State ex rel. Shaver v. Iowa Tel. Co.

• Citation: 154 N.W. 678,175 Iowa 607
• Decision Date: 01 November 1915
• Docket Number: No. 30414.,30414.
• Parties: STATE EX REL. SHAVER v. IOWA TELEPHONE CO.
• Court: United States State Supreme Court of Iowa

175 Iowa 607

154 N.W. 678

STATE EX REL. SHAVER

v.IOWA TELEPHONE CO.

No. 30414.

Supreme Court of Iowa.

Nov. 1, 1915.

Appeal from District Court, Polk County; C. A. Dudley, Judge.

Action to oust defendant company from the streets and highways of the city of Des Moines because the defendant is without a franchise to operate its local telephone system and exchange in the city, for that the company has not obtained the consent of the city and the electors thereof to use its streets, highways, avenues, alleys, and public places, as required by the statutes on the subject. Defendant contends such consent is not required. A number of defenses were interposed. The demurrer of plaintiff to defendant's answer was sustained. Defendant was found guilty of operating and maintaining a local telephone exchange and of occupying the streets, avenues, etc., of the city without lawful authority. A judgment was entered accordingly. Defendant appeals. Reversed and remanded.

Weaver and Preston, JJ., dissenting.Parker, Parrish & Miller, of Des Moines, for appellant.

H. W. Byers, E. C. Carlson, and E. N. Steer, all of Des Moines, for appellee.

DEEMER, C. J.

It is charged and admitted that the city of Des Moines is a city of the first class. Defendant is a corporation for pecuniary profit organized in August, 1895, under the laws of Iowa. Its articles of incorporation provide, among other things:

“The general nature of the business to be transacted by this corporation shall be the acquiring by purchase, lease, or otherwise, constructing, maintaining, and operating telephone plants, both local and long-distance, including telephone exchange systems and public and private telephones and telegraph lines. The amount of the authorized capital stock of this corporation shall be the sum of ten million dollars.”

The telephone plant of defendant includes 40 exchanges, located in 32 counties within the state of Iowa, including an exchange in the city of Des Moines, and 8,998 miles of poles, upon which are carried long-distance or toll lines, extending through 91 counties in Iowa. Its subscribers number 65,000. It affords connections with more than 326,000 connecting stations, being approximately 96 per cent. of the 340,000 telephones within the state of Iowa. Each of defendant's telephones within the city of Des Moines, Iowa, is connected with its long-distance wires, and each of said telephones may be and is used for the purpose of communication with points outside of the city of Des Moines. Defendant's telephone lines in the state of Iowa are connected with telephone lines in states other than the state of Iowa, and communication may be had by telephone as far east as New York and as far west as the city of Denver.

The Central Union Telephone Company in the year 1881 was a foreign corporation organized under the laws of Illinois, and continued such from 1881 to 1896, with its principal place of business in the city of Chicago. In or about the year 1881 the said Central Union Company, in pursuance of the power and authority granted by section 1324 of the Code of Iowa of 1873, as amended by chapter 104, Acts of the Nineteenth General Assembly, commenced to acquire, construct, maintain, and operate telephone lines in Iowa, and so continued until about September, 1896. Between the years 1881 and 1896 said Central Union Company operated telephone lines extending from Des Moines to Davenport, from Davenport to Burlington, and from Burlington to Keokuk, and from each of said cities to other cities and towns in Iowa. Said Central Union Company furnished the public means of communication by telephone between the cities and towns through and to which its said telephone lines extended, also to the inhabitants of each of said cities and other cities in Iowa, by means of local communication by telephone with the other inhabitants of each of said cities and towns. For the purpose of furnishing said communication, said Central Union Company during said years operated in each of the cities before named and in other cities in the state of Iowa what were known as local exchanges, by means of which the inhabitants of each said cities who desired telephone service secured connection with the local exchange, through which they could communicate by telephone with other telephone patrons in the same city and with persons in other cities and towns. The lines and apparatus were used by patrons for communication between all of said cities and towns, as well as local communication. In acquiring, constructing, maintaining, and operating its said telephone system, the said Central Union Company occupied the streets, avenues, alleys, and other public places of the cities before mentioned and cities and towns through and to which its line extended, as well as the country highways connecting said cities and towns, with its poles, wires and other apparatus.

