Citizens Telephone Co. v. City of Newport

224 S.W. 187, 188 Ky. 629, 14 A.L.R. 1369, 1920 Ky. LEXIS 332

• Court: Court of Appeals of Kentucky
• Decided: May 11, 1920
• Status: Published

Opinions

Opinion op the Court by

Judge Thomas

Reversing.

The general council of the city of Newport passed an ordinance creating a franchise within the city for the purpose of, constructing, maintaining and operating a telephone system therein, which ordinance was approved on October 6, 1909, and the city clerk, pursuant to directions contained therein, advertised the place and time for the sale of the created franchise, at which sale the appellant and defendant below, the Citizens Telephone Company, being the best bidder, became the purchaser. Its bid, pursuant to the terms of the ordinance, was in writing, and was submitted to the clerk, in which the defendant stipulated, as section 2 of the ordinance required it to do, the maximum charges foi services which would he made by it if its bid was accepted throughout the term of twenty years of the franchise. Those rates as contained in the bid are:

“Unlimited Service.

Covering all outward and inward local messages.

Business purposes, direct line ..................$100.00 per yr.

Residence purposes.

Direct line ........................................................................ 48.00 per yr.

2 party line........................................................................ 20.00 per yr.

Measured Service.

A charge for each local outgoing message, inward calls free..

Business purposes. Direct line........................ $48.00 per yr.

Allowing 600 local outgoing calls per year Additional local calls........................................................................3c each.

Guaranteed Service.

5e for each local outgoing message of 5 minutes’ duration, incoming calls free. Stations equipped with coin-receiving device into which money is deposited for each call.

Business Purposes.

Direct line. Guarantee.......................................... $5.00 per month

4 party line. Guarantee ..................................................10c per day.

4 party line .............................................................................-......5c per day

Note. — The above rates apply to stations located not to exceed two miles from the exchange. Other portions of the bid dealt with ‘extension telephone,’ ‘extension bells,’ and ‘extra listings,’ none of which have any bearing upon this controversy.”

The submitted bid of the defendant was duly accepted, and it constructed its system as required by the terms of the ordinance and has continued to operate it, except during the period of the Great War, when it was taken charge of by the United States government.

This suit was filed by the city of Newport and two of its citizens, who were subscribers to defendant’s telephone system, alleging that defendant was imposing higher rates and charges upon its subscribers in Newport than that stipulated in its bid, and it was sought to be enjoined from doing so.

The answer as amended denied the averments of the petition and alleged that at the time it purchased the franchise under the ordinance and at the time it made, and the city of Newport accepted, its bid, it was a Kentucky corporation, and neither owned nor operated a telephone line from Kentucky into Cincinnati, Ohio, nor did it own or operate, by itself or by any company in which it had an interest, any telephone system in the city of Cincinnati, but, on the contrary, at that time the Cincinnati & Suburban Bell Telephone Company, an Ohio corporation, owned and operated a trunk telephone line from the city of Covington into the city of Cincinnati, and owned and operated a telephone system throughout the city of Cincinnati and throughout the Cincinnati, Ohio, exchange district; that defendant neither had at that time, nor has it since had, any interest or beneficial connection with the Cincinnati & Suburban Bell Telephone Company (hereinafter referred to as the Ohio corporation); that from the time it began its operation in the city of Newport up to the taking over of the telephones of the country by the Federal Government as a war measure, “by arraugment between this defendant and said Ohio corporation, said Ohio corporation afforded to the telephone subscribers of° this defendant, residents of the city of Newport, Kentucky, telephone service at the rate or charge nominated in said bid. And this company, in return for said service, at the same time, rendered similar service to the subscribers to the Cincinnati exchange of said company, by giving them connection with the telephone subscribers to its, this, defendant’s, exchange;” that since the turning back of the telephone properties by the Federal Government to the owners, the Ohio corporation declines longer to follow the mutual arrangment for free exchange of messages between its subscribers' and those of defendant, and has fixed a charge of ten cents for interstate messages between Newport and Cincinnati, which charge defendant insists it has the right to pay to the Ohio corporation and to collect it from the subscribers who incurred it. It develops that the right of the defendant to charge and collect from its subscribers in Newport this ten cent message fee is the only question involved in this case.

