Opinion
March 11, 1908.
Joseph W. Taylor and Hugh Satterlee, for the plaintiff.
James Breck Perkins, for the defendant.
William W. Webb, Corporation Counsel, for the City of Rochester.
The sole question involved in this controversy is whether the plaintiff may charge the defendant for telephone service at a greater rate than that for which it agreed to furnish the same, under the terms of the contract of April 14, 1899, which is the rate heretofore charged the defendant for such service. It is contended on behalf of the plaintiff that the city had no power to enter into any agreement regarding the telephone rates, and that the telephone company received under said agreement no additional right of any kind, beyond what it already had under the franchise it received by the Transportation Corporations Law, under and pursuant to which it was created and now exists, and that, therefore, there was no consideration to support the agreement limiting the rate of compensation for telephone service.
The first inquiry which naturally presents itself is: What rights did the telephone company receive from the State under the law by which it was created, and what additional rights, if any, did it receive from the city of Rochester? Article 8 of the Transportation Corporations Law (Laws of 1890, chap. 566) provides for organizing telephone companies. By section 102 of that article it is provided that: "Such corporation may erect, construct and maintain the necessary fixtures for its lines upon, over or under any of the public roads, streets and highways; and through, across or under any of the waters within the limits of this State, and upon, through or over any other land, subject to the right of the owners thereof to full compensation for the same. * * *" All of the corporations, for the organization of which the Transportation Corporations Law provides, such as pipe line, gas and electric light companies, water works and roads and bridge corporations, except telegraph and telephone corporations, are required by the provisions of that law to obtain the consent of the local authorities to occupy the streets and highways (Transp. Corp. Law, §§ 45, 46, 61, 80, 82, 122, 123), and the same is true of the steam and street railroad corporations. (Railroad Law [Laws of 1890, chap. 565], §§ 11, 91.) But as regards telegraph and telephone corporations, the Transportation Corporations Law seems to contain no such restriction or limitation upon their right to use the public roads, streets and highways and waters of the State. Many, however, if not all, of the charters of cities and villages, as well as the General Laws, do to some extent regulate, restrict and limit the right of such corporations to use the public streets and carry on their business within the municipality; and in one instance, at least, it is provided that the common council of the city may prevent the setting or stringing of telegraph or telephone poles or wires in the city (Charter of the City of Jamestown [Laws of 1886, chap. 84], tit. 3, § 9, subd. 46), the effect of which provision we have passed upon during the present term in the case of City of Jamestown v. Home Telephone Co. ( 125 App. Div. 1), where an agreement was upheld whereby the telephone company agreed to pay a certain per cent of its earnings to the city for the consent and right obtained from the city to maintain a telephone system within its boundaries as provided in the agreement. There is, however, no such provision in the charter of the city of Rochester, nor am I aware of any statute applicable to that city which gives it the right to prevent a telephone company, organized under the Transportation Corporations Law, from using the streets of the city as is provided by that law, although the common council may control the erection, construction, laying, stringing, maintaining and removing of all wires, cables, poles, conduits and subways therein. (Laws of 1894, chap. 28, § 8, amending Rochester charter [Laws of 1880, chap. 14], § 40, subd. 7.
While it is strictly true, as contended on behalf of plaintiff, that the franchise of this telephone company, giving it the right to carry on its business and construct and maintain its lines in the public roads, streets and highways and the waters within the State, is a right which comes directly from the State, independent of any municipal grant ( Barhite v. Home Telephone Co., 50 App. Div. 25; City of Rochester v. Bell Telephone Co., 52 id. 6; Village of Carthage v. Central New York Telephone Co., 185 N.Y. 448), I think in this case the telephone company obtained additional rights and privileges from the city. Not only did the city assume to give to the telephone company the right to construct its telephone system in the public streets and highways of the city, but also granted it that right in, over and under the squares, parks, aqueducts and public places in the city, and to construct conduits, subways and manholes therein. It can hardly be claimed that all of the squares, parks, aqueducts and public places in the city are public roads, streets and highways; and it was only the latter which the telephone corporation had the right to use under the provisions of the Transportation Corporations Law. Beyond that, it is suggested that even as regards the streets, the telephone company having been given the right to construct conduits and subways, is still subject to the provisions of section 1 of chapter 397 of the Laws of 1879, as amended by chapter 483 of the Laws of 1881, which authorizes corporations maintaining a line or lines of electric telegraph to construct and lay lines of electrical conductors under ground in a city, village or town, provided consent is first obtained from the local authorities; that the act applies to telephone as well as telegraph corporations. ( Hudson River Telephone Co. v. Watervliet Turnpike Railway Co., 135 N.Y. 393, 404, 405; People ex rel. New York Electric Lines Co. v. Ellison, 188 id. 523.)
It is contended that, although the provisions of the Transportation Corporations Law authorize telephone corporations created under that law to construct and maintain their lines under as well as upon and over the public streets and highways, the provisions of the act requiring the consent of the local authorities to construct and lay them under ground is not inconsistent therewith. However that may be, it can hardly be claimed that a telephone company has the right to construct conduits and subways through the squares, parks and other public places, not within the streets of the city, without the consent of the municipal authorities.