The defendant contends that the said Central Union Company acquired, possessed, and owned the right to occupy in perpetuity the streets, avenues, alleys, and other public places in the city of Des Moines, as well as the other cities and town through and to which its line extended, and the country highways connecting said cities and towns, with its poles, wires, and other apparatus, for the purpose of carrying on a telephone business and furnishing to the public means of communication between said cities and towns, as well as local communication between the inhabitants of each of said cities and towns.

About September, 1896, the said Central Union Telephone Company, for a valuable consideration, sold, assigned, and transferred to this defendant all its telephone property in Iowa. Defendant contends that such transfer includes the right to occupy in perpetuity the streets, avenues, etc., in all the cities named and other cities and towns in the state in which it was then operating telephone lines, as well as the country highways extending between said cities and towns, with its poles, wires, etc., for the purpose of carrying on a telephone business. About the date last named defendant took possession of said telephone property, and has since owned and operated the same, and occupied and is now occupying the streets, avenues, etc., of all said cities and towns and of the said country highways, and it has used the streets, highways, etc., for the purpose of carrying on both long-distance and local telephone communication.

Section 2158 of the statute, which is the same as section 1324 of the Code of 1873, was in force when the Central Union Company was organized, except that in 1882, by chapter 104 of the Acts of Nineteenth General Assembly, the words “or telephone,” in the third line of section 2158, were added. The Central Union Telephone Company was incorporated in 1881, so that its franchise, in the sense that it had a right to exist and transact business under its articles of incorporation, would date from 1881; but, in the sense that it had a franchise or the right to use the streets, highways, etc., under the grant from the state, it is not so clear from the allegations of the answer that the company commenced to occupy the streets before the amendment of 1882 to section 2158 of the Code. The allegations are:

“That on or about the year 1881 the said Central Union Telephone Company, in pursuance of the power and authority granted by section 1324 of the Code of Iowa of 1873, as amended by Chapter 104 of the Acts of the Nineteenth General Assembly, commenced to acquire, construct, maintain, and operate,” etc.

Section 1619 of the present Code is substantially the same as section 1090 of the Code of 1873. The effect of the change will be hereafter noted. The defendant has not obtained the consent of the city of Des Moines or the electors therein to occupy the streets, highways, etc., for its local exchange or system in the city, as required by other sections of the statute subsequently enacted, and it contends that it is not required to do so because it obtained its authority from the state under prior statutes, and that, by accepting its franchise or right to use the streets, a contract obligation was created which the Legislature has no power to change.

The plaintiff contends that the power which had been reserved under the Constitution and the earlier statutes has been exercised by the enactment of sections 775 and 776 of the Code of 1897, and that, before defendant may occupy the streets and other public places in the city with its wires, poles, and other supports, the defendant must obtain the consent of the city and its electors.

II. As already indicated defendant contends that: (a) A direct grant by the Legislature to a public utility corporation to erect its plant upon the highways of the state, upon acceptance by a corporation coming within the terms of the grant, by the erection and operation of its plant, involving an expenditure of money, constitutes a contract between the state and such corporation which, in the absence of reserved power in the Legislature in effect at the date of the grant, cannot be impaired by subsequent legislation; (b) any legislation purporting to repeal or impair such grant is in violation of section 10 of article 1 of the Constitution of the United States and section 1 of article 14 of the amendment to that Constitution, and also in violation of section 21 and section 1 of article 1 of the Constitution of the state of Iowa; (c) neither by section 12 of article 8 of the Constitution nor by section 1090 of the Code of 1873 (section 1619 of the Code of 1897) has power been reserved in the Legislature to repeal a legislative grant under the circumstances set forth. Even if the Legislature has reserved the power to repeal the grant to telephone companies under the provisions of section 1324 of the Code of 1873, as amended, no such right has been in fact exercised by the enactment of sections 775 and 776 of the Code of 1897.

[1] These contentions present the main proposi...