State ex rel. Smythe v. Milwaukee Independent Telephone Co.

133 Wis. 588 | Wis. | 1907

Lead Opinion

Siebecicek, T.

This action is instituted on the relation of’ a resident and taxpayer of the city of Milwaukee to oust the defendant from the exercise of public rights, privileges.. and functions wbicb it is exercising in conducting a telephone business in tbe city of Milwáukee, and wbicb ostensibly were granted it by tbe city and accepted by tbe defendant. Tbe material provisions of tbe ordinance involved in tbis action are given in tbe foregoing statement of facts. Tbe various provisions of tbe ordinance bave been examined with much care to determine their nature and legal effect for tbo purposes of tbis case and to ascertain tbe city’s and defendant’s purposes in adopting and accepting them. Erom them it is apparent that tbe two main objects sought to be accomplished by tbe adoption of tbe ordinance were, first, to regulate defendant’s use of tbe streets and other public places of tbe city, and, secondly, to grant permission to tbe defendant to conduct a telephone business and to confer tbe right and to prescribe tbe conditions for tbe exercise of these public rights, privileges, and functions. Tbe principal questions before us are: (1) Has tbe city power to grant tbe rights and privileges covered by tbe ordinance ? (2) Is tbe defendant’s acceptance of tbe ordinance an exercise of tbe privileges, franchises, and public functions conferred under tbe terms of the ordinance? (3) Tbe right of tbe relator to institute this action.

In the recent case of Wis. Tel. Co. v. Milwaukee, 126 Wis. 1, 104 N. W. 1009, tbe question of tbe power of tbe city of Milwaukee to grant rights and privileges and to impose conditions upon telephone companies for tbe conduct of such a business in tbe city was considered, and it was held to be established under tbe statutes and decisions of tbis court that:

“No power is conferred upon the defendant [city] under its charter or by any law of tbe state to grant to tbe plaintiff tbe privilege of constructing, maintaining, or operating its telephone lines upon tbe streets of the . . . city,” and that “no authority is conferred upon tbe defendant [city] to> impose any other conditions . . . except such as it may lawfully impose under its power to control and regulate the "streets, alleys, and public grounds and prevent the incumbering thereof, under its general police powers.”

It is obvious, therefore, and it is not controverted, that the ordinance can only be sustained as an exercise of the city’s police power. In its first provision the ordinance declares that the defendant

“is hereby authorized and permitted to construct, maintain, and operate a public telephone exchange and system in the city of Milwaukee, and for that purpose the telephone company is hereby authorized and empowered to enter in and upon the streets, avenues, alleys, and other public grounds and ways within the city, for the purpose of erecting, maintaining, and operating said telephone system.”

The ordinance also contains many provisions which embody conditions and agreements respecting the exercise of franchises and public functions. Among this class of provisions are those establishing a schedule of rates to be charged for the services rendered by the defendant; the payment of a portion of its earnings above a specified amount as a revenue to the city; the payment to its patrons of rebates out of its earnings in excess of certain amounts; the payment of the expenses of legal proceedings in actions by parties other than the company for the enforcement of the ordinance; the furnishing of telephones to the city free of charge; obligating the defendant to connect its system with long-distance systems operating in the city; requiring the defendant to employ none but union laborers in good standing in trade organizations and to pay such employees the wage scale of their respective organizations; and providing that the telephone system and the property" connected therewith shall be transferred to the city upon compliance by it with the provisions of the ordinance for its purchase, pursuant to written notice and other conditions it prescribes. It is manifest from the nature and context of the provisions on these subjects' that the ordinance attempts to grant the right to1 exercise privileges, franchises, and public functions, and thus attempts to deal with powers wholly outside the city’s field of police regulation. These provisions of the ordinance clearly transgress the power committed to the city to regulate the manner in which defendant may use and occupy the city streets and other public places. In terms such provisions manifestly confer privileges, franchises, and public functions which the city has no authority to grant. This exercise by the city of a legislative function not delegated to it renders the ordinance void and ineffectual. State ex rel. Vilter Mfg. Co. v. M., B. & L. G. R. Co. 116 Wis. 142, 92 N. W. 546; Marshfield v. Wis. Tel. Co. 102 Wis. 604, 78 N. W. 735; State ex rel. Wis. Tel. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657; State ex rel. Wis. Tel. Co. v. Sheboygan, 114 Wis. 505, 90 N. W. 441. The attempt to grant, confer, and delegate rights and privileges constituting franchises and public functions of the state, whereby the rates for services are established, a revenue is to be paid to the city, and other public powers are to be exercised over the subjects above specified, is an act beyond the authority of the city. They pertain to a class of powers which are public in their nature and which do not belong of common right to persons generally. Such powers can only be exercised under authority from the state, and when franchises are so granted they constitute property, the title to which vests in the grantee. Sellers v. Union L. Co. 39 Wis. 525; Madison v. Madison G. & E. Co. 129 Wis. 249, 108 N. W. 65. Since the attempted grant of these privileges, franchises, and public functions, under the circumstances, vested no right in defendant to exercise them, the inquiry arises: Does the conduct of the defendant in accepting them as though they were valid amount to a usurpation of the powers'and franchises of the state?

