'

The order accomplished that which its title indicated.

The cities of Seattle, Spokane, Tacoma and Bellingham brought review proceedings in the superior court of Thurston county. November 7, 1947, that court issued its writ of review. Argument was concluded June 23, 1948. December 15, 1948, the superior court entered a judgment and decree in which it affirmed the fifth supplemental order of the department, except that portion which empowered the company to pass on to its subscribers the taxes imposed for the use of the streets. The company and the department then appelled to this court from that portion of the decree which referred to the use-of-the-streets taxes. The cities appealed from that part of the decree which affirmed the department's order relating to the occupation tax.

We state the appellants' assignments of error in their words:

'The court erred in holding that this court in the first appeal (19 Wash.2d 200 ) decided and ordered that occupation taxes should be passed on to ratepayers in the locality where levied as a matter of law without regard to the 'present municipal tax situation' in the state, or the rate structure, or other pertinent facts.

'2. The court...