236 Mo. 114 | Mo. | 1911
Plaintiff sues defendant to enjoin It from violating a certain agreement made between them May 4,1905, concerning the exchange of business •oh their respective lines. The material portions of the agreement read:
“This agreement, entered into by and between the Home Telephone Company, a corporation of •Joplin, Missouri, first party, and Sarcoxie Light and Telephone Company, a corporation of Sarcoxie, Missouri, second party.
“Witnesseth that whereas, the first party is •operating telephone exchanges at Carthage, Carterville, Webb City and Joplin, Missouri, and the second party operating an exchange at Sarcoxie, Missouri, and both operating local lines that toll business*121 is handled over, connecting principal points in Jasper connty, and arrange for the interchange of business with independent or opposition exchanges or toll lines in said connty, and if desirable and practicable, extend such service beyond said county, under such arrangements as will be advantageous.
“Now therefore, the parties hereto, for themselves their successors and assigns, in consideration of the mutual promises herein made, covenant and agree as follows, to-wit:
“First. The first party agrees to build and maintain a metallic No. 10 iron, or a copper No. 10, telephone line or lines from Carthage to Sarcoxie, then to connect with the party of the second part’s line to be run from the city limits to its exchange for the purposes herein specified.
“Second. Each party hereto grants a license to the other party to connect with the telephone exchange or system of the other party through its switch board at Carthage and Sarcoxie so that an interchange of business may at all times be carried on between said parties. Such connection to be completed on or before June 1, 1905, it being understood and agreed that the line of both parties hereto shall be so operated that service may be given from all lines .owned, controlled or connected with the lines of either of the parties hereto, over the lines of the other and its connection. And each party hereto agrees not to-enter into any contract with any other person, firm or corporation whereby any of the rights, privileges or-advantages herein acquired by either party may be impaired. ...
“Fourth. Each party agrees to transmit all messages destined to points on the lines of the other party hereto not reached by its own system or wires, to and over the lines owned or controlled by the other party.
“In consideration of the benefits to be derived by each of the parties hereto from the toll service*122 herein provided to be furnished by each party, agrees to transmit all business to points reached by its own line or lines, and those to be constructed or acquired within Jasper county over the lines of the parties hereto.
“Fifth. Each party hereto agrees to receive from the other and transmit all messages destined to points within its territory or on connecting lines which may be delivered to it by the other parties hereto, subject to all the conditions herein named. . . .
“Twelfth. This contract shall be and remain in force and effect during the period of twenty-five years from the date hereof, and thereafter until one year’s written notice shall have been given by either party to the other of its intention to terminate the same. Provided that if the franchise of either party hereto shall expire within less time than above mentioned, and be not renewed, and such party be compelled to ■cease doing business, this contract shall not be construed as requiring such party to do that which it is then unable to do, and provided further that each party shall at all times during the existence of this contract furnish to the other party connection with an independent telephone exchange in Carthage and Sarcoxie, Missouri, at current rates, otherwise this contract may be terminated at will by the party at an earlier period, but such action by either party shall not relieve the other from the obligations herein assumed.”
The petition then charges that the plaintiff then built the line from Carthage to Sarcoxie and gave the connections and did all other things required of it by the contract. At some length the petition charges the ■delinquencies of the defendant, but one paragraph will fairly present the matter. Such paragraph of the petition reads:
“Plaintiff states that the defendant in violation of the terms, condition and provisions of said*123 ■contract and in violation of the rights of plaintiff thereunder, has since the 10th day of April, 1906, up to the present time, failed, neglected and refused to. transmit to plaintiff all of the telephonic messages destined to points on the lines of plaintiff, or lines ■controlled by and connected with plaintiff’s lines, and not reached by defendant’s lines, as provided in said contract; bnt on the contrary has entered into a contract with the Missouri and Kansas Telephone Company, commonly known as the Bell Telephone Company, a competitor of plaintiff with lines running in competition with plaintiff’s lines in Jasper connty, Missouri, and a large number of other points, in violation of the rights, privileges and advantages of said contract to the plaintiff and impairing the rights of plaintiff thereunder, by and through which defendant has since the 10th day of April, 1906, ■delivered and transmitted to said company a large part and proportion of the messages received by defendant and destined for points on the lines of plaintiff and lines controlled and connected with plaintiff and not reached by defendant’s system of wires, to plaintiff’s damage in the sum of $10,000.”
The concluding portion of the petition thus reads:
“Plaintiff states that the defendant is at the present time violating and continués to violate said ■oontract as aforesaid by continuing its unlawful connection for the purposes hereinbefore stated, with the Missouri and Kansas Telephone Company, as aforesaid, and .unlawfully transmitting over the lines of said company the business and messages which rightfully should be transmitted over the lines of this plaintiff under said contract.
