The Detroit times., 1911-03-13
CITY CANNOT STOP
PROPOSED PHONE
MERGER
Anti Consolidation Clause in Home
Company's Franchise Annulled BY
Decision in Suit Against
Lighting Board.
Believed That Amalgamation Awaits
Ruling in Standard Oil and
Tobacco Cases.

4 ~ NAO AAShhO ASACRhSaS WI "~~~~
asked about the story that his com
pany is to be merged with the tele
phone trust.
There are no negotiations whit
ever In progress. and there have beer
none." he continued. 1T is true thai
we have some plans for new financ
ing on foot. but there Is no ground
for this talk about a merger with the
Bell companies.
In spite Of oficial denials, however
the talk OF merger which will In
clude all the important independent
telephone companies, will not down
Definite action, II Is said, is being de
layed until the supreme court hands
down decisi0ns u ,the Standard Oh
and American Tobacco Co. cases
When the attitude OF the court is de
fined, the merger can be framed along
lines that will comply with Its rulings
II is generally supposed that the
franchise of the Home Telephone Co,
effectively prevents any merger or
consolidation with any other company.
but an. examination Of the records
shows that this Is not the case. short
ly after the Cooperative Telephone
Co., to the rights OF which the Home
succeeded, started to build its lines,
| 1t brought suit to compe! the public
lighting commission to allow II to use
the city poles and conduits, In accord
apce with the franchise terms, but
Judge Hosmer denied the petition and
| the company was ordered to keep on
city property.
The decision, however, went farth-
er, and said that inasmuch an the per
mission to use the city poles and con
duits where convenient, was part ol
| the consideration for the franchise
and the city could not grant this. that
the company should be freed from
certain provisions Of the franchise
the most important of which was the
requirement that, 1t should never
merge or consolidate with the Michi'
gan Bell Telephone Co., or any other
telephone concern.
The security which the company
gave for performance OF this require
ment, q conveyance OF all Its property
and certificates for all stock issued
was returned, and the company 10
now left free to do as 1t sees mt In
the matter Of merger.
Another important provision Of the
franchise which was eliminated by
this decision, was the clause that the
plant might be bought by the city at
any time, the conveyance given as
security to become operative when.
ever the city wanted to pay for the
property.
There are several other important
provisions of the franchise which
were declared invalid by the decree OF
Judge Hosmer. One of these 10 the
clause which limited the rates to be
charged for city telephone service.
Another provided that the books OF
the company should always be open
to inspection by the public, and an.
other that the life OF the franchise
should be limited to 80 years unless
the city took 1t over before. All these
were declared invalid by the court
because the city could not perform
what IL promised to do In regard to
the use Of the conduits and poles OF
the public lighting commission.
AS the franchise stands at present
there Is no limit to the length OF life
of the franchise, but Corporation
Counsel Hally gave It as his opinion
that II could not be construed to be
more than the 30 years provided by
the instrument In the first place.
II do not believe" said he, that
the court had power to set aside part
OF the franchise as invalid and hold
the city bound by the remainder Of II.
IL seems to me that such q revision Is
a function OF the common council and
II Il should come into court would
be inclined to set up that the Home
company has no city franchise under
which to operate since the decision of
the court has so seriously altered the
terms Of the original agreement be-
tween the Cooperative Telephone Co.
and the city. The company has a
right to operate, however, under its
state franchise but the restrictions
which were placed upon It originally
are altogether invalidated."
The city has, consequently, nothing
to say as to the disposal OF the prop
erty by the Home Telephone Co., al
though this was one OF the most I'm
portant provisions OF the franchise.
The city has no more, chance Of own
ing the Home company than 1t hal
of owning the Michigan State com
pany. II the merger goes through as
planned, there will be nothing for the
city to do but pay telephone tolls and
kick at fnefiicient service. the priv
leges II il now allowed to exercise.
Another turn was given to the tele-
phone situation by the suggestion that
the. Morgan interests might be desir-
Gus Of consolidating the independent
telephone companies In this territory
with the Cuyahoga and United States
companies OF Cleveland. This may be
taten ne q nrol,mInary .fan In ~.
amalgamation of all the independents
with the trust and II Is believed that
Morgan would be very glad to get rid
Of the Cleveland independent com
l.. ~ -