Clinton-Dunn Telephone Co. v. Carolina Telephone & Telegraph Co.

IÍOKE, J., after stating tbe case: On tbe bearing it was made to appear that, in 1901, E. F. Young and wife owned and operated, for charge, a local telephone system in tbe town of Dunn, N. O., and plaintiff, a corporation acting under a <¿"was¿-public franchise, owned and operated a like system in tbe town of Clinton, N. C., and was extending its line towards Dunn. That oil 15 February of that year tbe said Young and Avife entered into a contract with plaintiff, in consideration of $10 and that plaintiff company would pay for two-thirds of tbe poles from tbe corporate line of Dunn to tbe local exchange in tbe town and of mutual stipulations in tbe agreement whereby tbe said plaintiff company could physically connect its system with tbe local exchange in Dunn and tbe patrons of tbe Dunn system, for a single charge of 25 cents, could send messages to Clinton and haA^e service for local delivery, in that town, without further charge, and plaintiff and its subscribers should have like privilege and service in reference to local delivery in Dunn. Tbe agreement stipulated further: “That tbe parties shall quietly enjoy tbe same and that this contract shall remain in full force and effect from and after tbe signing and sealing of — 13 — tbe same, and tbe successors and assigns of eacb shall forever quietly enjoy tbe privileges granted by tbe contract; tbat tbe toll fees of eacb shall be 25 cents from exchange to exchange and tbat local messages shall be settled and established by eacb so tbat tbe fee,s charged shall not exceed 25 cents. . . . Tbat this contract shall not be revoked or changed without tbe consent and tbe same mutually agreed to by eacb, their successors and assigns. In testimony whereof,” etc. Tbat tbe physical connection was then made, tbe parties entered into the enjoyment and exercise of tbe privileges conferred by tbe contract and continued therein until October, 1901, when Young and wife sold and conveyed their system and all rights, etc., held by them to defendant company, a corporation acting also under a quasi-public franchise and owning and operating an extended system of telephone lines in the eastern part of the State; that the purchaser entered into the exercise of the rights conferred by the contract with plaintiff, and physical connection being continued, and stipulated service afforded by each until February, 1910, when defendant, having, as stated, acquired the plants of various companies in the eastern part of the State and claiming to have spent large sums of money in improving these lines, giving them better equipment and affording a higher order of service, wrote plaintiff company, saying that the con-' tract was not considered as binding on defendant; that it had not been made by the company; that it was unfair in its obligations and burdens and discriminative in its terms and operation. The letter stated, further, that the rights conferred had been abused on the part of plaintiff company, by extending the privileges granted to other lines and systems not included in the agreement, and contained formal notice that, unless within thirty days plaintiff entered into a contract agreeing to pay $72 per annum for service in Dunn to plaintiff and its subscribers and $72 additional per annum for each additional system exercising the privileges of the contract, and by plaintiff’s permit or procurement, the connection with plaintiff company would be discontinued. That this demand not having been complied with, defendant severed the connection with plaintiff’s system, depriving plaintiff and its subscribers and — 14 — patrons of all service and telephone connection with Dunn and its inhabitants or any possibility of procuring the same except on defendant’s terms. On these, the facts chiefly relevant to the inquiry, we think the court below correctly ruled that plaintiff was entitled to have the connection restored and service afforded, but that the order should be modified or so interpreted that the rate at which this service shall be rendered must be made to depend upon further findings of fact to be had and made in the cause. It is very generally recognized that a telephone company, acting under a gwasi-public franchise, is properly classified among the public-service corporations, and as such is subject to public regulation and reasonable control and is required to afford its service at uniform and reasonable rates and without discrimination among its subscribers and patrons for like service under the same or substantially similar conditions. Godwin v. Telephone Co., 136 N. C., 258; Leavell v. Telegraph Co., 116 N. C., 211; Horner v. Electric Co., 153 N. C., 535; Griffin v. Water Co., 122 N. C., 206; Telegraph Co. v. Telegraph Co., 61 Vt., 241; Telephone Co. v. Telegraph Co., 66 Md., 399; Yancy v. Telephone Co., 81 Ark., 486; Telegraph Co. v. Kelly, 160 Fed., 316. In the absence of constitutional or statutory requirement, this obligation to afford service at reasonable rates and without discrimination to all who will “pay the charges and abide by the reasonable regulations of the company” does nót as a rule extend to making physical connection with the company’s lines, but there is high authority for the position that, when such physical connection has been voluntarily made, under a fair and workable arrangement and guaranteed by contract, and the continuous line has come to be patronized and established as ’a great public convenience, such connection shall not, in breach of the agreement, be severed by one of the parties. In that case the public is held to have such an interest in the arrangement that its rights must receive due consideration. This position finds approval in S. v. Cadvallader, 112 Indiana, pp. 619-636, and is stated in the elaborate and learned opinion of Chief Justice Myers as follows: “Such physical connection cannot — 15 — be required as of right, but if such couuectiou is voluntarily made by eoutraot, as is here alleged to be tbe case, so that tbe public acquires au interest in its continuance, tbe act of tbe parties in making sucb connection is equivalent to a declaration of a purpose to waive tbe primary right of independence, and it imposes upon tbe property sucb a public status that it may not be disregarded,” citing Mahan v. Telephone Co., 132 Mich., 242; and tbe reasons upon which it is in part made to rest are referred to in tbe same opinion as follows: “Where private property is by tbe consent of tbe owner