State ex rel. Rice v. Public Service Com'n

• Decision Date: 09 May 1949
• Docket Number: 40227
• Parties: State of Missouri, at the Relation of D. A. Rice, Doing Business as Doniphan Telephone Company, Appellant, v. Public Service Commission of the State of Missouri et al. and Southwestern Bell Telephone Company, Respondents
• Court: Missouri Supreme Court

220 S.W.2d 61

359 Mo. 109

State of Missouri, at the Relation of D. A. Rice, Doing Business as Doniphan Telephone Company, Appellant, v. Public Service Commission of the State of Missouri et al. and Southwestern Bell Telephone Company, Respondents

No. 40227

Supreme Court of Missouri

May 9, 1949

Appeal from Cole Circuit Court; Hon. Sam C. Blair, Judge.

Affirmed.

SYLLABUS

In a proceeding initiated by the Public Service Commission, said Commission found that the standard traffic agreement of the Bell system provided a fair division of long distance telephone tolls between the exchanges and lines operated by appellant and those operated by the Bell system. The finding of the Commission is supported by the evidence and appellant's share of the division is not confiscatory.

Donald C. Power and Green & Green for appellant.

(1) The appellant was not afforded an opportunity or the right to a fair judicial and open hearing. All the substantial evidence introduced at the hearing established that under the division of tolls as proposed by Southwestern Bell and found by the Commission to be fair and reasonable, would result in appellant operating his business at a loss. The decision and order of the Commission went entirely outside of the record and injected data with respect to station values in its opinion upon which no testimony had ever been introduced and then trended that value to a date certain without any indication of a basis upon which its trends were computed. Such procedure, opinion and order of the Commission is in direct violation of the due process clause of the Fourteenth Amendment to the Constitution of the United States and under the evidence such order and opinion will result in the taking of the property of appellant for public use without just compensation. Ohio Bell Tel. Co. v. Public Utilities Comm. of Ohio, 301 U.S. 292, 81 L.Ed. 1093; West Ohio Gas Co. v. Public Utilities Comm. of Ohio, 294 U.S 62, 79 L.Ed. 761; State ex rel. Southwestern Bell Tel. Co. v. Public Service Comm. of Missouri, 262 U.S. 276; St. Joseph Stock Yards Co. v. United States of America, 298 U.S. 38, 80 L.Ed. 1033; Interstate Commerce Comm. v. Louisville & Nashville Railroad Co., 227 U.S. 88, 57 L.Ed. 431. (2) Under the rate of division of toll as ordered by the Commission the appellant will not receive a fair return on the reasonable value of appellant's property and, by reason thereof such opinion and order if placed in effect is confiscatory in effect and in violation of the Constitution of the United States. Louisiana Water Co. v. Public Service Comm., 294 F. 954, 269 U.S. 597; 52 Am. Jur. 78-79, sec. 47; State ex rel. Southwestern Bell Tel. Co. v. Public Service Comm. of Missouri, 262 U.S. 276. (3) The opinion and order of the Commission is based on data not introduced in evidence and such opinion is contrary to all of the substantial evidence introduced at such hearing and is not supported by any competent substantial evidence introduced at the hearing. Therefore the opinion and order cannot be upheld. State ex rel. Public Service Comm. v. Shain, 342 Mo. 867, 119 S.W. 220; State ex rel. City of St. Louis v. Public Service Comm., 329 Mo. 918, 47 S.W.2d 102; State ex rel. Henson v. Brown, 326 Mo. 230, 31 S.W.2d 208; State ex rel. City of Harrisonville v. Public Service Comm., 291 Mo. 432, 236 S.W. 852; Ohio Bell Tel. Co. v. Public Utilities Comm. of Ohio, 301 U.S. 292, 81 L.Ed. 1093; United States v. Baltimore & Ohio Railroad Co., 293 U.S. 454, 79 L.Ed. 587; State of Florida v. United States of America, 282 U.S. 194, 75 L.Ed. 291. (4) The conclusion of the Commission that division of tolls as provided for in the Standard traffic agreements for the period of times for which they were used were fair and reasonable, is contrary to all the substantial evidence introduced in such hearing, is not supported by any substantial evidence, is arbitrary, unfair, unjust, confiscatory and in direct violation of the due process clause of the Fourteenth Amendment to the Constitution of the United States of America. Such order and opinion will result in the taking of the private property of appellant for public use without just compensation. Interstate Commerce Comm. v. Louisville & Nashville Railroad Co., 227 U.S. 88, 57 L.Ed. 431; Ohio Bell Tel. Co. v. Public Utilities Comm. of Ohio, 301 U.S. 292, 81 L.Ed. 1093. (5) Since Rice did not agree to an arbitration of the controversy as provided by Section 5697, R.S. 1939, this Commission did not have jurisdiction over the particular issue involved, namely, a matter of private contract between two telephone companies as to a division of toll revenues. (6) The Commission erred in comparing the operations of other telephone companies with those of Rice when there was no testimony produced in the record to show that such operations were comparable and when, in fact, the testimony produced in this case clearly demonstrates that the operations of the other companies presented were not comparable. See Cases under (1). (7) The Public Service Commission's findings and order erred in holding that because the division of tolls as proposed by Southwestern Bell Telephone Company for appellant is the Standard form used in division of tolls between Bell and other companies, that therefore it should produce a fair return or just compensation for appellant. The Commission by the above findings upon which the order was based erred in ignoring the law that what might be a fair return for one may be inadequate for another, depending on circumstances, locality and risks. 52 Am. Jur. 78-79, sec. 47; Ohio Bell Tel. Co. v. Pub. Utilities Comm. of Ohio, 301 U.S. 292, 81 L.Ed. 1093; Louisiana Water Co. v. Public Service Comm., 294 F. 954, 269 U.S. 597.