Another defense relied on was that if the ordinance and defendant’s bid could be construed into a contract whereby the latter agreed to furnish to its Newport subscribers free service throughout the Cincinnati, Ohio, exchange district, it was void because beyond the authority of the city of Newport to make, it being contended that its authority to fix rates in the franchise contract must be confined to rates within its corporate limits.

Still another defense was that if the. ordinance and defendant’s bid created an obligation on the part of defendant to furnish the free service to its Newport subscribers, as insisted by plaintiffs, that contract was subject to the right of congress, under its power over interstate commerce, to regulate or annul, and that by the acts of congress in amending the interstate commerce act — one passed in 1910, approved June 18,1910, and the other passed in 1920, approved February 28 of that }mar —the Federal Government assumed control over interstate telephone messages, and that the Ohio corporation having, according to the provisions of those acts, filed a schedule of tariffs with the interstate commerce commission, for interstate messages, such tariffs superseded and annulled prior existing rates for such messages, although they existed by virtue of contract, in support of which the cases of L. & N. Ry. Co. v. Mottley, 219 U. S. 467; Croninger v. Adams Express. Co., 226 U. S. 491; M. K. & T. R. R. Co. v. Harriman Brothers, 227 U. S. 657; Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426; B. & O. R. R. Co. v. Pitcairn Coal Co., 215 U. S. 481; L. & N. R. R. Co. v. Allen, 152 Ky. 145; L. & N. R. R. Co. v. Miller, 156 Ky. 677; Adams Express Co. v. Cook, 162 Ky. 592, and Western Union Telegraph Co. v. Lee, 174 Ky. 210, together with others, are relied upon.

The demurrer filed to the answer as amended, and each paragraph thereof, was sustained, and defendant declining to plead further, judgment was rendered holding that the ordinance for the sale of the franchise and defendant’s bid imposed the obligation upon the latter to furnish to its Newport subscribers free service throughout the Cincinnati, Ohio, exchange district, which included the city of Cincinnati, and surrounding suburbs. The defendant was also enjoined from collecting any charges from its Newport subscribers greater than those stipulated in its bid, the effect of which was to enjoin it from collecting the ten cents imposed by the Ohio corporation for messages of any of defendant’s Newpo'rt subscribers into any of the territory covered by the Cincinnati, Ohio, exchange district. Complaining of that judgment, defendant prosecutes this appeal.

Clearly the first question to be determined is whether there exists a contract between the city of Newport and the defendant obligating the latter to render the service which the former insists upon. For if there exists no such contract, a consideration of the other questions will be unnecessary. Whether such contract exists must be determined from the terms of the ordinance .and those of that portion of defendant’s bid which we have heretofore incorporated.

The ordinance consists of twenty-eight sections, only two of which refer or in any wise relate to the charges which the successful bidder may make under his purchased franchise. Those sections are numbers 2 and 20, and are in these words:

“Section 2. Each bidder shall state in his bid the Akind or kinds of service that he will render, what service he can give by way of telephone connections with the surrounding territory or adjacent cities, and shall be prepared to furnish evidence of his ability to render the service that he may set forth in his bid, each bidder shall state in his bid the maximum prices for which he will furnish customers and subscribers, telephone service, stating the kinds of service and their respective prices.

“Section 20. It is a condition of this franchise that the successful bidder, in the event that he shall furnish, either through himself or through some person or company in which he has an interest, telephone service of the same or similar character of service in Cincinnati or Covington, or any of the cities adjoining the city of Newport, either now or hereafter, at rates less than the rates that-may be prescribed in his bid, then and thereupon the prices charged under this grant and his bid shall be reduced so as to correspond with the lower rates aforementioned, and any subsequent reduction of rates by said successful bidder or person or corporation in which the successful bidder may have an interest in any of said adjacent cities shall work a corresponding reduction of the rates under this franchise. No toll in addition to said rates above provided for shall be charged by said successful bidder for telephone connection between the subscribers to its system in Newport and subscribers in adjoining cities including the Cincinnati, Ohio, exchange district.”

