135 Pa. Super. 218 | Pa. Super. Ct. | 1939
Opinion by
This is an appeal by The Bell Telephone Company of Pennsylvania, (hereinafter called Bell Company), from an order of the Pennsylvania Public Utility Commission directing it to revise its intrastate toll rates for distances exceeding thirty-six miles so as to conform to the rates charged by American Telephone & Telegraph Company, (hereinafter called American Company), using appellant’s facilities, for service over comparable distances in interstate service.
The order was based on a finding of the Commission, made after a full and extended hearing, that the toll rates charged by the appellant company for long distance service within the State of Pennsylvania were higher than the interstate rates, using the same facilities, for a like or even greater distance, and constituted unreasonable discrimination against intrastate patrons, in violation of section 304 of the Public Utility Law of May 28, 1937, P. L. 1053.
At the outset it may be stated that the appellant, both in-its oral argument and in its reply brief, expressly disclaimed raising the question of confiscation. See
The Bell Company furnishes statewide telephone service to the public in Pennsylvania. It has no property or facilities outside the State of Pennsylvania, but by connections with American Company and other telephone companies, owned or controlled by American Company, it furnishes its subscribers and patrons with nationwide telephone service and even telephone service to distant lands. All of its common stock ($110,-000,000), is owned by American Company. A dividend of 8% per annum is paid on the common stock. Its 6%% preferred (non-voting) stock ($20,000,000), is in the hands of the investing public and commands a high premium.
American Company does no local business in Pennsylvania. It has no lines here used in local telephone service. It has long distance lines in Pennsylvania, which it uses for interstate service, and two long distance boards or exchanges — one in Philadelphia and one in Pittsburgh — but it does not perform any service between terminals wholly in Pennsylvania. Its poles,
As a result of certain investigations instituted by Federal Communications Commission Avith respect to the long line telephone rates of American Company and that commission’s insistence on their substantial reduction, American Company filed a new schedule of rates, which was approved by Federal Communications Commission, effective January 15, 1937, which called for a reduction of about $12,000,000 yearly from its pre-
In putting into effect the new rates American Company lowered its toll rates for distances in excess of thirty-six miles, and arranged for a like reduction in all interstate business of Bell Company with respect to calls put through at privilege points and where direct connection was made at certain other points without using any facilities of American Company. For example, the station to station, three minute, call between Harrisburg, Pa. and Camden, N. J. which had been sixty cents was reduced to fifty-five cents. Between Johnstown, Pa., and Camden, N. J., for the same kind of call, the rate was reduced from $1.05 to 85c; from Pittsburgh, Pa. to Camden, N. J. the rate was reduced from $1.15 to $1. This was done to “carry out the arrangement by the Federal Communications Commission” (p. 95a).
Since 1920, when any reductions had been made by American Company in its interstate rates and reflected in its interstate tolls, corresponding reductions were always made by Bell Company in its intrastate toll rates for comparable distances. This happened frequently, — “practically every year for the last five or six years” prior to November, 1937 — , and every time a change was made interstate, Bell Company conformed as to intrastate toll rates (p. 139a). But as to the change made by the schedule effective January 15,1937, Bell Company did not conform its intrastate toll rates. In one rate only was the Bell Company’s toll rate lower than American Company’s. For local calls, not more than six miles, Bell Company’s rate has been five cents, while American Company’s lowest rate is ten cents for
The reason given by Bell Company for not conforming its intrastate toll rates to the interstate toll rates arranged for by American Company effective January 15, 1937, was that after consultation -with the Public Service Commission of Pennsylvania, the predecessor of the present Public Utility Commission, in December 1936, it had made a reduction of its local or residence exchange rates, effective as to billings February 1, 1937, entailing a yearly reduction of $1,800,000, and that the company could not afford a further reduction, which it was estimated would amount to $600,000 gross, or $463,000 net, a year, or 42/100 of one per cent on its common stock. But it was brought out on the examination of appellant’s witnesses, on November 16, 1937, that the actual receipts for the first ten months of 1937 plus the estimated receipts for November and December of that year showed gross receipts of $69,118,-769, as against $65,510,510, in 1936 and net receipts of $16,203,805, as against net receipts of $16,139,990 in 1936, so. that notwithstanding considerable increases in wages, taxes, etc., both gross and net revenues had increased in 1937, the gross local service revenues affected by the reduction having increased nearly two million dollars, and the actual revenues for local service for the first ten months of 1937 being more than 86% of such revenues for the whole year 1936. It is
The concrete result of the refusal of Bell Company to conform its intrastate rates with the interstate rates arranged for it by American Company is best shown by specific instances of the discrimination resulting therefrom against intrastate patrons or service, taken from complainants’ ‘Exhibit No. 4,’ (p. 289a) as checked and corrected by appellant.
Comparison of three minute initial period station to station intrastate toll rates with rates for interstate messages:
Taking as an example Harrisburg to Philadelphia and Harrisburg to Camden, it must be remembered that the call to Camden, N. J. uses precisely the same exchanges, lines, facilities, etc., as the call to Philadelphia, and in addition requires connection with another exchange and the use of facilities of New Jersey Bell Telephone Company at Camden, — for which by itself a charge of five cents is made, divided between Bell Company and New Jersey Bell Telephone Company — , and notwithstanding this additional service and the payment to the connecting company of part of the charge, the interstate rate is five cents less than the intrastate rate over the same line, in the same direction, which uses a part, but not all, of the same facilities and service.
