State v. Rocky Mountain Bell Tel. Co.

• Decision Date: 29 January 1903
• Parties: STATE v. ROCKY MOUNTAIN BELL TEL. CO.
• Court: Montana Supreme Court

71 P. 311

27 Mont. 394

STATE v. ROCKY MOUNTAIN BELL TEL. CO.

Supreme Court of Montana

January 29, 1903

Appeal from district court, Lewis and Clarke county; J. M. Clements Judge.

Action by the state against the Rocky Mountain Bell Telephone Company. From a judgment in favor of defendant, plaintiff appeals. Reversed.

Jas Donovan, Atty. Gen., for the State.

H. G. & S. H. McIntire, for respondent.

HOLLOWAY J.

This is an action brought against the defendant company to recover a license tax for conducting the business of a telephone company in Lewis and Clarke county, Mont. The action is brought under section 4071 of the Political Code, as amended by an act of the 5th legislative assembly, approved March 6 1897, which provides that every person, corporation, or association doing business in this state as a telephone company must pay a license, in each county where such business is transacted, of 75 cents per year for each instrument in use.

The complaint contains three causes of action: The first, for the license due on 250 instruments in use during the year commencing July 1, 1899, and ending June 30, 1900; the second, for the license due on 381 instruments in use during the year commencing July 1, 1900, and ending June 30, 1901 and the third, for the license due on 368 instruments in use from July 1, 1901, to the date of the commencement of this action. The allegations are alike as to every cause of action, viz.: That the defendant at the times therein mentioned was carrying on the business of conducting a telephone exchange system, and using and leasing the instruments to its patrons and customers in Lewis and Clarke county, Mont., to the number therein stated, and that no license for conducting such business had been taken out by the defendant company. The answer admits the allegations above, and for an affirmative defense alleges: "That the defendant, Rocky Mountain Bell Telephone Company, is a corporation duly organized under the laws of the state of Utah, with its principal place of business in Salt Lake City, and has complied with the laws of Montana prescribing the conditions upon which foreign corporations are permitted to do business in this state; that its business is that of receiving and transmitting for hire messages by telephone; that for the purpose of conducting and carrying on the said business the defendant company has erected and is maintaining poles along and across various streets, roads, and highways in the state of Montana, and in the states of Utah, Idaho, and Wyoming, and has stretched across and affixed to said poles wires necessary for the transmission of electric currents, which wires connect with and are attached to instruments used for the transmission of telephonic messages, and which instruments are placed in the offices of said defendant company and at the places of business and residence of its several patrons and customers, and communicate with similar instruments in all of the offices of said company and with instruments in the places of business and residence of its patrons and customers in said states aforesaid, and said poles, wires, and instruments are indispensable to the business of said defendant company, and are the means and instrumentalities by which its said business is carried on and conducted, and without which said business could not be carried on; that the defendant company's lines are located in, extend through, and connect the states of Montana, Utah, Idaho, and Wyoming; that for the transaction of its business the defendant company has many instruments in Lewis and Clarke county, in the state of Montana, and in the other states above named, and said instruments are arranged for use and are necessarily used by patrons of defendant company in receiving and transmitting messages from and to places in Montana, and between the said county of Lewis and Clarke and all of said states above named into and through which defendant's lines extend. Said instruments are connected by wire with the Western Union Telegraph Company and the Postal Telegraph Company, which companies have lines in the county of Lewis and Clarke and state of Montana, and extending into and through other states and foreign countries, and are engaged in the business of receiving and transmitting for hire messages by means of the electric telegraph from and to places within the state of Montana and other states and foreign countries; that by such connection of the defendant company with the said telegraph companies' wires, telephone messages may be and are transmitted to the states, countries, and places to which said telegraph companies and their connections extend without any extra charge to patrons and customers of the defendant company; that annually thousands of messages are transmitted, sent, and received over the defendant company's lines by means of its said instruments between persons in the state of Montana and persons in other states and countries." The answer further alleges: That the defendant has paid its property tax in Lewis and Clarke county, Mont., which includes the general tax on such instruments and other personal property; and that compliance by the defendant with the conditions upon which foreign corporations are permitted to do business in this state creates a contract between defendant company and this state, and the imposition of the license tax sought to be collected in this action impairs the obligation of such contract, and that the law imposing such license tax further violates the constitution of the United States in that it denies to the defendant company the equal protection of the laws. The replication filed by the plaintiff to the affirmative defense set up in the answer admits that the defendant is engaged in the business of receiving and transmitting messages by telephone, and that it has such wires connecting the different places in Montana with points in Utah, Idaho, and Wyoming, but denies that the telephone instruments belonging to the defendant company in Lewis and Clarke county are necessarily used by the patrons of such company in receiving and transmitting messages between places in Montana and places in all or any of the other states above named; and denies that such instruments, or any of them, ever have been so used.

Upon these pleadings the cause came on for trial before the court sitting without a jury, and, after having heard the proofs of the respective parties, the court made certain findings of fact and conclusions of law. Findings 6 and 9 only are material here. They are as follows:

"(6) That for the transaction of its business the defendant company has many instruments in Lewis and Clarke county in the state of Montana, and in the other states above named, and said instruments are arranged for use and some are necessarily used by said, company and its customers in receiving and transmitting messages from and to places in Montana, and between the county of Lewis and Clarke and all of the states into and through which defendant's lines extend."

"(9) That the instruments of the defendant company which are used exclusively in business within the state of Montana, if any there are, cannot be separated or discriminated from its instruments used in interstate business: nor does Pol. Code, § 4071, subd. 2, as amended, make such discrimination or separation, but imposes the license tax upon each telephone instrument in use without limiting the license tax upon instruments used exclusively in local or interstate business."

A consideration of the pleadings in this case discloses the fact that the state claims, and the defendant company admits that during the several years mentioned in the pleadings the defendant company had used, operated, and leased to its patrons in Lewis and Clarke county, Mont., the number of telephone instruments claimed by the plaintiff for which it sought to collect the license tax. The gist of the defendant's affirmative answer is that it has many instruments in Lewis and Clarke county, Mont., which are connected by means of its wires with places in Utah, Idaho, and Wyoming, over which many messages are transmitted annually, and that such instruments and wires, and the poles to which such wires are attached, are necessary instrumentalities by which the defendant company conducts its business, and that such business is interstate commerce. Nowhere in the answer are the instruments, which the defendant claims it is using in transmitting messages from Lewis and Clarke county to points outside of Montana, identified as the particular instruments which the plaintiff in its complaint charges are in use in Lewis and Clarke county. For aught that can be determined from the pleadings in this case, the defendant company has the number of instruments for which the state seeks to collect license, and also the instruments designated in the defendant's answer, which it is using in...