No. 12293 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1972 

XHE STATE OY NONTANA ex re1 THE MOUNTAIN STATES TELEPHONE 

AND TELEGRAPH COMPANY, 

Relator, 

THE DISIXICT COURT OF THE SECOND JUDICIAL DISTRICT OF THE STATE 

dF MONTANA, IN AND FOR THE COUNTY OF SILVER BOW, THE HONORABLE 

JAMES D. FREEBOURN, JUDGE PRESIDING, 

Respondents. 

Original proceedings. 

~ounsel of Record: 

Fox Appellant : 

Hughes, Bennett and Cain, Helena, Montana 59601 

Alan Cain argued, Helena, Montana 59601. 

For Kespondent: 

S. 0. Meyers argued, Butte, Montana 59701. 

Poore, McKenzie and Roth, Butte, Montana 59701. 

James A. Poore 111 argued, Butte, Montana 59701. 

Submitted: June 21, 1972 

Decided : ;NOV 1972 

Clerk 
Mr, Justice Gene B. Daly delivered the Opinion of the Court. 

This is an original proceeding wherein relator, The 

Mountain States Telephone and Telegraph Company (hereinafter 

referred to as Mountain States), petitioned this Court for a 

writ of supervisory control directed to and requiring the 

respondent district court to grant Mountain States' motion 

for summary judgment in a civil action entitled: "Mary Jane 

Davidson and John G. Davidson, Plaintiffs, vs. The Mountain 

States Telephone and Telegraph Company, Defendant." Relator 

asked this Court to review the record of the district court 

in this action and its order denying relator summary judgment. 

The civil action seeks damages for omission of plaintiffs' 

listing and advertisement in defendant ' s telephone directory 

and its yellow pages. 

This Court assumed jurisdiction, briefs were filed and 

oral argument had, 

Plaintiffs Mary Jane Davidson and John G, Davidson assumed 

ownership and management of an existing ski shop in Butte, As 

a part of such ownership and management, they subscribed to a 

business telephone from Mountain States. In February 1.971, 

plaintiffs were contacted by Mountain States and at that time 

they requested, in writing, that certain advertising be placed 

in the yellow pages, and further requested their listing in the 

white pages be in bold faced print. 

In March 1971, Mountain States acknowledged the order and 

indicated the listings would be in the next issue of the telephone 

directory. Neither the "white pages" listing nor the "yellow 

pages1' listing and advertisement appeared in the spring, 1971, 

Butte telephone directory. 

Suit was brought by plaintiffs alleging negligent omission 

on the part of Mountain States, resulting in loss of profits and 

other damages to plaintiffs. Mountain States admitted the omission, 

and admitted the listing should have been in both the white pages 

and yellow pages of its directory. 
In their complaint, plaintiffs demanded damages in the 

amount of $7,990 for "'actual" damage to their business and $2,000 

punitive damages. The punitive damage claim was stricken from 

the complaint by the respondent court on motion of Mountain 

States. 

At the time of the pretrial conference Mountain States 

confessed judgment, however only in an amount limited by provisions which it contends are controlling. Mountain States then 

moved for summary judgment to enforce those limitations, The 

district court refused to grant summary judgment, and Mountain 

States now applies to this Court for an appropriate writ, 

Mountain States contends that liability for omission in 

the white pages of its directory is limited by the limitation 

of liability contained in the General Exchange Tariff, published 

by the Montana Public Service Commission, and which states: 

"3. The Telephone Company's liability arising from 

errors in or omissions of directory listings shall be 

limited to and satisfied by a refund not exceeding 

the amount of the charges for such of the subscriber's 

service as is affected during the period covered by 

the directory in which the error or omission occurs. 11 

Mountain States contends that under section 70-101, et.seq., 

R.C.M. 1947, it is required to file a schedule of its rates, 

tariffs, rules and regulations with the Montana Public Service 

Commission; that the Commission has complete authority to 

regulate all activities of the utility and pursuant to this 

authority requires Mountain States to publish a directory listing 

the names, addresses and phone numbers of its subscribers. 

It further contends errors and omissions in listing are 

inevitable, despite the most exacting proofreading standards. 

Even if decreased business or sales can be shown by a business 

whose listing has been omitted, the problem of causation when the 

offended subscriber is a business enterprise would be a problem 

for courts, Businesses suffer fluctuations from year to year, 

mostly unexplained, making the determination of damage a complex 

problem, In addition, the telephone company's exposure to liability 
is one factor which determines the rates the company is permitted 

by the Public Service Commission to charge. If the company must 

litigate every case of error in, or omission of a listing, the 

telephone rates must necessarily rise to reflect this increase 

in costs. All this is in the area of its public service, properly 

regulated by the Public Service Commission. 

