192 A.D. 748 | N.Y. App. Div. | 1920
Lead Opinion
The Public Service Commission, Second District, has ordered: “ That Western Union Telegraph Company shall, beginning January 1, 1920, discontinue its present practice of requiring Postal Telegraph-Cable Company to pay cash for such intrastate telegraph messages as shall be delivered to said Western Union Telegraph Company by Postal Telegraph-Cable Company for transmission, and shall in lieu thereof charge such messages to an account against Postal Telegraph-Cable Company which shall be rendered to said Postal Telegraph-Cable Company not more often than every thirty days; or in the case of the message being one for a person who is a charge
The Western Union Telegraph Company has brought this writ of certiorari to determine the right and power of the Public Service Commission to thus intervene in its affairs, and urges that it is not called upon to provide facilities for the carrying on of the business policies of the Postal Telegraph-Cable Company beyond the strict letter of the statutes governing its conduct. It is evident from the discussion of the learned chairman of the Public Service Commission, and the attitude of the intervenor in its brief, that the order proceeds largely upon the theory that as the Western Union Telegraph Company had heretofore permitted a credit to the Postal Telegraph-Cable Company it was bound to continue this practice for the special convenience of that portion of the public which chose to file its messages with the Postal Telegraph-Cable Company, and the determination of this question requires that we recur to certain fundamental principles underlying corporate action.
The Public Service Commissions Law (Consol. Laws, chap. 48; Laws of 1910, chap. 480) does not purport to repeal any statutes subsequent to 1907 (chap. 429), and we may assume that the General Corporation Law, the Stock Corporation Law and other statutes contained in the general revision of 1909 are still in effect. These statutes, including the Public Service Commissions Law, belong to a group of enactments dealing with the creation, maintenance, management and control of corporations, and are to be conn strued with reference to the provisions found in each one of them. (People ex rel. Haberman v. James, 5 App. Div. 412.) We may not, by an interpretation of the broad general language of one of these enactments, override and control the particular provisions of another; they must all be read and harmonized into an intelligent and workable whole, preserving to the individual or corporation all of those rights which belong to it under the law of its being, and which are not inconsistent with the rights of the public as defined in the statutes, or as exist under the common law. The revisers of the statutes have placed in the General Corporation Law all the provisions
When we find in section 34 of the General Corporation Law (as amd. by Laws of 1917, chap. 538) that “ the affairs of every corporation shall be managed by its board of directors,” and that, with certain exceptions, “ the directors may make necessary by-laws of the corporation,” we are bound to give some effect to this language; we are bound to assume that it means something, and if the granting or withholding of credit is not an affair of a corporation, as distinguished from its duty to the public, then we are at a loss to know what would constitute an affair of a corporation. Almost every corporation transacting any considerable business has a credit department; it is necessary to the well-being of the corporation, the earning of dividends, that the credits should b.e intelligently handled. It is as important to give credit where the interests of the stockholders require it as it is to withhold it where these interests would be adversely affected, and these are matters which peculiarly belong to the board of directors. “ Powers of those entrusted with corporate management are largely discretionary ” and “ courts will not interfere unless the powers have been illegally or unconscientiously executed, or unless it be made to appear that the acts were fraudulent or collusive .and destructive of the rights of the stockholders.” (Leslie v. Lorillard, 110 N. Y. 519; Burden v. Burden, 159 id. 287, 307; Schwab v. Potter Co., 194 id. 409, 415.) In the latter case the court quotes from Flynn v. Brooklyn City R. R. Co. (158 N. Y. 493, 507) that “ all questions within the scope of the corporate powers which relate to the policy of administration, to. the expediency of proposed measures, or to the consideration of contracts, provided it is not so grossly inadequate as to be evidence of fraud, are beyond the province of the courts,” and unless the Legislature in clear and direct terms has withdrawn from transportation corporations the rights which are declared to belong to the duties of the board of directors of “every corporation,” we must reach the conclusion that the power attempted to be exercised by the Public Service Commission is without warrant in law.