“Plaintiff states that unless defendant ,is enjoined it will continue said violation of said contract and deprive it of its benefits, profits, tolls and revenues that it should rightfully derive therefrom in the future.
*124 “Plaintiff states that it has no adequate and complete remedy at law to prevent the future violation of the contract on the part of the defendant, and that an action of damages is not sufficient and adequate to protect the rights of plaintiff, because the continued breaches of said contract on the part of defendant in the future, as aforesaid, will result in a multiplicity of suits.
“Wherefore, plaintiff prays the court for a judgment against defendant for damages already accrued in the sum of $10,000, as aforesaid, and in order that defendant may hereafter be restrained from further damaging plaintiff and violating the terms of said contract and impairing or destroying the business of plaintiff as to avoid a multiplicity of suits, plaintiff prays the court that defendant may be restrained from transmitting any telephonic messages received by it at any of its exchanges and destined for points not reached by defendant’s system of wires, and to points on the lines of plaintiff, or lines controlled by plaintiff or on connecting lines with plaintiff, to the Missouri and Kansas Telephone Company or to any other telephone company competing with plaintiff at such point during the term and life of said contract, and that the court issue its mandatory order .and injunction requiring the defendant to deliver and transmit all such messages to this plaintiff during the term of said contract, and in all respects to comply with the agreements and provisions therein contained, and that defendant be restrained from further physical connection with the Missouri and Kansas Telephone Company for the transmission of messages in violation of the terms of said contract, and for such.other judgments and decrees as to the court may seem meet and just.”
Other paragraphs of the petition may require notice in the discussion of the questions presented.
“Now comes the defendant and demurs to the plaintiff’s petition herein and says that the same is insufficient in law for the reasons following, to-wit:
“1st. Because said petition does not state facts sufficient to constitute a cause of action.
“2d. Because the contract between the plaintiff and defendant set forth in said petition is void as against public, policy, in so far as said contract undertook to prevent the defendant from doing the acts complained of in the petition.
“3d. Because said contract is in violation of the statute of the State of Missouri respecting the duties of telephone companies, and particularly of sections 1254, 1255 and 1256, Revised Statutes 1899.
“4th. Because the acts complained of in plaintiff’s petition would not entitle the plaintiff to recover damages against this defendant nor would they entitle the plaintiff to the equitable relief sought in this action.”
This demurrer the court sustained, and the plaintiff refusing to plead further its bill was dismissed.
Plaintiff then filed a motion to set aside the order sustaining such demurrer, and dismissing its said bill, which motion duly preserved in a bill of exceptions, reads:
“Now comes the defendant and moves the court to set aside the order sustaining the demurrer to plaintiff’s bill and .the judgment dismissing plaintiff’s bill and grant plaintiff a new hearing for the following reasons, to-wit:
“1. Because said order and judgment is violative of article 5 of the amendments to the Constitution of the United States. And is violative of section 10; article 2, and section 30 of article 2, of the Constitution of the State of Missouri. In that it deprives*126 plaintiff of its property without due process of law. And in that under said rulings no remedy is afforded plaintiff for the injury to its property.
“2. Because said ruling of the court is violative of section 15 of article 2 of the Constitution of Missouri. In that it impairs the obligation of the contract between plaintiff and defendant.”
This motion the court, nisi, overruled and defendant brings the cause here by appeal.
I. There is but little use in mincing words about the real issues in this case. It is apparent upon the-face of things, in view of State history, of which we must take notice, that the real contest is between the Kinloch Telephone Company upon the one side and what is usually known as the Bell Company upon the other. The two local companies are hut instrumentalities, one in the hands of the Kinloch Company, and the other once in its hands, but now in the hands of the Bell Company. The court does not know less of the. developments in the State than does the average citizen. The average citizen knows that there was a. time when the Bell Company had no competitor in this State. The average citizen knows that local phone systems were organized in the towns and country districts. They likewise know that there being no-competition in long-distance service it was a matter of indifference with the Bell Company whether they permitted physical connection of such lines with their lines. In many, if not most places, no physical connection was tolerated. This is general knowledge in this State. It is also general knowledge that later theKinloch Company after a time succeeded in interesting most of the divers local companies, and put in long-distance service in the State in competition with the Bell Company. We use the term Bell Company because it is generally known that the Missouri &. Kansas Telephone Company is but one of the numer
That the contract involved in this case was one of a number made during this period of developing competition to the Bell Company is apparent. Time developed the fact that a farmer or merchant would not leave his farm or his store to talk through the long-distance booth of one company located in the town,, when he could connect at his farm or his store with another long-distance telephone company reaching the same place. When this dawned upon the other competing company, independence became activity, and indifference was wrought into a desire to serve all the public by a direct and physical connection. This much is general public knowledge. In the light of the surroundings and the law, statutory and otherwise, we must construe this contract.