Plaintiffs strongly question the authority of the Public 

Service Commission to act in the field of limitation of liability 

in this manner, as beyond its authority and an unconstitutional 

delegation of legislative powers,(Art.IV, Sec. 1, Montana Constitution), if the legislature has such power, Plaintiffs maintain 

the entire subject matter is governed by the Montana statutes on 

damages, sections 17-301 and 17-401, R.C.M. 1947, 

Plaintiffs cite Great Northern Utilities Co. v. Public Service 

Comm., 88 Mont. 180, 293 P. 294, (also cited by Mountain States 

as authority to regulate rates), as a demonstration of the fact 

that the authority to regulate rates in that case had to be 

"inferred" from the statute. Therefore, they contend, the 

statutes never contemplated permitting the extension of authority 

of the Public Service Commission to limit liability for error 

or omission. 

In a sense plaintiffs are correct in that in Great Northern 

Utilities the Court did rule that the statutes enacted in relation to the Public Service Commission did authorize rate making 

authority, but this was not as arbitrary or confined as the term 

"inferred1' might imply. Great Northern Utilities was a lengthy 

in depth discussion by Judge Leiper on utilities, the monopolistic 

aspect, public interest, statutory construction, legislative intent and much more, The Court either spoke directly or affirmed 

langauge from other jurisdictiom and the federal courts in many 

areas. In regard to public utilities generally, the Court discussed and approved the principle of private property devoted 

to public use, as it differs from property used in business 

generally. This concept is based on the principle that property 
devoted to public use or a use in which the public has an 

interest, grants to the public an interest in the use which 

can be controlled by the public for the common good, This is 

done through the Public Service Commission in Montana and the 

Court further held that the Commission is required not only to 

regulate charges, but has a duty to see to reasonable service 

being rendered, among other regulatory functions. 

This places the utility in a class of corporations strictly 

regulated in its rights and privileges and it therefore should 

be regulated, at least to the extent of its static known exposure to liabilities such as its directory omissions and errors 

when this function is required by the Commission, and at the very 

least indirectly involved in rate and service considerations. 

The language of Great Northern Utilities is broad enough 

to include this function by the Commission. The Court there 

further observed that the utility and the public were adequately 

protected under the system of regulated monopoly control constitutionally, in as much as all permitted regulations or rates 

must be reasonable. 

In a review of the cases cited to this Court, the majority 

have held in fact situations similar to those here that the 

limitation contained in the General Exchange Tariff is reasonable 

and binding on the subscriber. Bird v. Chesapeake and Potomac 

Telephone Company, (D,C.App.), 185 A.2d 917; Warner v. Southwestern 

Bell Telephone Company, (Mo,1968), 428 S.W.2d 596; 92 ALR2d 917. 

We agree. 

The second issue here is the extent of Mountain states' 

liability for failing to list plaintiffs in the yellow pages. 

The yellow pages advertising is outside Mountain statesf area of 

public service, and is not under the authority of the Public 

Service Commission, but rather is governed by the rules of law 

applicable to private contracts. 

Here we are concerned with the provision in the advertising 

contract which limits the liability of Mountain States for the 
omission of classified advertising. It provides: 

11 In case of error in the advertisement as published 

or in case of the omission of all or any part of the 

advertisement from publication, the Telephone Company's 

liability, if any, shall be limited to a pro rata 

abatement of the charge paid to the Telephone Company 

for such advertisement in the same proportion that the 

error or omission reduces, if at all, the value of the 

entire advertisement, but in no event shall such 

liability exceed the amount payable to the Telephone 

Company for said advertisement during the service life 

of the directory in which the error or omission occurs. 11 

We do not agree with the contention that this limitation 

falls under section 13-804, R.C.M. 1947, "Contracts fixing 

damages void", but rather provides for a maximum recovery as 

will be discussed later in this opinion. Williston on Contracts, 

3d Ed., V. 5 5781-A. 

The majority of the cases cited to us have upheld the 

provision that we have under consideration and under similar 

circumstances. A leading decision is McTighe v. New England 

Telephone & Telegraph Co., 216 F.2d 26, 28. The jurisdictions 

of South Carolina, Ohio, New Mexico, Florida, California, 

Missouri, Maryland, Texas and Louisiana are generally in accord 

with the principle that it is within the utility's domain of 

private contract and there are many alternate methods of advertising; that the error or omission is generally a simple mistake 

not amounting to gross negligence and the rationale in these 

jurisdictions ranges all the way from the determination that 

the provision is a reasonable restriction to the principle that 

lacking fraud, willful, or wanton misconduct, the parties are 

free to contract and reasonableness is not an issue. As Judge 

Medina stated in McTighe: 

1 I If there be some disparity in the bargaining 

power of the contracting parties it is not more 

than may be found generally to exist * * *. I' 

Plaintiffs have cited Allen v. Michigan Bell Telephone 

Company, 18 Mich.App, 632, 171 N,W,2d 689, to the contrary as 

their principal authority and furnished a Colorado and Oregon 

citation by permission after oral argument. 
The Michigan Court criticizes other jurisdictions holding 

the exculpatory paragraph in the advertising contract valid 

for having not recognized the problem of unconscionability, 

meaning the absence of a meaningful choice on the part of one 

party (subscriber) and the contract terms unreasonably favoring 

the other (telephone company), Further, there being no competing 

alternate, except at a prohibitive disproportionate cost. 

