Vicksburg & Y.C. Tel. Co. v. Citizens' Tel. Co.

• Decision Date: 02 December 1901
• Citation: 79 Miss. 341,30 So. 725
• Parties: VICKSBURG & YAZOO CITY TELEPHONE CO. v. CITIZENS' TELEPHONE CO. ET AL
• Court: Mississippi Supreme Court

30 So. 725

79 Miss. 341

VICKSBURG & YAZOO CITY TELEPHONE CO. v. CITIZENS' TELEPHONE CO. ET AL

Supreme Court of Mississippi

December 2, 1901

FROM the chancery court of Warren county. HON. WILLIAM C. MARTIN Chancellor.

The Vicksburg & Yazoo City Telephone Company filed its bill in chancery against the Citizens' Telephone Company and the Cumberland Telegraph and Telephone Company, seeking, among other objects, to subject the property of the Citizens' Telephone Company, which had all been conveyed to the Cumberland Telephone Company, to the payment of such damages as had been sustained by complainant by reason of the breach on the part of the Citizens' Telephone Company of a certain contract, which it had made with the Standard Telephone Construction Company, complainant's assignor. The bill alleges that on August 17, 1897, the Standard Telephone Construction Company entered into a contract with the Citizens' Telephone Company, wherein it was stated to be the purpose of the said Standard Telephone Construction Company to construct and maintain long-distance telephone lines diverging from Vicksburg, Miss. to points in Mississippi and Louisiana; and by said contract the Citizens' Telephone Company granted to the Standard Telephone Construction Company the use of any of its poles within the corporate limits of Vicksburg for the express and sole purpose of placing thereon its wires necessary for connecting its lines with its said telephone exchange in the city of Vicksburg free of any charge or rental therefor; that the Citizens' Telephone Company should furnish to the Standard Telephone Construction Company, free of charge suitable space in its exchange for a telephone, which was to be directly connected with the long-distance line of said Standard Telephone Construction Company; that the Standard Telephone Construction Company should keep its lines in good repair and working order, and that the said contract should be binding upon the successors or assigns of either or both of the parties thereto, and should be in force and effect for the period of ten years; that the Standard Telephone Construction Company placed its wires upon the poles of the Citizens' Telephone Company within the city of Vicksburg and established a telephone and other suitable apparatus in the exchange of the Citizens' Telephone Company, and that both of the parties to the contract fully complied for a long time with all the terms and stipulations of said contract; that the complainant became the successor and assignee of all the property of the Standard Telephone Construction Company and all of its rights and interests under said contract, and was duly recognized and accepted by the Citizens' Telephone Company as such legal successor and assignee of said company, and that for a long time it operated and maintained the property so acquired by it in conjunction with the exchange of the Citizens' Telephone Company, and that in all particulars the terms and stipulations of said contract continued to be observed and complied with by it and the said Citizens' Telephone Company; that the property, with the privileges and appurtenances thereto belonging, so acquired by complainant, are valuable and costly, being worth at least $ 6,000; that the Citizens' Telephone Company had sold and transferred to the Cumberland Telephone & Telegraph Company all of its poles, wires, instruments and appliances used by it and necessary for the maintenance and conduct of its telephone business in the city of Vicksburg; that it has closed its exchange in the city of Vicksburg, and retired from business; that the Cumberland Telephone Company is now exercising all the privileges and franchises in so far as the maintenance and conduct of the telephone business is concerned which had theretofore been enjoyed and exercised by the Citizens' Telephone Company; that the Citizens' Telephone Company, except in so far as its mere naked franchise is concerned, has become merged into and consolidated with the Cumberland Telephone & Telegraph Company; that the Cumberland Telephone & Telegraph Company, at the time and before the date of its contract with the Citizens' Telephone Company, by which it acquired the property of the same, was fully advised of the nature and character of the contract entered into between the Standard Telephone Construction Company and the Citizens' Telephone Company, of which, as stated, the complainant is owner by assignment; that by virtue of the premises and of the contract, complainant, as assignee, is entitled to maintain its wires as now placed upon the poles owned by the Citizens' Telephone Company, and recently sold by them as aforesaid, and to have suitable space in the exchange of the Cumberland company for a telephone to be connected with the lines of complainant, and to have its lines connected with the exchange of said Cumberland company; that complainant is ready and anxious to comply with all the obligations assumed under said contract, but that the said Cumberland Telephone & Telegraph Company refuses complainant the privilege of so doing.