This discrimination against intrastate service in Pennsylvania led the Public Utility Commission of its own motion to bring this proceeding against Bell Company as respondent, which resulted in the order appealed from.
We think the evidence in the case justified the finding by the Commission of unreasonable discrimination on the part of Bell Company, and that the order is not unreasonable or arbitrary.
I.
Preliminarily, we may say, we do not agree with the learned counsel for appellant as to the construction
But the relation between these two companies and the use of the facilities, exchanges and wires of Bell Company by American Company in the transmission of its business, is different from mere stock ownership, and justifies the Commission in its ruling that the intrastate service and patrons of Bell Company, which are under its supervision and regulation, shall not be unreasonably discriminated against to the advantage of those using the same facilities, in addition to other facilities of a connecting company, in interstate service. While the form, of the order is that appellant revise its intrastate rates to “conform to the rates charged by American Telephone & Telegraph Company for service over comparable distances,” its actual effect, as indicated in the report and argued by its counsel, is that appellant revise its rates for wholly intrastate service to conform to its rates, for comparable distances, charged for interstate service, which includes the very same service and facilities used in intrastate service; in other words that appellant shall not charge more for intrastate service than it charges for prescisely the same service, plus the additional service furnished by a connecting company, in interstate service. Appellant
Appellant makes the mistake, so often committed in citing opinions, of taking general expressions found in the opinion away from the setting of facts which justifies their use. It is clear from the opinion — even apart from the dissenting opinion of Mr. Justice Brewer, concurred in by Mr. Justice Gray — that there can be no objection to a state, by its regulatory body, fixing an intrastate rate by using the standards adopted for interstate rates, provided it results in no hindrance to, or interference with, or regulation of, interstate commerce.
In Illinois Commerce Commission v. United States, 292 U. S. 474, 483, 485, 487, Mr. Justice Stone, speaking for the court said: “The decision [of the Interstate Commerce Commission] in the first proceeding, that the increase in interstate rates was reasonable, was made in the hope that the state commissions would bring intrastate rates into harmony. When they failed to do so, the Commission reaffirmed its finding that the new interstate rates were reasonable and found that the intrastate rates must be raised in order that the intrastate traffic may bear its fair share of the revenue burden. It is plain from the nature of the inquiry that the rate level, to which both classes of traffic were raised, was found reasonable on the basis of the traffic as a whole. Where the conditions under which interstate and intrastate traffic move are found to be substantially the same with respect to all factors bearing on the reasonableness of the rate, and the two classes are shown to be intimately bound together, there is no
II.
Much of what we have just said is likewise applicable to appellant’s second contention, and supports the conclusion that the order of the Commission does not constitute a hindrance to, interference with, or regulation of, interstate commerce; and it must not be forgotten that unless the order has that effect it is not in conflict with the interstate commerce clause of the federal constitution.
Many of the cases cited and relied on by appellant on this branch of the' case have no application or relevance to this case. For example, Wisconsin R. R. Commission et al. v. Chicago, B. & Q. R. Co., 257 U. S. 563 and Florida v. United States, 282 U. S. 194, related to orders of the Interstate Commerce Commission which
There is absolutely no evidence in this case that the rates of American Company, which by arrangement with the Federal Communications Commission were made applicable to Bell Company’s interstate service were not just and reasonable and did not produce a fair and reasonable return to the respective companies for the service performed. While the reduction was voluntary, in the sense that the rates were not imposed by an order of the Federal Communications Commission, they were the result of insistent demands of the Federal Communications Commission that the rates be reduced because they were exorbitant and unjust. We must assume, in the absence of all proof to the contrary, that the rates so established by the American Company and approved by the Federal Communications Commission are just, fair and reasonable to the utilities as well as to the public; for the Federal Communications Commission has no power or authority to impose an interstate rate on a utility company which would cause an unjust or unreasonable discrimination against intrastate traffic. The proof is, that since the establish
The appellant does not claim that the order results in confiscation of its property; possibly because it does not desire to have the Commission enter upon a valua-ation of its property, used and useful in the public service, for rate making purposes.
In the light of the evidence in this reeord it is idle to suggest, much less to hold, that the order appealed from amounts to regulation of interstate service or rates, or is a hindrance to or interference with interstate telephonic traffic and communication.
Nor is the order invalid because it is not alternative in form, directing appellant either to raise its interstate rates or lower its intrastate rates, to conform. While such alternative form is frequently used, in order to avoid unjust discrimination, where the regulatory body has the power to order either, it is not obligatory, where as here, the Public Utility Commission has no power to make an order interfering with interstate rates. In the present case there is no alternative open which the Commission may impose on the appellant. If an unjust and unreasonable discrimination against intrastate service exists, which can be corrected only by a reduction of the intrastate rates to conform with the just and reasonable rates established for interstate service, the Public Utility Commission has the power to order it. See Merchants Warehouse Co. v. United States et al., 283 U. S. 501, 513; Texas & Pacific Ry. Co. v. United States, 289 U. S. 627, 650.