This is not a case where a telephone company is kept from using the public streets in a city by the exaction of the local authorities that the company limit its rates as a condition for such use, which it is unwilling to do, nor where a municipality has undertaken to regulate the rates for telephone service after the telephone company has obtained its rights and is doing business in the city without asking or obtaining further privileges from the city. In the absence of any statute conferring such power it has none, and I think it may well be doubted that it has this right under the power conferred upon the city to regulate the use of the streets for telephone purposes. (Joyce Elect. Law, § 525, and cases there cited.) That, however, is not this case. Here the telephone company voluntarily entered into a contract with the city; it recognized the right of the city to make the same and grant to it certain rights and privileges which it now uses and enjoys; and I think it is now estopped from questioning the right of the city to grant the same and repudiating that part of its agreement limiting its telephone rates as is provided in the contract. ( Simons Sons Co. v. Maryland Telephone Co., 99 Md. 141; Gaedeke v. Staten Island Midland R.R. Co., 43 App. Div. 514; Dusenberry v. N.Y., W. C. Traction Co., 46 id. 267, 272.)
Wholly independent of the question as to whether, under the right given to the city to regulate and control the erection of telephone poles and wires in its streets, it can exact that the telephone corporation limit its telephone rates, I think the telephone company acquired and now uses and enjoys rights and privileges from the city under the agreement, beyond what it would have had but for such agreement. At all events, as has been stated, under the principles of estoppel, it should not now be heard to question the authority of the city to make the agreement and grant the rights, as the city has assumed to do, taken advantage of by the telephone company.
Although the defendant was not a party to the contract, he is one of the persons for whose benefit the provision contained in the contract limiting the rates was made, and may insist upon its enforcement. ( Simons Sons Co. v. Maryland Telephone Co., supra; Gaedeke v. Staten Island Midland R.R. Co., supra.)
Judgment should be directed adjudging that the defendant is entitled to telephone service at the rate of forty-eight dollars per annum, as limited in the agreement of April 14, 1899, and that the plaintiff is entitled to recover of the defendant for the quarter services now due only the sum of twelve dollars, without costs to either party.
All concurred; McLENNAN, P.J., concurring in a separate opinion, except WILLIAMS, J., who dissented upon the grounds that the agreement, so far as it assumed to fix telephone rates, was invalid, was without consideration and was not binding on the present telephone company.
I concur in the result reached by Brother KRUSE in this case, but think we should place our decision upon the broader proposition that where the Legislature grants a franchise to a telephone company, as we will assume was done in this case, to construct, maintain and operate its system in and through a municipality, but where, by such franchise of the State, authority is reserved to the municipality to "regulate and control the erection, construction, laying, stringing, maintaining and removing of all wires, cables, poles, conduits and subways, upon, over and under the streets, avenues, lanes, squares, parks, bridges, aqueducts and public places within said city," such reserved authority entitles the municipality to prescribe the rates which may be charged to the individual residents of such municipality for telephone service, as a consideration for the regulation which it may make.
Concededly, under the power reserved to the city of Rochester, it was competent for it to say that the poles and wires of the plaintiff should be erected and strung upon certain streets of said city rather than upon other of its streets which might be more desirable and advantageous to the plaintiff in the construction of its system. The municipality had a right to require in certain contingencies that the wires of the plaintiff should be conducted through conduits rather than over the surface of the streets. Presumably to give greater facilities and advantages to the plaintiff corporation, such municipality permitted it to select the streets which it should occupy and determined the manner of occupation, but on the condition that the citizens of the municipality should be entitled to have telephone service at a maximum rate of forty-eight dollars per year. An illustration which would seem to settle the principle involved must present itself to any one: the State grants a franchise to a telephone company to erect, maintain and operate its system in the city of Rochester, but reserves to such city the right to dictate how and in what manner such franchise shall be exercised. The company, conceiving it to be most advantageous to it, desires to erect its poles and string its wires on Main street for its entire length. The municipality contends that that is unnecessary; that such demand imposes upon such street an unnecessary burden, and insists that the telephone corporation must go upon a parallel street and supply Main street from its main lines thus located; but by agreement it was consented that if the telephone company would furnish telephone facilities to the people of Rochester at a certain price, the municipality would forego its objection to the obstruction of Main street with the poles and wires of the telephone company. Concededly, it would have been entirely competent for the city of Rochester to have said to the telephone company, "You must not erect poles or string wires in Main street. You may thus erect your poles and string your wires in other streets of the city." It does not seem to me possible that it can be said that when the telephone company asked in its agreement that the right should be given to it to erect its poles and string its wires in certain streets rather than in other streets and agreed in consideration therefor to serve the citizens of the city of Rochester for a certain sum, it should now be heard to say, "We accept the option given to us but repudiate the consideration which we agreed to pay therefor." To illustrate again: Suppose that a telephone company asked permission to set its poles and string its wires on Main street in the city of Rochester. The common council, in answer to such proposition, inquires what the cost of the telephone service is to be to the people. The answer of the telephone company is, "It is none of your business. We have a franchise from the State to go through your city and without your permission." But it is answered, "Under the laws of the State the city of Rochester has the right to regulate and control. We, therefore, say that you shall not go through this street at all; you must go through some other street less advantageous to you, unless you agree to serve the people of the city at a certain rate per telephone." The telephone company assents. The franchise is granted pursuant to the agreement thus made. Can it be said that the telephone company may take advantage of a concession thus made by the common council or by the municipality and repudiate the consideration for such concession, to wit, the maximum rate to be charged by it?
My notion is that it ought to be held that where a telephone company agrees with full knowledge of all the facts that it will serve the inhabitants at a certain price per telephone, in consideration of the regulations imposed by such municipality in answer to the telephone company's request, such undertaking by the telephone company to charge such maximum rate is binding and enforcible upon such company at the instance of any citizen or taxpayer of the municipality.
Judgment directed adjudging that the defendant is entitled to telephone service at the rate of forty-eight dollars per annum, as limited in the agreement of April 14, 1899, and that the plaintiff is entitled to recover of the defendant for the quarter services now due only the sum of twelve dollars, without costs to either party.