Lemhi Telephone Co. v. Mountain States Telephone & Telegraph Co.

571 P.2d 753, 98 Idaho 692, 1977 Ida. LEXIS 448
CourtIdaho Supreme Court
DecidedSeptember 21, 1977
Docket11919
StatusPublished
Cited by26 cases

This text of 571 P.2d 753 (Lemhi Telephone Co. v. Mountain States Telephone & Telegraph Co.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lemhi Telephone Co. v. Mountain States Telephone & Telegraph Co., 571 P.2d 753, 98 Idaho 692, 1977 Ida. LEXIS 448 (Idaho 1977).

Opinions

[694]*694McFADDEN, Chief Justice.

Lemhi Telephone Company is an independent telephone company which operates exchanges in Salmon and Leadore, Idaho, and Grant, Montana. Mountain States Telephone and Telegraph Company (Mountain Bell) is a telephone company which operates as a member of the Bell System in several western states, including that part of Idaho south of the Salmon River. Lemhi and Mountain Bell interconnect for purposes of long distance telephone service. This case arose out of a dispute over division of revenues derived from long distance telephone calls billed on Lemhi Telephone credit cards. The Idaho Public Utilities Commission ordered Lemhi to desist from issuing credit cards in certain situations, and to pay moneys to Mountain Bell in compensation for division of tolls made under past credit card practices. We set aside the order of the IPUC.

A contract entitled “Independent Company Traffic Agreement” was executed by Mountain Bell and Lemhi on May 7, 1970. Therein, the two companies agreed to connect their respective systems to allow transmission of long distance telephone messages. Division of long distance toll revenues would be determined according to a complex formula developed by the Bell System and set forth in the Traffic Agreement. The division of revenues with Lemhi, as with other independent companies, was designed to fit into the total Bell System long distance toll division procedure. Ostensibly, that method allots revenues to various companies commensurate to the cost of services and equipment incurred by each company in each message. Because it is impossible to pinpoint costs for individual calls, statistical averages are computed for cost components, and payments among companies are made in these average amounts on a per message basis; the amounts are termed “settlements.” Various Bell companies across the land all contribute to a central pool and divisions are then divided and remitted to each company.

In the Traffic Agreement, Lemhi and Mountain Bell also provide for mutual billing procedures. Thus, a Lemhi customer making a call from a telephone in a Mountain Bell service area may bill his call to his Lemhi telephone. Similarly the two companies honor each other’s telephone credit cards.

Lemhi receives a settlement amount for each call originating on a Bell System telephone but billed through Lemhi. Thus, if a call is made on a Bell System telephone, and is billed on a Lemhi credit card, Lemhi bills the customer, collects the toll, retains its settlement amount, and transmits the remainder of the toll to Mountain Bell, which in turn invokes the process described above to divide the amount among the appropriate Bell operating companies. Apparently, the process is based on the assumption that if a call originates on a Bell phone, but is billed to a Lemhi credit card, it will in most cases be made to a Lemhi exchange. The settlement amount is paid to Lemhi to compensate it for use of its equipment in receiving the call, and for its costs in billing. The assumption that most calls billed on Lemhi credit cards will be incoming to a Lemhi exchange is in turn premised on the assumption that Lemhi will issue credit cards only to persons who live or work in the Lemhi service area. Given these assumptions, the process is designed so that on an overall average basis, Lemhi will be compensated for its costs, and Mountain Bell will not pay settlement amounts to Lemhi except where it is probable that the call in some way involved Lemhi equipment.

To insure the integrity of the assumptions upon which the division is based, certain provisions are found in the Traffic Agreement. That agreement provides that the settlement amount paid to Lemhi will only be paid on messages “billed to credit cards issued in accordance with Industry recognized practices.”1 Further, the agree[695]*695ment stipulates that each company will adopt practices and operating procedures comparable to those of the Bell System.2

In March of 1970, Lemhi became a wholly owned subsidiary of Burlington Northern, Inc. In July of 1970, at the request of Burlington Northern, Lemhi issued telephone credit cards to various Burlington Northern personnel, who did not live or work in the Lemhi service area. Burlington Northern does not maintain offices nor conduct business in the Lemhi service area. The cards were then used by Burlington Northern personnel to charge calls originating and terminating at various points throughout the country. Pew of the charged calls were to or from the Lemhi service area.

In September of 1973, Mountain Bell filed a formal complaint against Lemhi with the Idaho Public Utilities Commission. In the complaint, Mountain Bell alleged that Lemhi was in violation of the Traffic Agreement in issuing cards to Burlington Northern personnel for use around the country. The complaint noted that issuance of cards to persons outside of the service area of the company was, with some unrelated exceptions, contrary to industry practice. By issuing cards to Burlington Northern, Lemhi allegedly was causing messages totally unrelated to Lemhi service to be billed through Lemhi, thus allowing Lemhi to claim settlement amounts for messages which never utilized Lemhi equipment. Mountain Bell urged that as a result, settlement amounts were being paid to Lemhi when Lemhi was not entitled to the amount, and that the overall effect was to deprive it of the revenues paid to Lemhi. In the complaint, Mountain Bell claimed that the practice was “unfair, unreasonable, unjustly discriminatory and unduly preferential,” and it asked for the return of the amounts paid in settlement to Lemhi for messages billed on the Burlington Northern credit cards, and for an order preventing Lemhi from issuing credit cards outside of its service area.

Lemhi contended that the Commission did not have jurisdiction to consider the issues presented by Mountain Bell. The commission concluded that it did have jurisdiction, and ordered Lemhi to discontinue the practice of issuing credit cards to out-of-service-area persons. Additionally, the commission ordered Lemhi to repay moneys collected as settlement amounts from the Burlington Northern charges. Lemhi has appealed.

On appeal, Lemhi argues that the dispute as to the terms of the traffic agreement, and Lemhi’s compliance therewith, is a contractual dispute and thus should be considered by the courts and not by the commission. Lemhi further argues that the commission lacks authority to order repayment of amounts already collected, as such orders are retrospective in nature; Lemhi argues that the Commission has only prospective powers when ordering division of revenues. We agree with Lemhi and will consider each argument in turn.

Initially, appellant asserts that the controversy between Lemhi and Mountain Bell is a contract dispute. The Traffic Agreement provides that Lemhi will receive settlements for messages billed on its credit cards, but only in instances where credit cards are issued in accordance with industry recognized practices. The basis of Mountain Bell’s complaint is that Lemhi deviated from industry recognized practices when it issued cards to persons having no connection with the Lemhi service area. Lemhi argues that the essence of the Mountain Bell position is that Lemhi violated the [696]*696contract. Lemhi further characterizes Mountain Bell’s request for repayment as a claim for damages resulting from the breach of contract. Contract disputes, Lemhi urges, are matters for the courts and not the commission.

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Bluebook (online)
571 P.2d 753, 98 Idaho 692, 1977 Ida. LEXIS 448, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lemhi-telephone-co-v-mountain-states-telephone-telegraph-co-idaho-1977.