It is without dispute that the defendant is organized under the laws of this state for the purpose of conducting a telephone business, and that as snob corporation it may exercise tbe powers and privileges granted by sec. 1778, Stats. (1898), as amended, wbicb confers npon telephone companies tbe right to occupy tbe streets of a city for maintaining and oper- , ating a telephone business. Tbe city’s attempt to confer on tbe defendant tbe right to conduct a telephone business added nothing to tbe powers and privileges conferred on it by tbe general laws of tbe state, and such grant by tbe city was wholly unnecessary for tbe exercise of them. But tbe defendant has treated tbe ordinance as a valid one, and has complied with tbe condition of it respecting its acceptance by filing with tbe city clerk a written acceptance of it. Tbe effect of such a written acceptance of an ordinance attempting to grant such rights, powers, and privileges was considered by this court in State ex rel. Vilter Mfg. Co. v. M., B. & L. G. R. Co., supra, and it was there held that such acceptance constituted an exercise of tbe franchises so attempted to be conferred and operated in law to place tbe defendant in tbe position of actually exercising tbe rights and powers attempted to be conferred by tbe ordinance. Under such circumstances tbe defendant By its acceptance is estopped from denying that it is exercising these public rights, privileges, and functions. Tbe supreme court of California in an analogous case observes:

“In such case would tbe intruder be permitted to say, ‘1 have not usurped a franchise, because there can be no franchise without a grant.’ Tbe response would be: ‘You have usurped a power of tbe government. You cannot act as if you bad tbe franchise and say you are not exercising it.’ ” Ex parte Henshaw, 73 Cal. 486, 493, 15 Pac. 110.

To tbe same effect is tbe bolding in State ex rel. Vilter Mfg. Co. v. M., B. & L. G. R. Co., supra, where a commercial railroad accepted a franchise from tbe city of Milwaukee to operate a street railway. This was declared as unauthorized for want of power in tbe railroad company to exercise tbe rights so conferred, and it was resolved that its acceptance by the company constituted the exercise of franchises and resulted in the usurpation of the franchises of the state. People ex rel. Att’y Gen. v. Utica Ins. Co. 15 Johns. 358; Comm. v. Del. & H. C. Co. 43 Pa. St. 295. Since defendant under the facts and circumstances must be held to be in the exercise of the rights so attempted to be conferred, it results that it is guilty of having usurped and of now unlawfully exercising the powers, franchises, and public functions of the state. It follows that the complaint states facts sufficient to charge the defendant with being in the exercise of these powers of the state and thus, of being guilty of usurping them. Under sec. 3466, Stats. (1893), the remedy of quo warranto is appropriate to oust the defendant from the exercise of them. It is a “person” within the provisions of this section, and, if it be found to be in the exercise of powers and franchises without warrant in the law, judgment of ouster may be awarded against it. State ex rel. Att’y Gen. v. Portage City W. Co. 107 Wis. 441, 83 N. W. 697; State ex rel. Vilter Mfg. Co. v. M., B. & L. G. R. Co. 116 Wis. 142, 92 N. W. 546.

It is averred that the relator has not sufficient interest in the subject matter of this action to enable bim to institute it. The complaint alleges that relator is a resident, elector, and taxpayer of the city of Milwaukee. He avers that he is authorized to prosecute this action under sec. 3466, Stats. (1898), providing for the bringing of actions by the attorney general in the name of the state upon his own information or the complaint of any private party, and further providing:

“Such action may be brought in the name of the state by a private person on his own complaint when the attorney general refuses to act. ...”