Plaintiffs' argument is based on the Michigan decision and 

the monopolistic quality of the defendant utility company and, 

in addition, points out a resulting general nationwide deterioration of telephone service, 

As plaintiffs point out, defendant is a public utility 

monopoly. Since the utility corporation has devoted its assets 

to a public service, it is a permitted legal monopoly to be 

regulated by the public through its elected officials. Great 

Northern Utilities Co, v. Public Service Commission, 88 Mont. 180, 

293 P. 294, In this respect, it is set apart in the family 

of corporations from the profit corporation which is not regulated and can and does deal in the market place. Even though 

the yellow pagesadvertising is not part of the utility's public 

function, the utility is not in the "market place" advertising 

business per se and if it offers rhis service at all it is 

necessarily, at least in fact, a part of its directory function 

and subject to some of the same disabilities in relation to 

errors and omissions as is the white pagedirectory. 

In this area, once an error or omission is made in the 

advertising there is no opportunity to correct this problem, any 

more than in the white listing, until the next publication. On 

the other hand "market place" advertisers can correct or mitigate 

in the next issue or broadcast. The same problems attendant to 

damages exist here and if they could be accurately ascertainable 

they could conceivably run for a considerable period of time, 

with no opportunity to mitigate or abate. 

The monopolistic character of the yellow pages which the 

Michigan Court decries as resulting in no meaningful choice or 
or no competing alternate, except at a prohibitive disproportionate 

cost, is not exactly, as has been discussed, a one way street, 

particularly when one considers further that by the Michigan 

court's own definition the service is desirable and at a more 

reasonable cost than "market place" advertising. It necessarily 

follows that in some cases it may appear harsh at times but not 

ur~conscionable. The mere fact of claimed unequal bargaining 

position does not render it so in today's world of commerce, 

where situations of this nature are not uncommon, McAlear v, 

Saint Paul Insurance Companies, 158 Mont. 452 , 493 P.2d 331, 

29 St. Rep. 73. 

Plaintiffs claim that permitting this kind of limitation 

could be extended to limitations on recovery for personal 

injuries caused by the utility, The problem of an extension 

of this kind and also the acceptance of limitations of liability 

generally is well stated in some of the most modem enactments 

contained in the Uniform Commercial Code, In subsection (3),of 

section 87A-2-719, R,C.M, 1947, the section of Montana's Uniform 

Commercial Code wherein limitation of recovery by contract is 

provided for, it is stated: 

"* + * Limitation of consequential damages for in.iury 

to 

facie unconscionable but limitation 

the person in the case of consumer 

of 

goods 

damages 

is F w ere 

moss is commercial is not," (Emphasis supplied). 

Without a demonstration of bad faith, fraud, or willful 

or wanton conduct by Mountain States, a limitation of liability 

for errors and omissions in its advertising expressed in a 

written and signed contract is reasonable and nowise against 

public policy and it is within the power of the company and 

subscribers to its directory to make such contracts and they 

become a valid and binding limitation, 

The abstracts of the two cases submitted after argument 

are interesting but not helpful on our principal point. The 

Oregon case, Macca v. General Telephone Company of the Northwest, 

Inc., Oregon Superior Court # 9849, is a different situation 
involving two phone companies and an invasion of privacy 

or harassment complaint resulting from a number switch which 

does not seem to turn on a contract limitation of yellow pages 

advertising. 

The Colorado case, Irish v. The Mountain States Telephone 

& Telegraph Company, Colorado Court of Appeals /, 71-326, involves 

the failure to include a dentist's listing in the yellow pages 

section, although it appeared in the white pages. That court's 

discussion is confined to the proof of damages and proximate 

cause and no mention is made of any contract limitation on damages. 

It does not appear that either of the two cases submitted 

by plaintiffs after argument reaches our problem and it is clear 

that insofar as damages are concerned those two cases are unique 

situations in which damages could be much more accurately ascertained than in the ordinary commercial enterprise. 

The order denying summary judgment is reversed with instructions to enter judgment within the limitations of the 

liability expressed in the General Exchange Tariff and the yellow 

pages advertising contract. 

Associate Justice 
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OfChief Justice - 

/ l~ssociate Justice