Other sections relate to the manner in which the system shall be constructed, the life of the franchise, the number of free telephones to be furnished for the use of the city, the indemnifying of the city against damages during the construction of the system, and other matters wholly foreign to the question involved except that section 27 provides that the ordinance, the bid, and the required bond shall constitute the contract between the city and the successful bidder.

It is perfectly apparent, and indeed we find no contention of counsel to the contrary, that there appears nothing in defendant’s bid remotely pointing to any contractual obligation to furnish free service for messages into the city of Cincinnati, Ohio, or its. exchange district. On the contrary, a literal interpretation of that • part of the bid dealing with “measured service” would rather indicate that there should be a charge “for each local outgoing message,” but that inward calls should be free. Color is given to this interpretation when under the heading of “unlimited service,” in the bid, the maximum rates are much higher, but include “all outward and inward local messages. ’ ’ At any rate it is not contended that anything contained in the rates stated in the bid creates the obligation insisted upon. But, since the acceptance of the franchise which the ordinance created would bind the defendant to the performance of all of its obligations, our next duty is to see whether the ordinance contains terms sufficient to create the contract contended for.

Section 2 provides that the successful bidder shall state in his bid the kind of service that he will render', what service he can give by way of telephone connections with surrounding territory and adjacent cities, the maximum rates to be charged for each particular service, and that he shall furnish evidence of his ability to render the character of service stated in his bid. Surely it can not be contended that there is anything contained in that section even resembling an obligation by defendant to furnish free telephone service to its subscribers into points outside of the city of Newport. The required statements were evidently meant only to furnish data upon which the city might act in accepting or rejecting the bid. But, if the required statement relating to furnishing telephone connections could be construed into a contract to furnish such service upon the acceptance of the bid containing the statement, then clearly it would not apply except as to connections with such surrounding territory and adjacent cities as might be contained in the bid, and nowhere do we find in the latter any statement of defendant’s ability to furnish telephone connections to and with the city of Cincinnati, Ohio, or its exchange district.

Section 20 of the ordinance only purports to deal with the automatic reduction of rates to defendant’s Newport subscribers in the event it shall furnish, through itself or some' company in which it has an interest, the same or similar telephone service in Cincinnati, Ohio, Covington, Kentucky, or any of the cities adjoining Newport. The provision therein is that if at the time, or at any time thereafter, the defendant should furnish the same services to any of the surrounding cities at rates less than those contained in its bid, then such rates should be automatically reduced to a level with similar rates furnished to the adjoining city or cities. The language of the ordinance is, “then and thereupon the prices charged under this grant and his bid shall be reduced to correspond with the lower rates aforementioned.” Manifestly, the rates aforementioned ■refer to the lower rates which might, under the conditions of the section, be furnished by defendant to any of the cities adjoining Newport, and for which automatic reduction was provided. It can not refer to any rates in any other part of the ordinance, because in section 20 is the first place the word “rates” appears. The last sentence of section 20 stipulates that “no toll in addition to said rates above provided for,” shall be charged by the successful bidder for telephone connections to its Newport subscribers and subscribers in adjoining cities, including Cincinnati, Ohio, exchange district. There can be no doubt that the phrase in this last sentence, “said rates above provided for” refers to the same automatically reduced rates as the phrase “lower rates aforementioned,” contained in a former part of the section.

The fundamental rule for the interpretation of statutes, as well as other writings, is that the language employed should be given its plain and ordinarily understood meaning, which rule would seem to require the above interpretation of section 20 of the ordinance. But if the language were such as to create a possible doubt as to the meaning, then, under the well established doctrine of the “last antecedent,” it would be our duty to construe the phrases in section 20, “rates aforementioned,” and “rates above provided for,” to refer to the last antécedent, which is the automatically reduced rates referred to by the section. This rule for the construction of statutes is thus stated in 36 Cyc. 1123:

“By what is known as the doctrine of the ‘last antecedent,’ relative and qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding, and are not to be construed as extending to or including others more remote, unless such extension is clearly required by a consideration of the entire act.” We find no such requirement in the entire contract here involved.