We look in vain in the Transportation Corporations Law for any intimation that the affairs of such corporations are not within the control of their boards of directors, in so far as it relates to matters of business policy and administration. Section 103 of the Transportation Corporations Law provides that every telegraph and telephone corporation “ shall receive dispatches from and for other telegraph or telephone lines or corporations, and from and for any individual, and on payment of the usual charges by individuals for transmitting dispatches as established by the rules and regulations of such corporation, transmit the same with impartiality and good faith and in the order in which they are received,” etc. There is nothing here that assumes to take away the general powers of boards of directors over the administrative policy; to determine that all or any of the persons or corporations shall be given credit. That is a matter in which the public, as such, has no concern; it does not go to the question of fairness in rates nor quality or efficiency of the service. It is purely an administrative question, and is clearly within the scope of the powers conferred by section 34 of the General Corporation Law, and is not abridged by anything in the Transportation Corporations Law, The statute makes it the duty of the Western Union
Looking to the Public Service Commissions Law we find no delegation of power over the affairs of the corporation; over its discretion to determine upon its administrative policy, in the effort to earn dividends for its stockholders. Subdivision 2 of section 94 (as added by Laws of 1910, chap. 673) provides, not that it shall take over the powers of boards of directors, but that it “shall have general supervision of all telegraph corporations, telephone corporations and telegraph lines and telephone lines within its jurisdiction as hereinbefore defined and shall have power to and shall examine the same and keep informed as to their general condition, their capitalization, their franchises and the manner in which their lines and property are leased, operated or managed, conducted and operated with respect to the adequacy of and accommodation afforded by their service and also with respect to the safety and security of their lines and property, and with respect to their compliance with all provisions of law, orders of the Commission, franchises and charter requirements.” It has these general supervisory powers, not over the business management and policy of the corporation, but over those matters in which the public, as distinguished from the stockholders, have an interest.
It is true, of course, that it is provided in section 97 of the Public Service Commissions Law (as added by Laws of 1910, chap. 673) that “ whenever the Commission shall be of opinion, after a hearing, had upon its own motion or upon a complaint that the rates, charges, tolls or rentals demanded, exacted, charged or collected by any telegraph corporation * * * for the transmission of messages or communications by telegraph * * * or that the rules, regulations or practices of any telegraph corporation * * * affecting such rates, charges, rentals or service are unjust, unreasonable or unjustly discriminatory or unduly preferential or in any wise in violation of law, * * * the Commission shall * * * determine the just and reasonable rates, charges and rentals to be thereafter observed and in force as the maximum to be charged, demanded, exacted or collected for the performance or rendering of the service specified and shall fix the same by order,” etc., but this does not authorize the Public Service Commission to fix by order the persons or corporations which shall be given credit. The subsequent provisions of said section 97 do not seem to authorize the' Commission to so order. (See, also, Laws of 1919, chap. 624, amdg. said § 97, subd. 3.) In view of the
It certainly cannot be held with any degree of plausibility
The order of the Commission, and the theory of the Postal Telegraph-Cable Company, proceeds upon the proposition that where an individual or corporation delivers a message to the Postal Telegraph-Cable Company for delivery at a point where the latter corporation has no office it may deliver this message at the initial point to the Western Union Telegraph Company, and that this corporation is bound to transmit this message and to extend credit for the service for a period which may extend to 'thirty days, either to the Postal Telegraph-Cable Company or to the customer, if he happens to be a credit or charge customer of the Western Union Telegraph Company. In other words, the Postal Telegraph-Cable Company undertakes to act as the agent of persons and corporations delivering messages to it for transmission to territory within the State of New York where it has no office and no franchise to do business, and to compel the Western Union Telegraph Com
Section 100 of the Transportation Corporations Law provides that seven or more persons may become a corporation for the purpose of constructing and maintaining and operating telegraph lines, upon making and fifing a certificate “ stating the name of the corporation; its general route and the points to he connected,” etc., and such a corporation, with the consent of the local authorities (Matter of New York Independent Telephone Co., 133 App. Div. 635; 200 N. Y. 527) is authorized to place its poles and wires in the public streets and highways along this general route and within the points to be connected, and this legislative grant of corporate existence and the consent of the local authorities authorized .to act in behalf of the State, constitutes “ a single, indivisible franchise to construct and operate ” a telegraph fine in the territory designated. (City of New York v. Bryan, 196 N. Y. 158, 166.) It is well settled by authority in this State that a transportation or public service corporation has no franchise rights or authority outside of the territory designated in its charter; it is confined to the “ general route and the points to be connected,” and it has no power to operate outside of the territory thus defined in its charter. (Schinzel v. Best, 45 Misc. Rep. 455, 463, 465; Hart
