State ex rel. City of St. Louis v. Public Service Commission

• Decision Date: 25 March 1931
• Docket Number: 30540
• Citation: 36 S.W.2d 947,327 Mo. 318
• Parties: The State ex rel. City of St. Louis, Appellant, v. Public Service Commission of Missouri et al
• Court: Missouri Supreme Court

36 S.W.2d 947

327 Mo. 318

The State ex rel. City of St. Louis, Appellant, v. Public Service Commission of Missouri et al

No. 30540

Supreme Court of Missouri

March 25, 1931

Appeal from Cole Circuit Court; Hon H. J. Westhues, Judge.

Affirmed.

Julius T. Muench and Forrest G. Ferris, Jr., for appellant.

(1) The cost of service is not the sole standard for measuring rates as rates should not exceed the value of the service to the consumer. Re Mound City Elec. L. & I. Co., 6 Mo. P. S. 357; Re Kansas City Elec. Lt. Co., P. U. R. 1917C (Mo.) 728; Clear Creek Oil & Gas Co. v. Fort Smith Spelter Co. (Ark.), 255 S.W. 903, P. U. R. 1924B 856. (2) Discriminatory telephone rates are unlawful. Sec. 10502 Subsec. 1, R. S. 1919.

D. D McDonald and J. P. Painter for respondent Public Service Commission.

(1) If the order of the commission can be sustained upon any theory, neither the trial court nor this court is authorized to set it aside. State ex rel. St. Joseph v. Busby, 274 S.W. 1067. (2) The burden of proof is on the city to show by clear and satisfactory evidence that the order of the commission complained of is unreasonable or unlawful. Sec. 10535, R. S. 1919; State ex rel. Bell Tel. Co. v. Pub. Ser. Com., 233 S.W. 425. (3) The power of the Public Service Commission to regulate rates does not include the power to confiscate the property of a public utility. Stone v. Farmers Loan & Trust Co., 154 U.S. 362; Smyth v. Ames, 169 U.S. 466; Simpson v. Shepherd (The Minnesota Rate Cases), 230 U.S. 352.

E. W. Clausen for respondent Telephone Company; J. W. Jamison of counsel.

(1) All orders of the Public Service Commission are prima-facie lawful and reasonable, and will ordinarily be sustained if supported by evidence. Secs. 10534, 10535, R. S. 1919; State ex rel. St. Joseph v. Busby, 274 S.W. 1067. (2) In any action arising out of the provisions of the Public Service Commission Act, or growing out of the exercise of the power of the commission, the burden of proof is upon the party seeking to set aside the order of the commission to show by clear evidence that the order is unreasonable or unlawful. Sec. 10535, R. S. 1919; State ex rel. St. Joseph v. Busby, 274 S.W. 1067; State ex rel. Telephone Co. v. Pub. Ser. Com., 233 S.W. 425; State ex rel. v. Pub. Ser. Com., 271 Mo. 155; Pond on Public Utilities (3 Ed.) sec. 1919; 2 Wyman on Public Service Corporations, sec. 1405. (3) There inheres in the ownership of property the right to manage and control its use, and this right is not destroyed by regulatory statutes. Railroad Co. v. Wisconsin, 238 U.S. 491; Banton v. Railroad Corporation, 268 U.S. 413; Railroad v. Minnesota, 238 U.S. 340; Mo. ex rel. Tel. Co. v. Pub. Ser. Com., 262 U.S. 276. (4) It is the power and duty of the owner to exercise its discretion in adopting regulations generally beneficial to it and its customers. Hewlett v. Western Union Teleg. Co., 28 F. 181. (5) Unlawful discrimination exists only where classes of users similarly situated are arbitrarily and unreasonably treated differently. State v. Pub. Ser. Com., 10 S.W.2d 946; State v. Ry. Co., 172 S.W. 35.

Cooley, C. Davis, C., concurs; Westhues, C., not sitting.

OPINION

COOLEY

This is an appeal from the judgment of the Circuit Court of Cole County affirming an order of the Public Service Commission. The city of St. Louis, by complaint to the commission, challenged the right of the Southwestern Bell Telephone Company to collect a charge of twenty-five cents per month each for equipping with dials telephones attached to private branch exchanges (called in the record P. B. X.) in St. Louis. This rate had been filed with and approved by the commission on March 1, 1926, and was part of the telephone company's lawfully established tariff when the complaint herein was filed.