We have seen that there is no “more remote” antecedents in the ordinance to which those phrases might refer, since, as we have seen, the word “rates” appears for the first time in the section under consideration. Clearly the last sentence in section 20 of the ordinance, forbidding the collection of tolls for connections with the cities surrounding Newport was inserted to prevent the successful bidder, under the conditions named therein, from charging more than the automatically reduced rates under the guise of collecting the toll for telephone connections. But at most that section can not be construed into an obligation on the part of the successful bidder to furnish free telephone connection, except as to such cities surrounding Newport, including Cincinnati, Ohio, in which such bidder shall furnish telephone service of the same character submitted in its bid, through itself or some company in which it has an interest, and it is admitted that defendant has never furnished such service by any of the methods stipulated in the city of Cincinnati, Ohio, or in any portion of that city’s exchange district. So that, under any view which may be taken as to the meaning of section 20 of the ordinance, it can not be held that the defendant, in becoming the successful bidder for the franchise, obligated itself to furnish the service contended for.

If it was the intention of the parties to contract for free service for defendant’s Newport subscribers to its system erected under the franchise, into and throughout the Cincinnati, Ohio, exchange district, it is marvelously strange that somewhere in the carefully prepared ordinance of 28 sections they did not say so in clear terms, and not leave this most important feature to be inferred from a sentence inserted in a section dealing only with automatically reduced rates to be furnished only upon conditions therein specified; and that, too, in spite of the fact that the specified conditions do not, nor never did exist with reference to that district.

It is strenuously insisted that because such services were furnished under traffic arrangement with the Ohio corporation for some eight or nine years, that defendant thus contemporaneously construed its contract as obligating it to furnish them. In the first place the pleading to which a demurrer was sustained refutes, this contention by alleging that such free service was by mutual exchange of service between defendant and the Ohio corporation, and to accommodate their respective customers. Furthermore, it is the settled practice of the courts to disregard the doctrine of contemporaneous construction, except in cases where the language to be construed is so uncertain, ambiguous and doubtful as to justify the application of the doctrine. It is never invoked in the absence of such uncertainty, ambiguity or doubt. Nor can such mutual arrangement, although observed for a long period, ripen into a contract from mere continued observance during which time the complaining parties (plaintiffs and others whom they represent) were obtaining more than their contract gave them. Rural Home Telephone Co. v. Kentucky & Indiana Telephone Company, 128 Ky. 209; Clarke v. Rogers, 159 Ky. 762, and 13 Corpus Juris 548.

Neither are we at liberty to infer a contract on the part of the defendant to render the services contended for ©n the ground that it was the presumed general imtention of the parties to provide therefor, since in the construction of contracts or other writings the intention to be enforced by the courts as gathered from the language employed is the one which the words in their usual and ordinary meaning express, and not the one which the parties may have intended to but did not express. Bedford v. Bedford, 99 Ky. 284; Howard v. Cole, 124 ; Fowler v. Mercer, 170 Ky. 256; Grutherie v. Grutherie, 168 Ky. 805; Wickersham v. Wickersham, 174 Ky. 604; Eichorn v. Morat, 175 Ky. 80; Shields v. Shields, 185 Ky. 391; Phelps v. Stoner, Idem. 466; Prather v. Watson, 187 Ky. 709; Triplett v. Gill, 7 J. J. Mar. 432; Kelley v. Bradford, 3 Bibb 317, and 13 Corpus Juris 523.

Having reached the conclusion that there exists no contract between the defendant and plaintiff for the free service contended for, and there being’ no other objection to the collection of the ten cent message charge made by the Ohio corporation, it results that the court erred in granting the injunction, which conclusion renders it unnecessary to consider the other question raised by the answer.

The conclusions reached are meant only to apply to the questions of free messages into the Cincinnati, Ohio, exchange district, it being the only one involved in this case. Where the defendant has acquired and operated telephone systems in adjoining cities to Newport, as it has in Covington ^nd perhaps others, a different ques¡tion would be presented, to which the reasons for this opinion would not apply.

Wherefore, the judgment is reversed with directions to dismiss the petition, and for proceedings consistent with this opinion. Chief Justice Carroll dissenting.