The Sarcoxie Company, now physically connected with the Bell Company, says the contract is void, although the consideration has been fully paid and performed by the Home Telephone Company. By the terms of the contract the Home Company was to build a line from Carthage to Sarcoxie. This outlay has.
II. That this contract was not intended to stifle competition in long-distance telephone rates, at the time of its making, is apparent from the face thereof, as well as from the history detailed in our paragraph one. That the purpose was to meet competition clearly appears. By paragraph eight of the contract provision is made for meeting competition. In other words the very face of the contract shows what the known public history is, that the object of these-contracts connecting the local companies with the Kinloch system was for the very purpose of competition and not for monopoly, and it might be added that the idea of a monopoly first concurred when the farmer or merchant with a local phone connected with the Kin-loch system, would, for long-distance messages, use that system rather than go to the local booth of the 'Bell Company. With such subscribers, the relationship of the local companies not only furnished competition but convenience, and if the rates were the same convenience decided the route of the message. But beyond all this, these connections in the end furnished one continuous, competitive line with that of the Bell Company, and this competition might be broken down, if it shall be said that physical connection with the Bell Company must be made by all companies having connection with the Kinloch system. The contention has never been in this court, and it is a matter of vital importance. The Bell Company is apparently seeking to reap where it hath not sown, and this under the guise of law. The present case was advanced
Whilst it is true the question here has not been before this court, the same question, and practically the same contract, was before the St. Louis Court of Appeals. [Telephone Co. v. Telephone Co., 147 Mo. App. 216.] The appellant in this ease was a party to that suit, and the contract under consideration was one with a local company at Neosho, Missouri. In terms the contract is practically the contract here. That court by a vote of two to one held the contract void. Reynolds, P. J., filed a dissenting opinion, and there the case rests. In our judgment, the dissenting opinion expresses the law of the case. To our mind the majority opinion overlooks a vital distinction which •should be drawn. There is no question that a public telephone company is a public service corporation, and as such must treat the members of the general public alike. Nor can it be questioned that a contract the evident purpose of which it to create a monopoly should be condemned. The vital point in this case is that the petition seeks to enjoin the respondent from permitting a physical connection between its lines and those of the Bell Company. The petition avers that such connection has been permitted and that such is in violation of the contract. It is conceded in the opinion of Nortoni, J., in the case supra, that as an original right, no telephone company, either at common law or under our statute, could compel physical connection between its line and those of the Sarcoxie Company, tmt it is urged that inasmuch as by the contract in issue the plaintiff has been granted physical connection by switch board with the Sarcoxie Company, then and from that time on all other competing companies must be granted the same privileges. The opinion overlooks the point that if the contract is de dared void, the plaintiff has no status with the Sar
Now reverting to the vital question in this case,, i. e., if a local telephone company desires to extend its usefulness toward the public, and in order to do so-makes a contract of the character of the one here involved, can every other telephone line compel physical connection with such local company? In other words,, has it no control over its property or instrumentalities? Our judgment should not be harsh toward the-public, nor on the other hand should it strip a public-service corporation of all property rights. The contract under consideration shows that the two companies were occupying different fields of service. It shows that each desired to extend its usefulness. Such could be done by joining the two lines and such other-lines as might be connected with either. It would appear that the Home Company had long-distance telephone connections with the Kinloch System. Monopoly is the cry of the Sarcoxie Company in this case. The cry would be feeble if it came from that company alone, but vigor and volume is added to the cry by-reason of the physical connection with the Bell Company. It cannot be said that the joining, of the twO-telephone lines operating in different fields creates a monopoly or stifles competition. Such action only broadens the use of both lines. If the two contracting-lines occupied the same field and were therefore competitive lines a very different question might be presented.
To our mind the purpose of this contract was to-make one continuous system of the lines owned, .con
So, therefore, upon that part of the contract which provides for the joining of these lines and those connected and controlled by them, we feel constrained to hold the contract valid, unless it be rendered invalid by matters which we discuss next.
III. The Sarcoxie Company goes further, however, and challenges that part of the contract which designates the routing of the messages over the lines • of the Home Company and its connections. This they say is violative of all law both statutory and otherwise. Not only so, but that it violates public policy. The contention boiled down is that no agreement can be made whereby two companies or more may undertake to join their lines into one competitive line, and thus route all the business received over such agreed line.
Plaintiff claims that its contract is authorized by statute. The statute reads: “Any company incorporated as herein provided may contract, own, use and
That this statute standing alone is broad enough to cover the contract in question there can be no doubt. This was section 1254, Revised Statutes 1899. The contract in question was made in 1905, when this section was in full force and effect, as it is to-day.