After a hearing the commission dismissed the complaint, holding the charge to be reasonable and lawful, which order was, on certiorari for review, affirmed by the circuit court.

P. B. X. service is telephone service rendered to large users in which a number of lines connect the company's central office with a switchboard on the subscriber's premises, to which switchboard telephone instruments on the premises (called stations) are connected by lines radiating from the switchboard so that any such station may be connected by the P. B. X. operator with any other such station without having the call handled by the company's central office. This class of service is called a private branch exchange, since, as stated by respondents, it is "a complete telephone exchange, a branch from the main system and privately operated." In addition, each station connected with a P. B. X. switchboard may be connected by the P. B. X. operator with the company's central office so as to permit communication with the company's other subscribers. Respondent company claims and its evidence tended to show that "two classes of service are, therefore, included in the P. B. X. service: (1) intercommunicating service on the subscriber's premises; (2) communication from the subscriber's premises to the outside."

The company's telephone service in St. Louis is being converted from the former manually operated switchboard system to the dial or "automatic" system, in which the person using a telephone equipped with a dial makes his call by means of the dial mechanism without the aid or intervention of a switchboard operator at the company's central office. The change from the old to the new system has not been completed throughout the city, but has been made in certain districts, in one of which is complainant's City Hall. In that building complainant uses P. B. X. service. Upon changing from the old to the new system the company furnishes dialed telephone instruments to individual line subscribers without any additional charge and also, without extra charge, equips with dials the local switchboards of P. B. X. subscribers. The charge in controversy is for equipping and maintaining with dials individual telephones on the subscriber's premises connected with the P. B. X. switchboard. Under the manual system the user of a telephone attached to a P. B. X. switchboard could either give the local operator the number he wished and have her complete the call, or he could ask for "outside," whereupon the local operator would connect the line with the company's central office, where the call would be completed. The latter procedure saved some time to the P. B. X. switchboard operator. It was shown that while the use of P. B. X. service in that respect was not uniform, such use had become quite extensive. Under the automatic or dial system the user of a P. B. X. telephone, unless it is equipped with a dial, must have the local switchboard operator dial for him from her switchboard. If he has a dial telephone he can make his own call from his telephone or station. Under the manual system if the P. B. X. switchboard was unattended, as at night where local operators were kept only during the day, a line could be left "plugged through" to the company's central office so that the individual station could make a call as on an individual line. Under the automatic system a line can be similarly left "plugged through," but in order that a call may be made from the individual telephone thus left connected that telephone must have a dial.

In so far as it had been the practice of users of P. B. X. service for individuals to call for "outside" service while the local operator was on duty, or to have a line left plugged through when she was off duty, it is conceded that in order to get the same service under the automatic system as had been enjoyed under the manual system, the individual P. B. X. telephones as well as the switchboards must be equipped with dials.

Complainant's evidence tended to show that the automatic system on the whole gave somewhat slower service than the manual. The company's evidence was to the contrary. While we do not deem that issue material to the question here involved, it may be stated that in our opinion the preponderance of the evidence did not sustain complainant's contention.

By respondent telephone company's evidence the following furthers facts were shown:

The facilities furnished by the company to P. B. X. subscribers very widely, requiring different-sized private switchboards, different numbers of lines connecting such boards with the central office and different numbers of telephone instruments on the private premises, for which reasons the rate for P. B. X. service varies according to the facilities required. There can be no P. B. X. service without a P. B. X. operator, who is an employee of and paid by the subscriber. The maximum P. B. X. service to which the rate entitles the subscriber is determined by the capacity of the facilities furnished and the capacity of the P. B. X. operator to complete calls.

Rates involve two major considerations, viz., revenue requirements and determination of balance between different classes of service. In making rates attention is given to the cost of the particular service and to the value of that service and its effect upon traffic in relation to other people's service. It is the concern of the management that every subscriber shall get the service and only the service contemplated in the rate he pays. If this cannot be done by selling the subscriber the correct service it must be done by rate treatment, since abuse of service by one class of subscribers tends to interfere with the service rendered to another class. The rate is based upon the service to meet average use.

P. B X. service is different from individual line service. The rate for each is based upon the use designed to be made of each by the subscriber, and the P. B. X. rate is designed to meet the...