The bill avers that complainant is entitled to a decree commanding and enjoining the Cumberland Telephone & Telegraph Company to execute and perform all of the conditions, stipulations and obligations imposed by the contract of August 17, 1897; that, if mistaken in this, complainant is entitled to a decree declaring that the attempted disposition of the property of the Citizens' Telephone Company by it to be null and void, and directing that the same be restored to it by the Cumberland Telephone & Telegraph Company, and that it be required to resume the telephone business in the city of Vicksburg, and to fully execute and perform all the stipulations, conditions and obligations of said contract; that, if it should appear that, under the circumstances above stated, or for other reasons, a decree against the Citizens' Telephone Company for the specific performance of said contract should not be made, that complainant is entitled to have the damages which it has sustained by reason of the breach of said contract by the Citizens' Telephone Company assessed by the court, and a decree rendered therefor, and that it is entitled to have an account taken of the property unlawfully transferred to it and acquired by the Cumberland Telephone & Telegraph Company from the Citizens' Telephone Company, and the value thereof ascertained, and to have the Cumberland Telephone & Telegraph Company adjudged to hold the same as trustee, and to have a decree against the Cumberland Telephone & Telegraph Company for the damages so assessed and ascertained, to the extent of the value of the property unlawfully acquired from the Citizens' Telephone Company. The prayer of the bill was for a decree directing and commanding the Cumberland Telephone & Telegraph Company to execute and perform all of the conditions, stipulations and obligations imposed upon and assumed by the Citizens' Telephone Company by virtue of said contract; that, if mistaken in this, complainant prays that the contract of sale between the Citizens' Telephone Company and the Cumberland Telephone & Telegraph Company, and the transfers and conveyances of property thereunder, be declared null and void; that the Cumberland Telephone & Telegraph Company be directed to restore said property to the Citizens' Telephone Company, and that said last named company be directed and commanded to execute and perform all conditions, stipulations and obligations assumed by virtue of said contract; that, if it should appear that specific performance should not be decreed against either of said companies, then complainant prays that this court will cause to be assessed the damages sustained by it by reason of the breach of said contract by the Citizens' Telephone Company, and that a decree be rendered against same therefor, and that an account be taken of the property transferred by the Citizens' Telephone Company to the Cumberland Telephone & Telegraph Company, and its value ascertained, and that a decree be rendered in favor of complainant against the said Cumberland Telephone & Telegraph Company for the value of said property so ascertained to satisfy and discharge the decree against the Citizens' Telephone Company, and for general relief. To this bill the Cumberland Telephone & Telegraph Company interposed a demurrer. The demurrer was sustained by the court below, the bill dismissed, and complainant appealed to the supreme court.

Decree reversed and cause remanded.

Catchings & Catchings, for appellant.

We affirm that while there has been no consolidation between the Citizens' company and the Cumberland Company in the sense of there being a merger of the franchises of the two companies, yet there has in fact been a consolidation of all of the business and property of the two companies, so that one of them has ceased to own any property whatever, or to conduct any business whatever, while the other has become the owner of all the property of both of the companies, and transacts all the business formerly carried on by the two companies. We insist that this must be a consolidation. We are aware that the consolidation of corporations, in a technical sense, takes place usually by virtue of a contract under which one corporation becomes merged in another, or two or more corporations become united in such manner as to form a new and distinct corporation. But courts will look to the substance of a transaction, and not the form, and, so far as the public are concerned, the facts of this case make as perfect a consolidation as if there had been a strictly technical one.

There were two corporations engaged in the telephone business in the city of Vicksburg, whereas there is now but one. There were two...