We are clearly of the opinion that it is not the duty of the Western Union Telegraph Company to afford facilities to its rival in the development of its purely business affairs; that it is not called upon to become a party to the deception of the public by the practice of taking care of the Postal Telegraph-Cable Company’s business upon the basis of financing the credits of that corporation to its customers. The Western Union Telegraph Company has a right to the prestige of its highly developed service in the promotion of its own business; that is the fair interpretation of the mutual agreement growing out of the granting and acceptance of a franchise from the sovereign power. It has a right to have the public understand the true situation, and not to have it obscured by a system which permits the customer to understand that the Postal Telegraph-Cable Company is performing a service which it has no lawful right to perform for the reason that it has no franchise right to deliver messages in territory which it does not occupy. The territory covered exclusively by the Western Union Telegraph Company belongs to it to serve; it alone has the right to conduct a telegraph business in that particular territory, and when the Postal Telegraph-Cable Company, under the provisions of the order here under consideration, holds itself out as performing this service it is acting without warrant of law. It is probably impracticable to say that the Western Union Telegraph Company might refuse to perform this service for the customers of the Postal Telegraph-Cable Company; it probably owes the duty, on compliance with the provisions of the statute, to forward any message delivered to it, bat there is no reason why it should be called upon to promote the business interests of its rival by enabling that corporation to appear as serving a territory which it cannot reach lawfully. The system of accounting provided for in the order is admirably adapted to deceive and to give to the Postal Telegraph-Cable Company the advantages which belong to the chartered rights of the Western Union Telegraph Company, and the fact that the latter has, in times past, submitted to the imposition upon its just rights is not a reason for com-
The writ of certiorari should be sustained, and the order of the Public Service Commission reversed, and the proceeding be dismissed.
All concur, except John M. Kellogg, P. J., dissenting, with an opinion in which Cochrane, J., concurs.
Sic. See Gen. Laws, chap. 35 (Laws of 1890, chap. 563), § 9; Gen. Laws, chap. 35 (Laws of 1892, chap. 687), § 10, as amd. by Laws of 1895, chap. 672; now Consol. Laws, chap. 23 (Laws of 1909, chap. 28), § 10.— [Rep.
Dissenting Opinion
Section 103 of the Transportation Corporations Law requires one company to receive and transmit dispatches from and for another company and from and for individuals upon payment of the cash rates. It is I think conceded that under this section the Postal Company is entitled to have its dispatches transmitted by the Western Union if cash is paid therefor. The same section, however, requires that all dispatches shall be transmitted with impartiality, and the laws governing common carriers and the Public Service Commissions Law require a like service on equal terms, under like conditions. Apparently credit is given for the majority of dispatches sent by either company, and that fact gives to the Postal Company the right to .require that dispatches delivered by it to the Western Union shall be received by it and .transmitted and charged to the Postal Company. For a great many years the companies have exchanged business on substantially the terms mentioned in the order now under review. Each company had substantially the same rates. But when the government released to the companies the operations of their lines, about August 1, 1919, the Postal Company reduced its rates twenty per cent, while the Western Union discontinued the practice of receiving dispatches and charging the same under the old plan. It •claims that by reason of the difference in the rates, misunderstandings and frictions will grow up, especially if it is required to render bills to individuals for dispatches delivered to it by the Postal Company. The Public Service Commission is not all powerful. So far as we are now interested in it, it can require an equal service on equal terms to all. It does not appear, as I understand it, that the Western Union is now receiving dispatches from other companies under similar
I favor a modification of the order by striking therefrom the words “ or in the case of the message being one for a person who is a charge customer of the Western Union Telegraph Company, shall charge said message to said customer’s account with the Western Union Telegraph Company,” and, as so modified, it should be affirmed, without costs.
Cochrane, J., concurs.
Writ sustained and determination of the Public Service Commission reversed and proceeding dismissed, with fifty dollars costs and disbúrsements.