Respondent, however, seeks to obviate the force of this section by reason of section 3330, Revised Statutes 3909. Section 3330, Revised Statutes 1909, was section 1255, Revised Statutes 1899, as amended in 1907. The amendment was subsequent to the contract, and therefore we should take the' law in force at the date of the contract. Subsequent legislation cannot invalidate contracts lawful at the date of their making.
Section 1255, Revised Statutes 1899, reads: “It shall he the duty of every telegraph of telephone company, incorporated or unincorporated, operating any telephone or telegraph line in this State, to provide sufficient facilities at all its offices for the dispatch of the business of the public, to receive dispatches from and for other telephone or telegraph lines, and from or for any individual, and on payment or tender of theif usual charges for transmitting dispatches, as established by the rules and regulations of such telephone or telegraph line, to transmit the same promptly and with impartiality and good faith, under a penalty
Prom a reading of this section it will be observed that our statute at the date of this contract did not compel one company to physically connect its line with any other company. The most that was required was that such companies were to provide sufficient facilities at the offices of the corporation “for the dispatch of the business of the public, to receive dispatches from and for any individual, and on tender or payment of their usual charges for transmitting dispatches, as established by the rules and regulations of snch telephone or telegraph line, to transmit the same promptly and with impartiality and good faith.”
This section does not require physical connection between telephone lines. It does require such company to receive all messages from other telephone or telegraph lines and transmit them, as it likewise requires it to receive all messages from individuals. This does not mean that such corporation must yield to a physical connection with its lines by a competitive company and permit the use thereof in that way. In such case and under this statute the telephone corporation or the telegraph corporation has no greater right than the individual. If the individual goes to the office of the telephone company and tenders payment .for a message, the company must accommodate him. So, too, if a telegraph company or other telephone company goes in the "capacity of an individual or corporate entity and demands a similar service, it
It occurs to us that this question has been settled by this court in the railroad cases. Eailroads which intersect each other must, under the law, provide for the transfer of freight and business from one line to the other, but this does not mean that one company can take physical control of the lines of the other to forward freight originating upon its line. Judge Norton! attempts to draw a distinction between railroad and telephone companies, but we hardly think there is substance in it.
Under the Eailroad Act, we have section 3106, Eevised Statutes 1909, which reads: “All railroad corporations may contract with each other, or with other corporations, in any manner not .inconsistent with the scope, object and purpose of their creation and management.”
This statute in substance is the same as section 3329, Eevised Statutes 1909, supra, relating to the rights of telephone companies. The railway act has been construed by this court, and in our judgment ■such construction is'applicable to the telephone statute.
Speaking of the railroad section, Gantt, P. J., In Railroad Co. v. Railroad Co., 135 Mo. l. c. 202, said: “This section in its present shape may well be regarded as conferring the .requisite authority to make the ‘operating contract’ under discussion. In
Under the railway statute this court has held that it is proper for a railway company to enter into a contract with a single 'ferry company to handle its freight, and that a violation of such contract by employing another ferry company rendered the railroad company liable in damages. It was further held that such contract was not void as violative of public policy, nor as being a contract in restraint of trade or creating a monopoly. [Wiggins Ferry Co. v. Ry. Co., 73 Mo. 389; Wiggins Ferry Co. v. Ry. Co., 128 Mo. 224.]
In these cases the contract provided for one continuous line of transportation. The railway company
But, in addition to all this, the contention of defendant, if sustained, would not encourage competition, but rather retard it.
The theory of the case at bar is that under the law the Sarcoxie Company was compelled to grant physical connection to the Bell Company, because it had arranged for such'connection with a competitor of the Bell Company. Under the railway cases cited supra, this contention is not well founded. One other question remains and that we discuss next.
IY. It is next contended that this contract violates our statutes with reference to pools and trusts. We shall not set out the statutes, because they are well known. What we have heretofore said practically disposes of this contention, and disposes of it adversely to the claims of the defendant. The contract covers corporations operating in different fields, so far as local business is concerned, and as to long-distance business it contemplates a continuous competitive line. We are of opinion that the contract is violative of no law and is good.
In Wiggins Ferry Co. v. Ry. Co., 73 Mo. l. c. 411, we said:" “"While holding the contract, as we have construed it, to be valid, yet if it is shown by extrinsic evidence to be in conflict with public policy, to that extent it must yield and give way, and it is for the defendant affirming it to be so, to show it. The
As before stated the defendant has enjoyed the benefits of the contract and evidently through its new friend is now pleading public policy. Such pleading comes with little grace in a court of equity.
The matter of remedy is not seriously questioned, and if it were we could not say that equity should not interfere under the statements in the bill. The cause should be reversed and remanded to be proceeded with under the views herein expressed. It is so ordered..