invested with a public interest or privilege for tbe benefit of tbe public, tbe owner can no longer deal with it as private property only, but must bold it subject to tbe rights of tbe public in tbe exercise of that public interest or privilege conferred for their benefit.” Allnut v. Inglis (1810), 12 East, 527. Tbe doctrine of this early case is tbe acknowledged law. It is stated somewhat differently in Munn v. Ill. (1876), 94 U. S., 113, 24 L. Ed., 77, where it is said: “Property does become clothed with a public interest when used in a manner to make it of public consequence and affects tbe community at large. "When, therefore, one devotes bis property to a use in which tbe public has an interest, be, in effect, grants to tbe public an interest in that use, and must submit to be controlled by tbe public for tbe common good, to tbe extent of tbe interest be has thus created. He may withdraw bis grant by discontinuing tbe use; but so long as be maintains tbe use be must submit to tbe control.” See, also, Telephone Co. v. Telephone Co., 118 Ky., 277; 37 Cyc., pp. 1621-1658. While we bold, therefore, that tbe physical connection of these lines should be continued, it does not necessarily follow that tbe service shall be rendered at tbe rate originally fixed upon. So far as these parties are individually concerned, these original rates should bind.' It is true that defendant company was not one of tbe original contracting parties, but tbe contract provides that it shall extend to tbe successors and assigns of each, and defendant company, with full knowledge of its existence or of facts that should have put it upon inquiry leading to knowledge, took over tbe property, entered on tbe enjoyment of tbe — 16 — rights and privileges conferred, and may not be allowed as individuals to repudiate its obligations and its burdens. Mahan v. Telephone. Co., 132 Mich., 242. But here too the rights of the public must, on authority and principle, be allowed to affect the question. As heretofore stated, these public-service corporations are required to render their service at uniform and reasonable rates and without discrimination, and they are not allowed to enter on or continue in the performance of a contract which discriminates among their patrons or which renders them unable to afford the same or perform the duties imposed upon them by reason of their charter. Griffin v. Water Co., supra; Gibbs v. Gas Co., 130 U. S., 396; Western Union v. American Union, 65 Ga., 160; Thompson on Corporations, sec. 2792, and authorities cited. In the case of Gibbs v. Gas Co. the position is stated as follows : “Courts decline to enforce contracts which impose a restraint, though only partial, upon business of • such character that restraint to any extent will be prejudicial to the public interest. But where the public welfare is not involved and the restraint upon one party is not greater than protection to the other party requires, a contract in restraint of trade may be sustained. A corporation cannot disable itself by contract from the performance of public duties which it has undertaken, and thereby make public accommodation or convenience subservient to its private interests.” And applying the principle, if, under conditions developed in the reasonable and orderly exercise and performance of defendant’s duties, under its charter, the rates agreed upon between these contracting parties are of a character that discriminate among defendant’s patrons receiving like service tinder like conditions, or it is so unreasonable and burdensome as to render defendant company unable to perform properly the duties incumbent under its charter, the agreement, to that extent, must be annulled and the parties allowed to continue the service under such reasonable rates as they may further agree upon> or which may be sanctioned and approved by the supervising agencies established by law for the purpose. Revisal, 1905, sec. 1086 et seq. — 17 — In regard to tbe form of remedy available where, as in this State, the same court is vested with both legal and equitable jurisdiction, there is very little difference in its practical results between proceedings in mandamus and by mandatory injunction, the former being permissible when the action is to enforce performance of duties existent for the benefit of the public, and the latter being confined usually to causes of an equitable nature and in the enforcement of rights which solely concern individuals. High on Injunctions (4 Ed.), sec. 2. Owing to the public interests involved, in controversies of this character, it is generally held that mandamus may be properly resorted to. Godwin v. Telephone Co., supra; Commercial Union v. Telephone Co., supra; Mahan v. Telephone Co., 132 Md., 242; Yancy v. Telephone Co., 81 Ark., 486. ~We are not inadvertent to the ease of Solomon v. Sewerage Co., 142 N. C., 439. This was a case in which the rights of individual litigants were alone involved and where, in a well-considered opinion by Associate Justice Connor, specific performance of the contract, at a specified rate, was refused, on the ground that the contract in question was indefinite as to time, and in that respect also, was unilateral in its obligation. The rights growing out of the contract as affected by the public interests was referred to, but not considered or determined. The order, directing that physical connection with defendant’s exchange be restored and service continued, is affirmed, and the cause is remanded for further findings of facts and determination thereon by the court; whether the contract, at the stipulated rate, is discriminative among patrons receiving like service under like conditions or whether it is so unfair and-burdensome as to render defendant company unable to perform properly the duties incumbent under its charter to afford the general public telephone service at uniform and reasonable rates; an issue to be decided on conditions affecting the public interests, for, if these interests may be properly conserved, the fact that, as between the individuals concerned, the contract rate may operate unequally, would not justify or permit that the contract in that respect be avoided. It will be also ascertained and determined whether plaintiff has extended the privi — 18 — leges conferred by tbe contract to persons or telephone systems not embraced within the agreement. The judgment will be modified, in accordance with this opinion, and is otherwise affirmed. [Modified and affirmed. Brown, J., did not sit.