Miles v. People's Telephone Co.

Eschweiler, J. Construing the contract evidenced in the stock certificate quoted above by the language used and the circumstances surrounding the transactions between these parties, there is no difficulty in arriving at the conclusion that the trial court was right in its finding that the plaintiff was bound to pay for the use of his telephone and the telephone connection furnished by defendant such sum per an-num not exceeding $10 as should be arrived at by dividing the total cost of such service by the average number of telephones in use. Such an arrangement is totally different from anything in the nature of an assessment upon stock for payment of unpaid amounts due upon subscription and therefore statutory provisions with reference to assessments have no applicability to the provisions of the contract here in question. To permit the contract in question here to be construed as contended for by plaintiff, namely, that he and other holders of common stock were to receive from defendant that which it is evident from the record was reasonably worth anywhere from $6 to $12 per annum upon stock of the par value of not to exceed $55, would be in effect, to make that which is designated common stock in reality preferred, and that which is designated preferred stock to be in reality secondary, both so far as priority of participation in profits is concerned and in amount of such sharing, and would be to [100] do violence to tbe language as well as to tbe essence of tbe contract. In arriving ,at sucb cost it is proper to include, as was done by tbe trial court, any sums that may be applied by actual payment or set aside in a fund for losses caused by storms or catastropbes and to meet tbe requirements of industrial insurance, guarding, of course, against any duplication that might arise from tbe payment in one year out of sucb funds of sums for wbicb credit bad been given, wlien paid into sucb fund some prior year. There may also be properly included whatever was paid out on any of tbe bonded indebtedness of defendant, or interest thereon, guarding here also, as in tbe preceding item, against any double allowance through any possible crediting once when set aside as a fund and thereafter as a payment. Tbe trial court held that there could not be considered^ in arriving at sucb total cost, any allowance for what is called depreciation. By depreciation is meant that inevitable decrease, year after year, in tbe value of any sucb industrial plant owing to ordinary wear and tear, to tbe influence of tbe elements, and to improvements in materials and methods wbicb thereby lessen tbe value of tbe old. Tbe term also covers tbe necessity of providing, in a systematic way, tbe funds in advance and year by year for tbe change to tbe new material or method when tbe old material and methods become useless or inadequate. We think this view of tbe trial court was error, and that tbe better rule is to bold that a reasonable allowance from year to year for such depreciation can properly be considered as an element of tbe total cost for each year’s service. This is tbe view adopted in other jurisdictions. Knoxville v. Knoxville W. Co. 212 U. S. 1, 10, 29 Sup. Ct. 148; People ex rel. Binghamton L., H. & P. Co. v. Stevens, 203 N. Y. 7, 22, 96 N. E. 114. Tbe necessity for some sucb allowance is recognized as a [101] matter of common, present-day knowledge. Von Baumbach v. Sargent L. Co. 242 U. S. 503, 37 Sup. Ct. 201. It is recognized in tbis state as a matter of public policy, for tbe legislature has provided that a charge over and above the expense of maintenance in such a sum as is required to keep property of a public utility in a state of efficiency corresponding to the progress of the industry, is proper, and has designated such charge as depreciation. , Sec. 1797m— 15, Stats. The defendant has an unquestionable right to make reasonable rules and regulations applying to all customers and persons served alike, for the proper, convenient, and economical carrying on of its business. Shepard v. Milwaukee G. L. Co. 6 Wis. 539; State v. Kenosha Home Tel. Co. 158 Wis. 371, 148 N. W. 877; Southwestern Tel. & Tel. Co. v. Danaher, 238 U. S. 482, 35 Sup. Ct. 886; Irvin v. Rushville C. Tel. Co. 161 Ind. 524, 69 N. E. 258; Buffalo Co. Tel. Co. v. Turner, 82 Neb. 841, 118 N. W. 1064, 19 L. R. A. n. s. 693; Woodley v. Carolina Tel. & Tel. Co. 163 N. C. 284, 79 S. E. 598, Ann. Cas. 1914D, 116; Young v. Batesville Tel. Co. 81 Ark. 486, 99 S. W. 679; Malochee v. Great Southern Tel. & Tel. Co. 49 La. Ann. 1690, 22 South. 922. It' may therefore elect to do business on a cash or a credit basis, and when we consider the smallness of the amount to be collected from individual users and the great expense that would be entailed in pursuing the usual legal procedure in contract actions thereon, it cannot well do business on a cash basis other than by adopting some such regulation as the one here in question. As it may well refuse on its part to do business with those who refuse on their part to abide by such regulations in the first instance, so it may, under reasonable conditions, enforce its rights by providing, especially where there has been a refusal to pay the then exist- ■ iñg charges, as was done in this case, that to all who refuse to give such security service will be discontinued. It being, therefore, authorized to make such terms and [102] conditions .a prerequisite to service, tbe trial court erred in bolding that tbe discontinuance of tbe service was unlawful and in awarding damages to tbe plaintiff for tbe period for wbieb bis service was discontinued. Tbat tbe difference between tbe $12 rate charged to subscribers and users of telephone service other than those bold-ing common stock and tbe maximum charge therefor of $10 for tbe same service to holders of such stock is not an unlawful discrimination so as to make either of such charges unlawful nor within sec. 1797m — 91, Stats., prohibiting the giving of. any undue or unreasonable preference or advantage or subjecting any one to any undue or unreasonable prejudice or disadvantage, is settled law. People’s Tel. Co. v. Lewis, 151 Wis. 75, 138 N. W. 100; New York Tel. Co. v. Siegel-Cooper Co. 202 N. Y. 502, 96 N. E. 109. It does not come within the situation disposed of in the case of Bradford v. Citizens Tel. Co. 161 Mich. 385, 126 N. W. 444, where different rates were charged to persons who were standing each in exactly tbe same contract relationship with tbe defendant in that case. It follows therefrom that the plaintiff under the contract between the parties can be required to pay for the use of telephone service an annual charge to be determined as above indicated; that a reasonable allowance for depreciation may be considered in arriving at the total cost of the expense of such service; that sums paid or set aside for losses caused by storms or catastrophes and for industrial insurance and for principal or interest of bonded indebtedness may also be so included; that defendant may make reasonable requirements to secure the payment of-the amounts due it for such service by requiring a deposit for the same and providing for a discontinuance of service if such conditions are not met; that the plaintiff having been rightfully deprived of service on account of his own default, he has suffered no legal [103] damages by reason of such discontinuance; and that tbe action should be dismissed with costs. By the Gourt. — Judgment reversed, and the cause remanded with directions to enter judgment in accordance with this opinion, with costs to defendant.