American Rapid Telegraph Co. v. Connecticut Telephone Co.

Pardee, J. In March, 1876, A. G. Bell became the patentee of the magnetic telephone, a mechanical device capable of transmitting articulate speech through wires by the power of magnetism and electricity; others subsequently became patentees of various improvement's upon it and of appliances to be used therewith; and the American Bell Telephone Company, a corporation chartered by, and — 372 — having its legal location in the state of Massachusetts, became the owner of these several patents. In May, 1880, the Connecticut Telephone Company was organized as a joint stock corporation in and under the laws of the state of Connecticut, for the purpose of building, owning, and operating systems of telephonic exchange therein. In February, 1881, it purchased from the American Bell Telephone Company the privilege of using, upon conditions and under limitations, certain of its magnetic telephones for the period of seven years within the limits of the city of Bridgeport, in a telephonic exchange system to be there established; the instruments to continue to be the property of the American Bell Telephone Company, and a stipulated rent to be paid for the right to use each one. The answer, among other things, alleges that the contract by which the Connecticut Telephone Company acquired from the American Bell Telephone Company the right to use its instruments, prohibits the former from allowing any such instrument placed outside of the limits of said city to be put in communication, either with the instrument in the central office or with that of any subscriber within the city, and from allowing any telegraph company to use the system of telephonic exchange for Bridgeport for the purpose of receiving from its customers messages to be sent, or delivering to them messages which have been sent over its wires, unless such telegraph company has purchased from the American Bell Telephone Company the right to use that system; that the Western Union Telegraph Company has purchased from that company the right, exclusive of all other telegraphic companies, to use every telephonic exchange system which may be established in the United States under the patents of the American Bell Telephone Company in connection with their business, and now uses and has the right to use the defendant’s system in Bridgeport, to the exclusion of the plaintiff; and that the defendant does not own and therefore cannot give to the latter the right which it demands. The plaintiff insists that the defendant has offered its — 373 — services to the public as a common carrier of articulate speech; that it has thereby made itself the servant of the public and has subjected itself to the operation of the general law which compels all such servants to serve applicants impartially, regardless of the limitations placed upon its use of the instruments. But the property of the American Bell Telephone Company in its patent is absolute and exclusive; it can rent or sell it in whole or in part; it can refuse to make or use, or to allow any one else to make or use, the telephone described in it; or it can make and sell one and no more, and put such restrictions as it pleases upon the time, place and manner of using that; and it was the privilege of' the Connecticut Telephone Company to purchase from it even the most limited right to use one or more of its instruments, and it is not within the power of the court either to enlarge or diminish the purchase. In this respect the position of the Connecticut Telephone Company is quite unlike that of railroad companies which have in the exercise of their respective franchises voluntarily undertaken by contract to put limitations upon the use of property absolutely their own and discriminate in favor of certain applicants for transportation; unlike that of proprietors of grain elevators, who have been declared to be warehousemen and as such to have brought themselves within the power of the legislature to regulate their tolls and compel them to render impartial service to applicants for storage; and unlike that of railroad companies which have undertaken to bind themselves by contract not to do in behalf of the public the service, the doing of which was the consideration upon which they received valuable franchises. The record does not show that the defendant ever exercised the right, or declared to the public that it had the right, to use the telephonic instruments upon any other terms than such as are strictly conformable to the measure of use granted to it by the owner of them; does not show, and we may not assume, that it failed to purchase the largest possible measure; and does show that it has offered that measure to the plaintiff. — 374 — Neither by availing itself of the right to organize as a joint stock corporation in this state, or of the right granted by statute to all telephonic proprietors to carry wires upon poles set in the public ways, nor even by taking from the legislature of this state the most unlimited franchise, can the defendant draw to itself the right to any use of the telephones belonging to the American Bell Telephone Company in excess of the grant. The citizens of this state cannot deprive the latter of its property in its patent simply by investing the Connecticut Telephone Company with a franchise to convey speech, nor compel the latter to sell to the plaintiff rights which it does not possess. A statute of this state provides in effect that every telephonic company shall with impartiality permit persons and corporations to transmit speech through its wires by its instruments. The utmost reach of this is to require them to .make an impartial use of such rights or privileges as they possess. If their system is carried into effect by instruments which are not the subjects of a patent and they so conduct their business as to become common carriers of speech, they are to serve applicants with impartiality; or if it is carried into effect by patented instruments, of which patents they are the owners, the same result is to follow; but, if it is carried into effect by instruments which are the subjects of a patent which is the property of a resident of another state, and from whom they are able to purchase, not the instruments themselves, but only a right to the temporary use thereof, subject to conditions and limitations, they are only required to give impartially to applicants the use of the full measure of the right which they have been able to procure. The statute cannot confer power upon courts, either to order them to buy that which .cannot be bought or to use the property of another without his consent. The legislature may deny the use of highways for the erection of poles for the support of wires to any corporation which is not the full owner of the telephonic patents by which its system is operated, and which is not able to give a perfectly unrestricted and — 375 — impartial use of all their capabilities to applicants, or to any corporation which proposes to use telephonic patents under any restrictions whatever imposed by the owner; and so embarrass and hinder as to induce them to become full owners of such patents or retire from the service of the public. Legislatures for reasons of public policy in many ways put limitations upon absolute owners in the use of their property; but they cannot transfer the property of one to another without compensation even for the public good. Again, the American Bell Telephone Company is located in another state; it has not been made nor of itself become a party to this proceeding; has not submitted itself to the jurisdiction of our courts. By leasing certain of its patented instruments to be used in this state under limitations, it did not surrender its invention to the public use here, nor here become a common carrier of speech, nor expose itself to the power of our courts to determine that it had forfeited the exclusive ownership of its patent in behalf of its limited lessee. Nor was it in the power of that lessee to confer authority upon our courts to confiscate, either in its behalf or in behalf of the public, the reserved rights of its lessor, by bringing its fragmentary right into this state and devoting it to the service of the public. The owner of a patent who leases for a limited term, upon conditions and under restrictions, an instrument or piece of mechanism covered by that patent, cannot, as the result of the lessee’s manner of use thereof, be subjected to the law governing common carriers or public servants, so as to be concluded by a judgment that he has dedicated his patent to the public and forfeited his reserved rights in it. If the lessee, the Connecticut Telephone Company, so uses its rights here as to subject itself to the operation of that law and offends it, the court will stop the misuse of its limited rights; but the decree will not reach beyond those rights; will not transfer to it any property or rights to the use thereof which it has not purchased. It is said further, that in incorporating limitations and — 376 — restrictions in its lease of its instruments to the Connecticut Telephone Company, the American Bell Telephone Company has violated a statute of the state which incorporated it and where it has its existence. That statute is in effect the same as our own, previously cited. But the American Bell Telephone Company is the owner of letters patent for an electric speaking telephone, and of course has the right to manufacture and sell or lease the instruments. It has also legislative permission to extend lines of wire within the state of Massachusetts for conveyance of articulate speech, for compensation. It is to the company in this last capacity, and within that state solely, that the statute applies. It does not affect its right as the owner of an instrument to lease it to a citizen of another state upon conditions; nor does it affect the right of such citizen to hire it under limitations ; he assuming the risk of being denied the privilege of using his limited right within his own state. There is no error in the judgment complained of. In this opinion the other judges concurred.