John Mohler for respondent. Concurred in by John P. Randolph, General Counsel, Public Service Commission of Missouri.

(1) Jurisdiction of the Public Service Commission to prescribe the division of revenues obtained from joint business between two telephone companies is specifically conferred by the plain words of the statute. Sec. 5670 (3), R.S. 1939. (2) Such authority to prescribe such division of revenues (or tolls, as such revenues are often called in the business) is indeed implied from legislative authority to a Commission to require physical connection of the lines of two telephone companies for interchange of traffic. 52 Am. Jur. pp. 78, 79, sec. 47. (3) Such authority, whether expressly or impliedly conferred is not inconsistent with constitutional requirements. 16 A.L.R. 362. (4) The appellant's hearsay evidence was inadmissible since it could not qualify under an exception to the rule because of appellant's petulant, sustained refusal to allow respondent access to examine into his plant, records, and operations upon which such evidence was based. Rowland v. Boyle, 244 U.S. 106, 61 L.Ed. 1022; Newton v. Consol. Gas Co., 258 U.S. 165, 66 L.Ed. 538; Michigan Bell Tel. Co. v. P.U. Comm., P.U.R. 1931E, 222, affirmed 45 F.2d 180; In re Wisconsin Tel. Co., P.U.R. 1931E, 101. (5) The Commission was at liberty to disbelieve the appellant's evidence. Under the Missouri rule, the Commission, as any trier of facts, is given carte blanche to disbelieve for any reason sufficient unto itself. Hunter v. Wethington, 205 Mo. 284, 103 S.W. 543; Gannon v. Laclede Gaslight Co., 145 Mo. 502, 46 S.W. 968, 47 S.W. 907; McClellan v. St. Louis, 170 S.W.2d 131; Earhart v. Lumber Co., 140 S.W.2d 750. (6) No matter the rule obtaining in this state, the Commission had ample reason to disbelieve and disregard the appellant's evidence, and did not act arbitrarily or capriciously in doing so. 20 Am. Jur., p. 1031; Hammett v. Wabash R. Co., 128 Mo.App. 1, 106 S.W. 1106; Reichenbach v. Ellerbe, 115 Mo. 588, 22 S.W. 573. (7) The Commission properly considered information acquired in the course of its experience as a test of the worth of appellant's evidence. Re Missouri Standard Tel. Co., P.U.R. 1928C, 695. (8) But even if the Commission had employed such information erroneously, the use thereof was simply superfluous and harmless, as the Commission had abundant other reasons for disregarding appellant's evidence as unworthy of "credence". The result only of the Commission's order, and not the method of arriving at it, is to be tested in this court. Unless the order itself is arbitrary or capricious, it must be sustained; and any claimed error not directly constituting the basis of decision must be disregarded. State ex rel. Potashnick Truck Service v. Public Service Comm., 129 S.W.2d 69; State ex rel. City of St. Louis v. Public Service Comm., 329 Mo. 918, 47 S.W.2d 102. (9) The Commission's order is based on ample and substantial evidence in the record. (10) The appellant's claim of confiscation, even if his evidence had been believed, would be theoretical rather than realistic, and the Constitution is concerned with realities. 11 Am. Jur., sec. 93, p. 721. Under appellant's own evidence, he will receive under the Commission's order some $ 3000 a year at no out-of-pocket expense. This result amounts not to confiscation, but rather to its antithesis, windfall.

OPINION

Douglas, P.J.

D. A. Rice, the appellant, owns and operates under the name of Doniphan Telephone Company three small telephone exchanges in Wayne County. The Piedmont exchange has 220 telephones, Williamsville has twenty-five, and Greenville has only three, all toll stations. Rice also owns the connecting lines between these three points and furnishes toll service between them. Rice acquired the properties in 1935 by purchase from the Referee in Bankruptcy for the North Central Telephone Company. That company had connected its lines with the long distance lines of the Southwestern Bell Telephone Company and furnished toll service to its...