In State ex rel. Wood v. Baker, 38 Wis. 71, it is stated:

“Before such a statute the courts of the state might perhaps, in proper cases, have authorized proceedings in the name of the attorney general, if that officer, wrongfully refused to act and it was necessary to proceed in his name. Be that as it may, this branch of the section gives a new proceeding by private parties in the name of the state, without the use of the attorney general’s name or office, in cases of local office, and in all cases in which that officer refuses to act. This is plainly in the nature of a civil action, although in the name of the state.”

It stands admitted that the attorney general has refused to act. Under the terms of the statute, upon the attorney general’s refusal to act, the action, though one by the state, may be prosecuted on the relation of a private party. If the relator is a taxpayer he has sufficient pecuniary interest in the matter, if the exercise of the powers and franchises may involve the city in a pecuniary way. That the city may become involved in the expenditure of money on account of this ordinance, through litigation concerning it, the purchase of the business, and in other ways as a party to it, is readily perceived. . If so, then the city’s money may be unlawfully and unnecessarily wasted through an unauthorized channel. State ex rel. Weinsheim v. Leischer, 117 Wis. 475, 94 N. W. 299.

The ordinance being void and the defendant having no lawful right to exercise the powers and franchises it has thus usurped, it must result that the complaint states facts sufficient to constitute a cause of action and to oust it from such usurpation, and the demurrer should have been overruled.

By the Oowrt. — The order appealed from is reversed, and the cause remanded with directions that the circuit court enter an order overruling the demurrer and for further proceedings according to law.

KebwiN and Timlist, JJ., concur in the foregoing opinion. Dodge, J., dissepts.

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Concurrence Opinion

Winslow, J.

(concurring).. While I am fully in accord ■with the decision reached in this case, I do not agree with some of the reasoning contained in the opinion. .If I rightly understand it, the opinion holds that the contract features of the ordinance (such as the fixing of rates, the payment of a part of its revenues to the city, and the like) constitute of themselves public privileges or franchises which the city had no authority to grant, and it is only by reason of the existence of these provisions that the ordinance is condemned and the defendant found to be guilty of usurping a franchise. I cannot agree with this idea. In my judgment the unlawful franchise consists in the attempted grant of the right to use the public streets and ways of the city and to carry oil its business therein. The many contract provisions cannot in any sense be considered as franchises or grants of privileges, but they simply serve to demonstrate very clearly that the city in attempting to grant the use of its streets to the company was attempting to grant a franchise and was not attempting simply to exercise its police power. As said in the case of State ex rel. Vilter Mfg. Co. v. M., B. & L. G. R. Co. 116 Wis. 142, 92 N. W. 546, such contract provisions and exactions tend very strongly .to stamp the ordinance as an attempted franchise, and repel the idea that it was intended simply as a police regulation. Eor this purpose they seem to be very significant, but not otherwise.

The grant of the right to use the streets for the purpose of conducting its business being the real franchise which is attacked, we are met with the proposition that the company already had this right by grant from the state, and hence that the attempted grant by the city is not a franchise in any sense, and quo warranto will not lie when no franchise has been usurped. This is the serious question in the case, and one upon which there is very little authority so far as my researches have gone. In the California case cited in the opinion (Ex parte Henshaw, 73 Cal. 486, 15 Pac. 110) it was held that one who was assuming to exercise the duties of an office which had been abolished by the repeal of the statute creating it was estopped, in an action brought against him for usurpation of the office, from denying the existence of the office. The argument in support of this conclusion is persuasive, but there is another view which I think logical and satisfactory. ■ The city council has legislative powers within certain prescribed limits. Presumably, when it attempts to legislate and passes an ordinance with all the required formalities, such ordinance is a valid exercise of its legislative power. On its face the ordinance appears to be a valid grant of privileges, and especially would it havO such appearance to business men and investors who could not be presumed to know that it was worthless. Thus it might easily be used as a basis of credit or as an inducement to invest money in the company obtaining it and might well deceive innocent third persons. It is not the case of an attempted grant of privileges or franchises by a person or body having no legislative power, which attempt might well be regarded as an absolute nullity. On the other hand, it takes the form of a local law solemnly passed by a lawmaking body and spread upon its 'records. It seems that there should be some way of testing the validity of this apparently valid legislation and of eliminating it from the records by an authoritative judgment and thus preventing its use for any purpose. In my judgment quo warranto may rightly and logically be used for this purpose, and hence I concur in the judgment.

Maeshall, J. I concur in the above opinion by Mr. Justice Winslow.